Exhibit 10.1

 

HANDLEMAN COMPANY

 

AND CERTAIN BORROWING SUBSIDIARIES

 

CREDIT AGREEMENT

 

dated as of November 22, 2005

 

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THE BANKS NAMED HEREIN

 

LASALLE BANK MIDWEST NATIONAL ASSOCIATION, as Agent

 

KEYBANK NATIONAL ASSOCIATION, as a Co-Syndication Agent

 

COMERICA BANK, as a Co-Syndication Agent

 

US BANK, N.A., as a Co-Syndication Agent

 

and

 

NATIONAL CITY BANK OF THE MIDWEST, as Documentation Agent

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I.   DEFINITIONS          1.1    Certain Definitions    1     1.2    Other
Definitions; Rules of Construction    14 II.   THE COMMITMENTS, THE SWINGLINE
FACILITY AND THE ADVANCES    15     2.1    Commitment of the Banks and the
Swingline Facility    15     2.2    Minimum Amounts; Limitation on Number of
Borrowings    17     2.3    Effect on Commitments    18     2.4    Termination
and Reduction of Commitments    18     2.5    Fees    18     2.6    Disbursement
of Advances    19     2.7    Conditions for First Disbursement    21     2.8   
Further Conditions for Disbursement    23     2.9    Subsequent Elections as to
Borrowings    23     2.10    Limitation of Requests and Elections    24 III.  
PAYMENTS AND PREPAYMENTS    25     3.1    Principal Payments    25     3.2   
Interest Payments    26     3.3    Letter of Credit Reimbursement Payments    27
    3.4    Payment Method    29     3.5    No Setoff or Deduction    30     3.6
   Payment on Non-Business Day; Payment Computations    30     3.7    Additional
Costs    30     3.8    Illegality and Impossibility    32     3.9   
Indemnification    32     3.10    Tax Documents    33     3.11    Applicable
Lending Office    33     3.12    Substitution of Bank    34 IV.  
REPRESENTATIONS AND WARRANTIES    35     4.1    Corporate Existence and Power   
35     4.2    Corporate Authority    35     4.3    Binding Effect    35     4.4
   Subsidiaries    34     4.5    Litigation    35     4.6    Financial Condition
   35     4.7    Use of Loans    35     4.8    Consents, Etc.    35     4.9   
Taxes    36     4.10    Title to Properties    36     4.11    ERISA    36    
4.12    Environmental and Safety Matters    36

 

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    4.13   Borrowing Base    38     4.14   Investment Company Act    38     4.15
  Public Utility Holding Company Act    38     4.16   Solvency, etc.    38    
4.17   Intellectual Property    38     4.18   Burdensome Obligations    38    
4.19   Labor Matters    39     4.20   No Default    39     4.21   Related
Transactions    39 V.   COVENANTS    40     5.1   Affirmative Covenants    40  
      (a)    Preservation of Corporate Existence, Etc.    40         (b)   
Compliance with Laws, Etc.    40         (c)    Maintenance of Properties;
Insurance    40         (d)    Reporting Requirements    41         (e)   
Accounting; Access to Records, Books, Etc.    42         (f)    Guaranties    42
        (g)    Further Assurances    42     5.2   Negative Covenants    43      
  (a)    Debt Service Coverage Ratio    43         (b)    Leverage Ratio    43  
      (c)    Net Worth    43         (d)    Borrowing Base    43         (e)   
Liens    43         (f)    Merger; Etc.    44         (g)    Disposition of
Assets, Etc.    44         (h)    Acquisitions    45         (i)    Nature of
Business    45         (j)    Investments, Loans and Advances    45         (k)
   Limitations on Restrictive Agreements    46         (l)    Payments and
Modification of Debt    46         (m)    Additional Covenants    47         (n)
   Indebtedness and Contingent Liabilities    47         (o)    Transactions
with Affiliates    48         (p)    Dividends, Redemptions and Other
Distributions    48 VI.   DEFAULT    48     6.1   Events of Default    48    
6.2   Remedies    51 VII.   THE AGENT AND THE BANKS    51     7.1   Appointment
and Authorization    51     7.2   Agent and Affiliates    52

 

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    7.3   Delegation of Duties    52     7.4   Exculpation of Agent    52    
7.5   Reliance by Agent    52     7.6   Notice of Default    53     7.7   Credit
Decision    53     7.8   Indemnification    54     7.9   Agent in Individual
Capacity    54     7.10   Successor Agent    54     7.11   Collateral Matters   
55     7.12   Agent May File proofs of Claim    55     7.13   Other Agents;
Arrangers and Managers    55     7.14   Sharing of Payments    56 VIII.  
GUARANTY    57     8.1   Guarantee of Obligations    57     8.2   Nature of
Guaranty    57     8.3   Waivers and Other Agreements    57     8.4  
Obligations Absolute    58     8.5   No Investigation by Banks or Agent    58  
  8.6   Indemnity    58     8.7   Subordination, Subrogation, Etc.    59 IX.  
MISCELLANEOUS    59     9.1   Amendments, Etc.    59     9.2   Notices    60    
9.3   No Waiver By Conduct; Remedies Cumulative    60     9.4   Reliance on and
Survival of Various Provisions    60     9.5   Expenses    61     9.6  
Successors and Assigns    62     9.7   Counterparts    64     9.8   Governing
Law; Consent to Jurisdiction    64     9.9   Table of Contents and Headings   
65     9.10   Construction of Certain Provisions    65     9.11   Integration
and Severability    65     9.12   Independence of Covenants    65     9.13  
Interest Rate Limitation    65     9.14   Margin Stock    65     9.15   Joint
Obligations; Contribution Rights; Savings Clause    65     9.16  
Confidentiality    67     9.17   Waiver of Jury Trial    67     9.18   Customer
Identification – USA Patriot Act Notice    67

 

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EXHIBITS

            

Exhibit A

  

Guaranty

   

Exhibit B

  

Revolving Credit Note

   

Exhibit C

  

Swingline Note

   

Exhibit D

  

Request for Advance

   

Exhibit E

  

Opinion of Counsel

   

Exhibit F

  

Request for Continuation or Conversion of Revolving Credit Loan

   

Exhibit G

  

Assignment and Acceptance

SCHEDULES

            

Schedule 1

  

Commitments

   

Schedule 4.4

  

Subsidiaries

   

Schedule 4.5

  

Litigation

   

Schedule 4.12

  

Environmental Matters

   

Schedule 5.2(e)

  

Liens

   

Schedule 5.2(j)

  

Investments

   

Schedule 5.2(n)

  

Indebtedness

 

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Execution Copy

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 22, 2005 (as
amended or modified from time to time, this “Agreement”), is by and among
HANDLEMAN COMPANY, a Michigan corporation (the “Company”), each of the
Subsidiaries of the Company designated in Section 1.1 as a Borrowing Subsidiary
(individually, a “Borrowing Subsidiary” and, collectively, the “Borrowing
Subsidiaries”) (the Company and the Borrowing Subsidiaries may each be referred
to as a “Borrower” and, collectively, as the “Borrowers”), the lenders party
hereto from time to time, (the “Banks” and individually, a “Bank”), LASALLE BANK
MIDWEST NATIONAL ASSOCIATION, formerly known as Standard Federal Bank, N.A., as
administrative agent for the Banks (in such capacity, the “Agent”), KEYBANK
NATIONAL ASSOCIATION, as a co-syndication agent (in such capacity, a
“Co-Syndication Agent”), COMERICA BANK, as co-syndication agent (in such
capacity, a “Co-Syndication Agent”), US BANK, N.A., as a co-syndication agent
(in such capacity, a “Co-Syndication Agent”) and NATIONAL CITY BANK OF THE
MIDWEST, as documentation agent (in such capacity, the “Documentation Agent”).

 

INTRODUCTION

 

A. The Borrowers, the Banks and the Agent are parties to a Credit Agreement
dated as of August 8, 2001, as amended (the “Existing Credit Agreement”).

 

B. The Company has requested that the Banks and the Agent amend and restate the
Existing Credit Agreement as herein provided, and the Banks and the Agent are
willing to amend and restate the Existing Credit Agreement strictly in
accordance with the terms and conditions set forth herein.

 

In consideration of the premises and of the mutual agreements herein contained,
the parties hereto agree that the Existing Credit Agreement shall be amended and
restated as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1 Certain Definitions. As used herein the following terms shall have the
following respective meanings:

 

“Acquisition” shall mean any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Company or any
of its Subsidiaries (i) acquires any going business or all, substantially all or
any substantial portion of the assets of any Person or division thereof, whether
through purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the Capital Stock of
any Person.

 

“Adjusted EBITDA” of any person shall mean, for any period, the Adjusted Net
Income of such person for such period plus, without duplication (a) Net Interest
Expense, (b) to the extent deducted in the computation of such Net Income,
federal, state and local income taxes and other equivalent taxes, including the
Michigan single business tax, and (c) to the extent deducted in the computation
of such Net

 

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Income, depreciation and amortization expense, including without limitation
recoupment of license expense, all as determined in accordance with Generally
Accepted Accounting Principles.

 

“Adjusted Net Income” of any person shall mean, for any period, the Net Income
of such Person for such period excluding, to the extent included in determining
such Net Income, each of the following, without duplication: (i) gains or
non-cash losses from the sale, exchange, transfer or other disposition of
property or assets not in the ordinary course of business and related tax
effects in accordance with Generally Accepted Accounting Principles, (ii) any
other extraordinary or non-recurring gains or other income not from the
continuing operation of such person and related tax effects in accordance with
Generally Accepted Accounting Principles and (iii) the income of any Subsidiary
of such person to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted and the income attributable to any minority interests.

 

“Advance” shall mean any Loan and any Letter of Credit Advance.

 

“Affiliate” when used with respect to any person shall mean any other person
which, directly or indirectly, controls or is controlled by or is under common
control with such person. For purposes of this definition “control” (including
the correlative meanings of the terms “controlled by” and “under common control
with”), with respect to any person, shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise.

 

“Applicable Lending Office” shall mean, with respect to any Advance made by any
Bank or with respect to such Bank’s Commitment, the office or branch of such
Bank or of any Affiliate of such Bank located at the address specified as the
applicable lending office or branch for such Bank set forth next to the name of
such Bank in the signature pages hereof or any other office or Affiliate of such
Bank or of any Affiliate of such Bank hereafter selected and notified to the
Company and the Agent by such Bank.

 

“Applicable Margin” shall mean, with respect to any Application Period, the per
annum rate set forth below based upon the Leverage Ratio for the Determination
Period, provided that as of the Effective Date the Applicable Margin for
Eurocurrency Rate Loans and Letter of Credit fees under Section 2.5(b)(i) is
1.450%, the Applicable Margin for Floating Rate Loans is 0.250% and the
Applicable Margin for facility fees under Section 2.5(a) is 0.300%:

 

Leverage Ratio

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Facility Fees

under Section 2.5(a)

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    Floating Rate Loans

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Eurocurrency Rate

Loans and

Letter of Credit Fee

Under Section 2.5(b)(i)

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< 0.50

   0.175 %   0.000 %   0.575 %

³ 0.50 but < 1.00

   0.200 %   0.000 %   0.800 %

³ 1.00 but < 1.50

   0.225 %   0.000 %   1.025 %

³ 1.50 but < 2.00

   0.250 %   0.000 %   1.250 %

³ 2.00 but < 2.50

   0.300 %   0.250 %   1.450 %

³ 2.50

   0.350 %   0.500 %   1.650 %

 

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“Application Period” shall mean a period commencing with and including the 60th
day after the end of the most recently completed fiscal quarter of the Company
to and including the 59th day after the end of the next following fiscal quarter
of the Company or the next succeeding Business Day.

 

“Assignment and Acceptance” is defined in Section 9.6(d).

 

“Bank Obligations” shall mean all indebtedness, obligations and liabilities,
whether now owing or hereafter arising, direct, indirect, contingent or
otherwise, of the Borrowers to the Agent or any Bank pursuant to the Loan
Documents.

 

“Borrowing” shall mean the aggregation of Advances made to any Borrower, or
continuations and conversions of such Advances, made pursuant to Article II on a
single date and for a single Interest Period. A Borrowing may be referred to for
purposes of this Agreement by reference to the type of Loan comprising the
relating Borrowing, e.g., a “Floating Rate Borrowing” if such Loans are Floating
Rate Loans or a “Eurocurrency Rate Borrowing” if such Loans are Eurocurrency
Rate Loans.

 

“Borrowing Base” shall mean, as of any date, the sum of (a) 80% of the net
accounts receivable of the Company, each Foreign Subsidiary which is a Guarantor
and organized under the laws of the United Kingdom or Canada and each Domestic
Subsidiary which are not subject to any Lien as of such date other than Liens
permitted by Section 5.2(e)(i) or (ii), less the amount of any Priority Liens on
such net accounts receivable, and (b) 100% of the cash and cash equivalents of
the Company, each Foreign Subsidiary which is a Guarantor and organized under
the laws of the United Kingdom or Canada and each Domestic Subsidiary which are
not subject to any Lien as of such date other than Liens permitted by
Section 5.2(e)(i) or (ii), less the amount of any Priority Liens on such cash
and cash equivalents, all as determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles; provided that the aggregate
amount included in the Borrowing Base with respect to the net accounts
receivable and cash and cash equivalents of any Foreign Subsidiary which is a
Guarantor shall not exceed the amount of the Guaranty of such Foreign Subsidiary
if such Guaranty is limited in amount.

 

“Borrowing Subsidiary” shall mean any Subsidiary of the Company or any other
person upon request by the Company to the Agent for designation of such
Subsidiary or person as a “Borrowing Subsidiary” hereunder so long as (a) the
Required Banks consent to such designation, (b) the Company guarantees the
obligations of such new Borrowing Subsidiary pursuant to the terms of Article
VIII hereof and each Guarantor guarantees the obligations of such new Borrowing
Subsidiary pursuant to a Guaranty, (c) such new Borrowing Subsidiary delivers
all corporate or organizational documents, legal opinions and authorizing
resolutions reasonably requested by the Agent, and (d) the Borrowers and such
new Borrowing Subsidiary shall execute a joinder agreement in form acceptable to
the Agent adding such new Borrowing Subsidiary as a party to this Agreement and
take such other actions reasonably requested by Agent.

 

“British Pounds Sterling” or “£” shall mean the lawful currency of the United
Kingdom.

 

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“Business Day” shall mean a day other than a Saturday, Sunday or other day on
which (a) the Agent is not open to the public for carrying on substantially all
of its banking functions or (b) if such reference relates to the date for
payment or purchase of any amount denominated in any currency other than
Dollars, banks are not generally open to the public for carrying on
substantially all of their banking functions in the principal financial center
of the country issuing such currency.

 

“Canadian Borrower” shall mean Handleman Company of Canada Limited, or such
other Subsidiary Borrower which is organized under the laws of Canada or any
political subdivision thereof and is approved by the Agent.

 

“Canadian Dollars” or “CDN$” shall mean the lawful currency of Canada.

 

“Canadian Prime Rate” shall mean the greater of (a) the Swingline Canadian
Bank’s cost of funds (as determined by the Swingline Canadian Bank in accordance
with its customary practice), plus 1.50% and (b) on any day a fluctuating rate
per annum equal to the rate of interest designated by the Swingline Canadian
Bank from time to time as its “Canadian Prime Rate”; provided that in no event
shall the Canadian Prime Rate be less than the market bid rate determined by the
Swingline Canadian Bank as the average of the bid rates for 30 day Canadian
dollar bankers’ acceptances that appear on the Reuters Screen CDOR Page at 10:00
a.m. (Toronto time) on the applicable day plus one and one half percent
(1.50%) per annum. The Canadian Prime Rate is not necessarily the lowest rate of
interest charged by the Swingline Canadian Bank in connection with extensions of
credit. Changes in the rate of interest on Canadian Prime Rate Loans shall take
effect simultaneously with each change in the Canadian Prime Rate. The
applicable Canadian Prime Rate shall be determined by the Swingline Canadian
Bank in its sole judgment, and such determination shall be conclusive absent
manifest error.

 

“Canadian Statutory Claims” means Liens or statutory right or claim on any
assets of a Foreign Subsidiary which is organized under the laws of Canada or
any of its political subdivisions in favor of a Canadian governmental authority
securing amounts due and payable for, without intending to be limiting, vacation
pay, worker’s compensation, unemployment insurance, pension plan contributions,
employee or non-resident withholding tax source deductions, unremitted sales
taxes, realty taxes (including utility charges and business taxes which are
collectible like realty taxes), customs duties or similar statutory obligations
under Canadian law.

 

“Capital Lease” of any person shall mean any lease which, in accordance with
Generally Accepted Accounting Principles, is or should be capitalized on the
books of such person.

 

“Capital Stock” shall mean (i) in the case of any corporation, all capital stock
and any securities exchangeable for or convertible into capital stock and any
warrants, rights or other options to purchase or otherwise acquire capital stock
or such securities or any other form of equity securities, (ii) in the case of
an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations thereunder.

 

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“Commitment” shall mean, with respect to each Bank, the commitment of each such
Bank to make Revolving Credit Loans and to participate in Letter of Credit
Advances and Swingline Loans made through the Agent pursuant to Section 2.1, in
amounts not exceeding in aggregate principal amount outstanding at any time the
respective commitment amount for each such Bank set forth for such Bank on
Schedule 1 hereto or otherwise established pursuant to Section 9.1 or 9.6, as
such amounts may be reduced from time to time pursuant to Section 2.4.

 

“Consolidated” or “consolidated” shall mean, when used with reference to any
financial term in this Agreement, the aggregate for two or more persons of the
amounts signified by such term for all such persons determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles.

 

“Contingent Liabilities” of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
any letters of credit, surety bonds or similar obligations and all obligations
of such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person.

 

“Crave” shall mean Crave Entertainment Group, Inc., a California corporation.

 

“Crave Acquisition Agreement” shall mean the Securities Purchase Agreement dated
October 18, 2005, among the Company and the shareholders, option holders and
warrant holders of Crave.

 

“Debt Service Coverage Ratio” shall mean, as of any date, the ratio of (a) the
consolidated Adjusted EBITDA for the Company and its Subsidiaries, less capital
expenditures, license advances and acquired rights, as calculated on a
consolidated basis for the four most recently ended consecutive fiscal quarters
of the Company, to (b) the sum of the consolidated Net Interest Expense of the
Company and its Subsidiaries, as calculated on a consolidated basis for the same
four fiscal quarters, plus the current maturities of all Indebtedness of the
Company and its Subsidiaries as of such date.

 

“Default” shall mean any of the events or conditions described in Section 6.1
which might become an Event of Default with notice or lapse of time or both.

 

“Defaulting Bank” shall mean any Bank that fails to make available to the Agent
such Bank’s Loans required to be made hereunder or shall have not made a payment
required to be made to the Agent hereunder. Once a Bank becomes a Defaulting
Bank, such Bank shall continue as a Defaulting Bank until such time as such
Defaulting Bank makes available to the Agent the amount of such Defaulting
Bank’s Loans and all other amounts required to be paid to the Agent pursuant to
this Agreement.

 

“Determination Date” shall mean, with respect to any Application Period, the
last day of the Determination Period for such Application Period.

 

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“Determination Period” shall mean, with respect to any Application Period, the
period of four consecutive fiscal quarters of the Company ending with the fiscal
quarter ending immediately preceding such Application Period.

 

“Disqualified Stock” shall mean any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part prior to a date one year
after the Termination Date.

 

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

 

“Domestic Subsidiary” shall mean each present and future Subsidiary of the
Company which is not a Foreign Subsidiary.

 

“Effective Date” shall mean the effective date specified in the final paragraph
of this Agreement.

 

“Environmental Laws” at any date shall mean all provisions of law, statute,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards which are applicable to any Borrower or any Subsidiary and
promulgated by the government of the United States of America or any foreign
government or by any state, province, municipality or other political
subdivision thereof or therein or by any court, agency, instrumentality,
regulatory authority or commission of any of the foregoing concerning the
protection of, or regulating the discharge of substances into, the environment.

 

“Equivalent” of an amount of one currency (the “first currency”) denominated in
another currency (the “second currency”), as of any date of determination, shall
mean the amount of the second currency which could be purchased with the amount
of the first currency at the spot or other relevant rate of exchange quoted by
the Agent at approximately 11:00 a.m. on such date.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.

 

“ERISA Affiliate” shall mean, with respect to any person, any trade or business
(whether or not incorporated) which, together with such person or any Subsidiary
of such person, would be treated as a single employer under Section 414 of the
Code.

 

“Euro” and/or “EUR” shall mean the Euro referred to in Council Regulation (EC)
No. 1103/97 dated June 17, 1997 passed by the Council of the European Union, or,
if different, the then lawful currency of the member states of the European
Union that participate in the third stage of Economic and Monetary Union.

 

“Eurocurrency Base Rate” applicable to any Interest Period shall mean, the rate
per annum obtained by dividing (a) the per annum rate of interest at which
deposits in the Permitted Currency in which such Eurocurrency Rate Loan is to be
denominated for such Interest Period and in an aggregate amount comparable to
the amount of the related Eurocurrency Rate Loan to be made by the Agent in its
capacity as a Bank hereunder are offered to the Agent by other prime banks in
the applicable interbank market selected by the Agent in its reasonable
discretion, at approximately 11:00 a.m. London time, on the second

 

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Eurocurrency Business Day prior to the first day of such Interest Period, as
displayed in the Bloomberg Financial Markets system (or other authoritative
source selected by the Agent in its sole discretion) or, if the Bloomberg
Financial Markets system or another authoritative source is not available, as
the Eurocurrency Base Rate is otherwise determined by the Agent in its sole and
absolute discretion, by (b) a number determined by subtracting from 1.00 the
then stated maximum reserve percentage for determining reserves to be maintained
by member banks of the Federal Reserve System for Eurocurrency funding or
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D), such rate to remain fixed for such Interest Period; plus,
in each case, all other applicable costs, expenses and reserves (including
without limitation the cost of compliance with any existing requirements of the
Bank of England Act of 1998 and/or Bank of England and/or the Financial Services
Authority to place non-interest bearing or special deposits with the Bank of
England and/or pay fees to the Financial Services Authority in connection with
advances denominated in British Pounds Sterling) for any Eurocurrency Advance
denominated in any Optional Currency; such sum to be rounded up, if necessary,
to the nearest whole multiple of one one-hundredth of one percent (1/100 of 1%).
The Agent’s determination of the Eurocurrency Base Rate shall be conclusive,
absent manifest error.

 

“Eurocurrency Business Day” shall mean, with respect to any Eurocurrency Rate
Loan, a day which is both a Business Day and a day on which dealings in Dollar
deposits or the relevant Permitted Currency are carried out in the relevant
interbank market.

 

“Eurocurrency Rate” shall mean, with respect to any Eurocurrency Rate Loan for
any Interest Period or portion thereof, the per annum rate that is equal to the
sum of (a) the Applicable Margin, plus (b) the Eurocurrency Base Rate; which
Eurocurrency Rate shall change simultaneously with any change in such Applicable
Margin.

 

“Eurocurrency Rate Loan” shall mean any Loan which bears interest at the
Eurocurrency Rate.

 

“Event of Default” shall mean any of the events or conditions described in
Section 6.1.

 

“Existing Credit Agreement” is defined in the introduction to this Agreement.

 

“Federal Funds Rate” shall mean the per annum rate that is equal to the per
annum rate established and announced by the Agent from time to time as the
opening federal funds rate paid or payable by the Agent in its regional federal
funds market for overnight borrowings from other banks; as conclusively
determined by the Agent, absent manifest error, such rate to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), which Federal Funds Rate shall change simultaneously with any
change in such announced rates.

 

“Financial Officer” shall mean any of the chief financial officer, vice
president – controller, treasurer or assistant treasurer of the Company.

 

“Floating Rate” shall mean the per annum rate equal to the sum of (a) the
Applicable Margin plus (b) for Loans other than Swingline Canadian Loans, the
greater of (i) the Prime Rate in effect from time to time, and (ii) the sum of
one-half of one percent (1/2 of 1%) per annum plus the Federal Funds Rate in
effect from time to time and, for Swingline Canadian Loans, the Canadian Prime
Rate; which

 

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Floating Rate shall change simultaneously with any change in such Applicable
Margin, Prime Rate, Federal Funds Rate or Canadian Prime Rate, as the case may
be.

 

“Floating Rate Loan” shall mean any Revolving Credit Loan which bears interest
at the Floating Rate.

 

“Foreign Subsidiary” shall mean each Subsidiary organized under the laws of a
jurisdiction outside of the United States of America.

 

“Generally Accepted Accounting Principles” shall mean generally accepted
accounting principles (as adopted in the United States) in effect from time to
time and applied on a basis consistent with that reflected in the financial
statements referred to in Section 4.6.

 

“Guaranties” shall mean the guaranty entered into by the Company for the benefit
of the Agent and the Banks pursuant to Article VIII of this Agreement and
guaranties entered into by each of the Guarantors for the benefit of the Agent
and the Banks pursuant to Section 5.1(f) in substantially the form of Exhibit A
hereto, as amended or modified from time to time, together with any joinders
thereto and any other guaranty executed at any time by any Guarantor, in each
case in form and substance acceptable to the Agent and the Required Banks. The
Agent is authorized to execute any of the foregoing on behalf of the Banks.

 

“Guarantor” shall mean each present and future Subsidiary of the Company
required to execute a Guaranty under Section 5.1(f) or otherwise entering into a
Guaranty from time to time and the Company (as a Guarantor under Article VIII
hereof); provided that, notwithstanding anything herein to the contrary, only
Domestic Subsidiaries which are Guarantors shall be considered Guarantors for
purposes of Article V of this Agreement and the interpretation of all the
covenants and other terms and provisions of Article V of this Agreement,
provided further that the foregoing shall not limit the obligations of any
Guarantor under its Guaranty.

 

“Hedging Agreement” shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

 

“Hedging Obligation” shall mean, with respect to any Person, any liability of
such Person under any Hedging Agreement. The amount of any Person’s obligation
in respect of any Hedging Obligation shall be deemed to be the obligation that
would be reflected in the financial statements of such Person in accordance with
Generally Accepted Accounting Principles.

 

“Indebtedness” of any person shall mean, as of any date, (a) all obligations of
such person for borrowed money and similar obligations, (b) all obligations of
such person as lessee under any Capital Lease, (c) the unpaid purchase price for
goods, property or services acquired by such person, except for accounts payable
arising in the ordinary course of business, (d) all obligations of such person
to purchase goods, property or services where payment therefor is required
regardless of whether delivery of such goods or property or the performance of
such services is ever made or tendered (generally referred to as “take or pay
contracts”), other than obligations incurred in the ordinary course of business,
(e) all obligations of such person in respect of any interest rate or currency
swap, rate cap or other similar transaction (valued in an amount equal to the
highest termination payment, if any, that would be payable by such person upon

 

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termination for any reason on the date of determination), and (f) all
obligations of others similar in character to those described in clauses
(a) through (e) of this definition for which such person is contingently liable,
as obligor, guarantor, surety or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
letters of credit, surety bonds or similar obligations and all obligations of
such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person. Notwithstanding the foregoing, clause (f) shall not include
(i) obligations or guarantees owing or guaranteed by any Subsidiary or the
Company to or for the benefit of any other Subsidiary or the Company, or
(ii) Unfunded Benefit Liabilities.

 

“Interest Payment Date” shall mean (a) with respect to any Eurocurrency Rate
Loan, the last day of each Interest Period with respect to such Eurocurrency
Rate Loan and, in the case of any Interest Period exceeding three months, those
days that occur during such Interest Period at intervals of three months after
the first day of such Interest Period, and (b) in all other cases, the last
Business Day of each month occurring after the date hereof, commencing with the
first such Business Day occurring after the date of this Agreement.

 

“Interest Period” shall mean, with respect to any Eurocurrency Rate Loan, the
period commencing on the day such Eurocurrency Rate Loan is made or converted to
a Eurocurrency Rate Loan and ending on the date one, two, three or six months
thereafter, as any Borrower may elect under Section 2.6 or 2.9, and each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the date one, two, three or six months thereafter,
as any Borrower may elect under Section 2.6 or 2.9, provided, however, that
(a) any Interest Period which commences on the last Eurocurrency Business Day of
a calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last
Eurocurrency Business Day of the appropriate subsequent calendar month, (b) each
Interest Period which would otherwise end on a day which is not a Eurocurrency
Business Day shall end on the next succeeding Eurocurrency Business Day or, if
such next succeeding Eurocurrency Business Day falls in the next succeeding
calendar month, on the next preceding Eurocurrency Business Day, and (c) no
Interest Period which would end after the Termination Date shall be permitted.

 

“LaSalle” shall mean LaSalle Bank Midwest National Association, a national
banking association.

 

“Letter of Credit” shall mean a standby letter of credit, having a stated expiry
date not later than twelve months after the date of issuance (provided that any
such letter of credit may provide for the renewal thereof for additional twelve
month periods with the consent of the Agent) and in any event not later than the
twenty fifth Business Day before the Termination Date, issued by the Agent on
behalf of the Banks for the account of any Borrower under an application and
related documentation acceptable to the Agent requiring, among other things,
immediate reimbursement by such Borrower to the Agent in respect of all drafts
or other demands for payment honored thereunder and all expenses paid or
incurred by the Agent relative thereto.

 

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“Letter of Credit Advance” shall mean any issuance of a Letter of Credit under
Section 2.6 made pursuant to Section 2.1 in which each Bank acquires a pro rata
risk participation pursuant to Section 2.6(d).

 

“Letter of Credit Documents” shall have the meaning ascribed thereto in
Section 3.3(b).

 

“Leverage Ratio” shall mean, as of any date, the ratio of (a) Total Debt as of
such date to (b) the consolidated Adjusted EBITDA of the Company and its
Subsidiaries for the four most recently ended consecutive fiscal quarters of the
Company.

 

“Lien” shall mean any pledge, assignment, deed of trust, hypothecation,
mortgage, security interest, conditional sale or title retaining contract,
financing statement filing, or any other type of lien, charge, encumbrance or
other similar claim or right.

 

“Loan” shall mean any Revolving Credit Loan or Swingline Loan, as the context
may require.

 

“Loan Documents” shall mean this Agreement, the Notes, the Letter of Credit
Documents, the Guaranties and any other agreement, instrument, certificate or
document executed at any time in connection with this Agreement.

 

“Loan Parties” shall mean each Borrower and Guarantor.

 

“Margin Stock” shall mean “margin stock” as defined in Regulations U or X or
“marginable OTC stock” or “foreign margin stock” within the meaning of
Regulation T or X.

 

“Material Adverse Change” shall mean any event, development or circumstance that
has had or would be reasonably likely to have a material adverse effect on
(a) the business, assets, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole or (b) the
validity or enforceability of any Loan Document or the rights and remedies of
the Agent and the Banks thereunder.

 

“Material Subsidiary” shall mean, at any date of determination, any Subsidiary
of the Company that, together with its Subsidiaries, (a) for the most recent
fiscal quarter of the Company or the most recent four consecutive fiscal
quarters of the Company, accounted for more than 10% of the consolidated
revenues of the Company and its Subsidiaries or (b) as of the end of the most
recently ended fiscal quarter of the Company, was the owner of more than 10% of
the consolidated assets of the Company and its Subsidiaries.

 

“Multiemployer Plan” shall mean any “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.

 

“Net Cash Proceeds” shall mean, in connection with any sale of assets, the cash
proceeds received by the Company from such sale and any cash received in respect
of any non-cash proceeds from such sale, but only as and when received, in all
cases net of all attorneys’ fees, accountants’ fees, investment banking fees,
amounts required to be applied to the repayment of Indebtedness secured by a
Lien expressly permitted hereunder on any asset which is the subject of such
sale (other than any Lien in favor of the Agent

 

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for the benefit of the Agent and the Banks) and other fees incurred in
connection therewith, net of all Indebtedness and other liabilities and
obligations incurred by the Company or any of its Subsidiaries, other than any
such liabilities and obligations which are incurred in the ordinary course of
business and not in excess of fair market value, in connection with such sale
and net of taxes and other liabilities paid or reasonably estimated to be
payable as a result thereof.

 

“Net Income” of any person shall mean, for any period, the net income (or loss)
of such person for such period taken as a single accounting period, determined
in accordance with Generally Accepted Accounting Principles.

 

“Net Interest Expense” of any person shall mean, for any period, all interest
paid or payable by such person during such period, minus any interest income for
such period.

 

“Net Worth” of any person shall mean, as of any date, the amount of any
preferred stock, paid in capital and similar equity accounts plus (or minus in
the case of a deficit) the capital surplus and retained earnings of such person
and the amount of any foreign currency translation adjustment account shown as a
capital account of such person.

 

“Notes” shall mean the Revolving Credit Notes and the Swingline Note; “Note”
shall mean any Revolving Credit Note or the Swingline Note.

 

“Obligations” shall mean all obligations (monetary (including post-petition
interest, allowed or not) or otherwise) of any Loan Party under this Agreement
and any other Loan Document including attorney fees and costs and any
reimbursement obligations of each Loan Party in respect of Letters of Credit,
all Hedging Obligations permitted hereunder which are owed to any Bank or its
Affiliate or Agent, all in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.

 

“Optional Currency” shall mean any currency which is freely transferable and
convertible into Dollars and acceptable to all the Banks; provided, that,
subject to the terms of this Agreement (including without limitation Sections
3.5 and 3.8), (a) Euros and British Pounds Sterling (so long as Euros and
British Pounds Sterling are freely available, freely transferable and freely
convertible into Dollars) shall be deemed acceptable to the Banks and (b) with
respect to any Swingline Canadian Loans, Canadian Dollars (so long as Canadian
Dollars are freely available, freely transferable and freely convertible into
Dollars) or any other currency acceptable to the Agent that is freely available,
freely transferable and freely convertible into Dollars and agreed to by the
Swingline Canadian Bank.

 

“Original Dollar Amount” shall mean, with respect to any Loan, the Equivalent in
Dollars of the original principal amount of such Loan specified in the related
request therefor given by any Borrower pursuant to Section 2.6(a) as such amount
is reduced by payments of principal made in respect of such Loan in Dollars (or
the Equivalent in Dollars of the amount thereof in the case of a payment made in
the Optional Currency in which such Loan is denominated) and (b) as such amount
is adjusted pursuant to Section 3.1(e).

 

“Overdue Rate” shall mean (a) in respect of principal of Floating Rate Loans, a
rate per annum that is equal to the sum of two percent (2%) per annum plus the
Floating Rate, (b) in respect of principal of Eurocurrency Rate Loans, a rate
per annum that is equal to the sum of two percent (2%) per

 

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annum plus the per annum rate in effect thereon until the end of the then
current Interest Period for such Loan and, thereafter, a rate per annum that is
equal to the sum of two percent (2%) per annum plus the Floating Rate (or, in
the case of any Eurocurrency Rate Loan denominated in any Optional Currency, the
per annum rate equivalent to the Prime Rate for such currency as determined by
the Agent), and (c) in respect of other amounts payable by any Borrower
hereunder (other than interest), a per annum rate that is equal to the sum of
two percent (2%) per annum plus the Floating Rate.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

 

“Permitted Currency” shall mean Dollars and any Optional Currency.

 

“Permitted Liens” shall mean Liens permitted by Section 5.2(e) hereof.

 

“Person” or “person” shall include an individual, a corporation, a limited
liability company, an association, a partnership, a trust or estate, a joint
stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.

 

“Plan” shall mean, with respect to any person, any pension plan (other than a
Multiemployer Plan), in the case of persons existing pursuant to the laws of the
United States or any political subdivision thereof, subject to Title IV of ERISA
or to the minimum funding standards of Section 412 of the Code which has been
established or maintained by such person, any Subsidiary of such person or any
ERISA Affiliate, or by any other person if such person, any Subsidiary of such
person or any ERISA Affiliate could have liability with respect to such pension
plan.

 

“Prime Rate” shall mean the per annum rate announced by the Agent from time to
time as its “prime rate” (it being acknowledged that such announced rate may not
necessarily be the lowest rate charged by the Agent to any of its customers),
which Prime Rate shall change simultaneously with any change in such announced
rate.

 

“Priority Liens” shall mean any Liens on any assets of any Person permitted by
Section 5.2(e)(i) or (ii) if such Lien would rank pari passu with or have
priority over a consensual Lien granted by such Person on such assets.

 

“Prohibited Transaction” shall mean any non-exempt transaction involving any
Plan which is proscribed by Section 406 of ERISA or Section 4975 of the Code.

 

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors.

 

“Regulation T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

 

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“Regulation U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

 

“Regulation X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

 

“Related Agreements” shall mean the Crave Acquisition Agreement and all
agreements and documents executed and delivered in connection therewith.

 

“Related Transactions” shall mean the acquisition of all Capital Stock of Crave
by the Company and all other transactions contemplated by the Related
Agreements.

 

“Reportable Event” shall mean a reportable event as described in Section 4043(b)
of ERISA including those events as to which the thirty (30) day notice period is
waived under Part 2615 of the regulations promulgated by the PBGC under ERISA.

 

“Required Banks” shall mean Banks holding 51% or more of the aggregate principal
amount of the Advances then outstanding (or 51% or more of the Commitments if no
Advances are then outstanding).

 

“Revolving Credit Advance” shall mean any Revolving Credit Loan and any Letter
of Credit Advance.

 

“Revolving Credit Loan” shall mean any borrowing under Section 2.6 evidenced by
the Revolving Credit Notes and made pursuant to Section 2.1.

 

“Revolving Credit Note” shall mean any promissory note of the Borrowers
evidencing the Revolving Credit Loans, in substantially the form annexed hereto
as Exhibit B, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.

 

“Same Day Funds” shall mean (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in any Optional Currency, same day or other funds as may be determined
by the Agent to be customary in the place of disbursement or payment for the
settlement of international banking transactions in such Optional Currency.

 

“Senior Debt” shall mean the sum, without duplication, of all Advances and all
other consolidated unsecured Indebtedness of the Company and its Subsidiaries,
exclusive of any interest rate or currency swap, rate cap or other similar
transaction. All reimbursement obligations, guarantees and other Contingent
Liabilities constituting Senior Debt shall be valued at the maximum amount
possible for such liability.

 

“Subsidiary” of any person shall mean any other person (whether now existing or
hereafter organized or acquired) in which (other than directors’ qualifying
shares required by law) at least a majority

 

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of the securities or other ownership interests of each class having ordinary
voting power or analogous right (other than securities or other ownership
interests which have such power or right only by reason of the happening of a
contingency), at the time as of which any determination is being made, are
owned, beneficially and of record, by such person or by one or more of the other
Subsidiaries of such person or by any combination thereof. Unless otherwise
specified, reference to “Subsidiary” shall mean a Subsidiary of the Company.

 

“Swingline Canadian Bank” shall mean ABN AMRO Bank N.V., Canada Branch (an
Affiliate of the Agent) or any other Applicable Lending Office of the Agent
designated by it from time to time hereunder in writing to the Agent, in its
capacity as the Swingline Bank for making Swingline Canadian Loans.

 

“Swingline Canadian Loan” shall mean a Swingline Loan denominated in Canadian
Dollars or a Swingline Loan otherwise made to a Canadian Borrower.

 

“Swingline Bank” shall mean each of LaSalle, in its capacity as lender of
Swingline Loans hereunder, and the Swingline Canadian Bank, and their respective
successors in such capacity. Each Swingline Bank may, in its discretion, arrange
for one or more Swingline Loans to be made by Applicable Lending Offices of such
Swingline Bank, in which case the term “Swingline Bank” shall include any such
Applicable Lending Office with respect to Swingline Loans made by such
Applicable Lending Office. References herein to the Swingline Bank shall be
deemed references to the Swingline Bank that made the relevant Swingline Loan.

 

“Swingline Loan” shall mean any loan to a Borrower evidenced by a Swingline Note
and made by a Swingline Bank pursuant to Section 2.1(b).

 

“Swingline Note” shall mean any promissory note of a Borrower evidencing the
Swingline Loans in substantially the form of Exhibit C hereto, as amended or
modified from time to time and together with any promissory note or notes issued
in exchange or replacement therefor.

 

“Termination Date” shall mean the earlier to occur of (a) November __, 2010 and
(b) the date on which the Commitments shall be terminated pursuant to
Section 2.4 or 6.2.

 

“Total Debt” shall mean, as of any date, all Indebtedness of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles. All reimbursement obligations, guarantees and
other Contingent Liabilities constituting Total Debt shall be valued at the
maximum amount possible for such liability.

 

“United Kingdom” shall mean the United Kingdom of Great Britain and Northern
Ireland.

 

“Unfunded Benefit Liabilities” shall mean, with respect to any Plan as of any
date, the amount of the unfunded benefit liabilities determined in accordance
with Section 4001(a)(18) of ERISA.

 

1.2 Other Definitions; Rules of Construction. As used herein, the terms “Agent”,
“Banks”, “Company”, “Borrowing Subsidiary”, “Borrowing Subsidiaries” and “this
Agreement” shall have the respective meanings ascribed thereto in the
introductory paragraph of this Agreement. Such terms,

 

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together with the other terms defined in Section 1.1, shall include both the
singular and the plural forms thereof and shall be construed accordingly. Use of
the terms “herein”, “hereof”, and “hereunder” shall be deemed references to this
Agreement in its entirety and not to the Section or clause in which such term
appears. References to “Sections” and “subsections” shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. All computations required hereunder and all financial terms used
herein shall be made or construed in accordance with Generally Accepted
Accounting Principles unless such principles are inconsistent with the express
requirements of this Agreement; provided that, if the Borrowers notify the Agent
that the Borrowers wish to amend the financial covenants in Article V and the
definition of Applicable Margin, including defined terms used therein, to
eliminate the effect of any change in Generally Accepted Accounting Principles
in the operation of such covenants or definition (or if the Agent notifies the
Borrowers that the Required Banks wish to amend Article V for such purpose),
then the Borrowers’ compliance with such covenants and the determination of the
Applicable Margin shall be determined on the basis of Generally Accepted
Accounting Principles in effect immediately before the relevant change in
Generally Accepted Accounting Principles became effective, until either such
notice is withdrawn or such covenant or definition is amended in a manner
satisfactory to the Borrowers and the Required Banks. Notwithstanding anything
herein, in any financial statements of the Company or in Generally Accepted
Accounting Principles to the contrary, for purposes of calculating and
determining compliance with the financial covenants in Article V and determining
the Applicable Margin, including defined terms used therein, any Acquisitions
made by the Company or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
period for which such financial covenants and the Applicable Margin were
calculated shall be deemed to have occurred on the first day of the relevant
period for which such financial covenants and the Applicable Margin were
calculated on a pro forma basis reasonably acceptable to the Agent.

 

ARTICLE II.

THE COMMITMENTS, THE SWINGLINE FACILITY AND THE ADVANCES

 

2.1 Commitments of the Banks and the Swingline Facility. (a) Each Bank agrees,
for itself only, subject to the terms and conditions of this Agreement, to make
Revolving Credit Loans to the Borrowers pursuant to Section 2.6 and Section 3.3
and to participate in Letter of Credit Advances to the Borrowers pursuant to
Section 2.6 from time to time from and including the Effective Date to but
excluding the Termination Date not to exceed an aggregate principal amount at
any time outstanding the amount of its respective Commitment as of the date any
such Advance is made; provided, however, that (i) the aggregate principal amount
of Letter of Credit Advances outstanding at any time shall not exceed
$25,000,000, (ii) the Equivalent in Dollars of the aggregate principal amount of
all Advances in Optional Currencies (other than Swingline Canadian Loans)
outstanding at any time shall not exceed $50,000,000, and (iii) the Equivalent
in Dollars of the aggregate principal amount of all Advances outstanding at any
time shall not exceed the aggregate amount of the Commitments; and the Borrowers
will not be entitled to obtain any Advance if each such condition, in addition
to other conditions contained herein, is not satisfied both before and after
giving effect to such Advance. Notwithstanding anything herein to the contrary,
Advances may only be used for necessary working capital requirements and general
corporate purposes of the Borrowers, to refinance the debt described in
Section 2.7(g), for acquisitions and capital expenditures by the Borrowers to
the extent permitted hereunder and for dividends and stock redemptions to the
extent permitted hereunder.

 

(b) Swingline Loans. (i) Each Borrower may request a Swingline Bank to make, and
each Swingline Bank may, in its sole discretion, make Swingline Loans, to such
Borrower

 

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from time to time on any Business Day during the period from the Effective Date
until the Termination Date in an aggregate principal amount not to exceed at any
time the lesser of (A) the Equivalent in Dollars of $20,000,000 for all
Swingline Loans other than Swingline Canadian Loans and the Equivalent in
Dollars of $10,000,000 for all Swingline Canadian Loans and (B) the aggregate
amount of Advances that could be but is not borrowed as of such date. Any
Swingline Loan may be made in any Permitted Currency agreed to by the Swingline
Bank making such Swingline Loan. Each Bank’s Commitment shall be deemed utilized
by an amount equal to such Bank’s pro rata share (based on such Bank’s
Commitment) of each Swingline Loan for purposes of determining the amount of
Advances required to be made by such Bank. Swingline Loans shall bear interest
at a rate agreed to by the applicable Swingline Bank and Borrower and for such
periods and subject to such other terms as may be agreed to by the applicable
Swingline Bank and Borrower, provided that Swingline Loans shall bear interest
at the Floating Rate at any time the Swingline Loans are refunded by Floating
Rate Loans or the Banks are required to purchase participations therein under
Section 2.1(b)(iii). Notwithstanding the foregoing or anything else herein to
the contrary, (x) the Swingline Canadian Bank may only make Swingline Canadian
Loans and shall not make any other Swingline Loans, and any other Swingline Bank
may not make Swingline Canadian Loans and (y) the Canadian Borrower may only
obtain Swingline Canadian Loans and may not obtain any other Loans, and no
Borrower other than the Canadian Borrower may borrow Swingline Canadian Loans.
Within the limits set forth above, so long as the a Swingline Bank, in its sole
discretion, elects to make Swingline Loans requested of it, the Borrowers may
borrow and reborrow under this Section 2.1(b)(i).

 

(ii) Each Swingline Bank may at any time in its sole and absolute discretion
require that any Swingline Loan to any Borrower be refunded by a Floating Rate
Borrowing from the Banks, and upon written notice thereof by a Swingline Bank to
the Banks and such Borrower, such Borrower shall be deemed to have requested a
Floating Rate Borrowing in an amount equal to the amount of such Swingline Loan,
and such Floating Rate Borrowing shall be made to refund such Swingline Loan.
Each such Bank shall be absolutely and unconditionally obligated to fund its pro
rata share (based on such Bank’s Commitment) of such Floating Rate Borrowing or,
if applicable, purchase a participating interest in the Swingline Loans pursuant
to Section 2.1(b)(iii) and such obligation shall not be affected by any
circumstance, including, without limitation, (A) any set-off, counterclaim,
recoupment, defense or other right which such Bank has or may have against any
Swingline Bank, Company or any of its Subsidiaries or anyone else for any reason
whatsoever; (B) the occurrence or continuance of a Default or an Event of
Default, subject to Section 2.1(b)(iii); (C) any adverse change in the condition
(financial or otherwise) of the Company or any of its Subsidiaries; (D) any
breach of this Agreement or any other agreement by any other Bank, any Borrower
or any Guarantor; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing (including without limitation the
Company’s failure to satisfy any conditions contained in Article II or any other
provision of this Agreement).

 

(iii) If Floating Rate Loans may not be made by the Banks as described in
Section 2.1(b)(ii) due to any Event of Default pursuant to Section 6.1(i) or if
the Banks are otherwise legally prohibited from making Floating Rate Loans or in
the case of a Swingline Canadian Loan, then effective on the date each such
Floating Rate Loan would otherwise have been made, each Bank severally agrees
that it shall unconditionally and irrevocably, without regard to the occurrence
of any Default or Event of Default or any other circumstances, in lieu of deemed
disbursement of Loans, to the extent of such Bank’s Commitment, purchase a
participating interest in the Swingline Loans by paying its participation
percentage thereof. Each such Bank will immediately transfer to the applicable

 

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Swingline Bank, in Same Day Funds, the amount of its participation. After such
payment to the applicable Swingline Bank, each Bank shall share on a pro rata
basis (calculated by reference to its Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any such Bank
shall not have so made the amount of such participating interest available to
the applicable Swingline Bank, such Bank and applicable Borrower severally agree
to pay to the applicable Swingline Bank forthwith on demand such amount together
with interest thereon, for each day from the date of demand by the applicable
Swingline Bank until the date such amount is paid to the applicable Swingline
Bank, at (A) in the case of a Borrower, the interest rate specified above and
(B) in the case of such Bank, the Federal Funds Rate for the first five days
after the date of demand by the applicable Swingline Bank and thereafter at the
interest rate specified above. The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the applicable Borrower of any
default in the payment thereof and the applicable Borrower shall reimburse each
Bank for any amounts that may be due under Section 3.5, 3.7, 3.9 or any other
term of this Agreement.

 

(iv) A Borrower shall give the applicable Swingline Bank notice of its request
for each Swingline Loan in such form requested by such Swingline Bank and by
such time as required by such Swingline Bank. Subject to the terms and
conditions of this Agreement, the proceeds of each such requested Swingline Loan
shall be made available to the Borrower requesting such Loan by depositing the
proceeds thereof, in Same Day Funds, in an account maintained and designated by
such Borrower at such Swingline Bank or in such other place specified by such
Swingline Bank.

 

(v) The Agent shall determine the procedures to be followed by the Swingline
Banks to ensure that the Equivalent in Dollars of the aggregate principal amount
of the Swingline Loans does not exceed the amounts permitted by
Section 2.2(b)(i) at the time any Swingline Loan is made and to ensure that the
amount of Advances made does not exceed the amounts permitted by Section 2.1(a),
and each Swingline Bank and the other parties hereto agrees to abide by such
procedures. If the Swingline Loans at any time exceed any of the amounts
permitted by Section 2.1(a) or 2.2(b)(i), the relevant Borrower or Borrowers
shall promptly prepay the relevant Swingline Loans by the amount of such excess.

 

(c) Amendment and Restatement. This Agreement amends and restates the Existing
Credit Agreement as of the Effective Date. All Advances and Letters of Credit
outstanding under the Existing Credit Agreement shall constitute Advances and
Letters of Credit under this Agreement and all fees and other obligations
accrued under the Existing Credit Agreement will continue to accrue and be paid
under this Agreement under the terms of this Agreement. The Advances and other
obligations pursuant hereto are issued in exchange and replacement for the
Advances and other obligations under the Existing Credit Agreement, shall not be
a novation or satisfaction thereof and shall be entitled to the same collateral
with the same priority. The Banks acknowledge and agree that such transfers of
rights and interests under the Loan Documents shall take place among the Banks
as of the Effective Date to give effect to Commitments set forth on the
signature pages hereof.

 

2.2 Minimum Amounts; Limitation on Number of Borrowings. Except for
(a) Borrowings and conversions thereof which exhaust the entire remaining amount
of the Commitments, and (b) conversions or payments required pursuant to
Section 3.1 or Section 3.8, each Revolving Credit Loan and each continuation or
conversion pursuant to Section 2.9 and each prepayment thereof shall be in a
minimum amount of $1,000,000 and in integral multiples of $100,000 in the case
of Floating Rate Loans, shall be in the minimum amount of $100,000 in the case
of Letter of Credit Advances and shall be in the

 

17

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minimum amount of $5,000,000 and in integral multiples of $1,000,000 (or the
approximate Equivalent thereof in any applicable Optional Currency) in the case
of Eurocurrency Rate Loans or such lesser amount agreed to by the Agent.
Notwithstanding anything herein to the contrary, (i) the Borrowers shall not be
permitted to request (x) that any Revolving Credit Loan be denominated in any
currency other than a Permitted Currency or (y) that any Revolving Credit Loan
other than a Eurocurrency Rate Loan be denominated in a currency other than
Dollars and (ii) no more than ten Interest Periods will be allowed to exist at
any time with respect to all Eurocurrency Rate Loans outstanding hereunder.

 

2.3 Effect on Commitments. Notwithstanding anything in this Agreement to the
contrary, the sum of the aggregate principal amount of all Revolving Credit
Loans plus all Letter of Credit Advances (being the maximum amount available to
be drawn under the related Letters of Credit plus the amount of any draws under
Letters of Credit that have not been reimbursed) and all Swingline Loans shall
not at any time exceed the aggregate amount of the Commitments of all Banks.

 

2.4 Termination and Reduction of Commitments. (a) The aggregate Commitments
shall reduce (and each Commitment shall reduce on a pro rata basis)
automatically by (i) $10,000,000 on the second anniversary of the Effective
Date, (ii) $20,000,000 on the third anniversary of the Effective Date, and
(iii) $20,000,000 (for an aggregate mandatory reduction of $50,000,000 for all
three such reductions) on the fourth anniversary of the Effective Date.

 

(b) The Company shall have the right to terminate or reduce the Commitments at
any time and from time to time at its option, provided that (i) the Company
shall give five days’ prior written notice of such termination or reduction to
the Agent specifying the amount and effective date thereof, (ii) each partial
reduction of the Commitments shall be in a minimum amount of $10,000,000 and in
an integral multiple thereof and shall reduce the Commitments of all of the
Banks proportionately in accordance with the respective Commitment amounts for
each such Bank, (iii) no such termination or reduction shall be permitted with
respect to any portion of the Commitments as to which a request for a Borrowing
pursuant to Section 2.6 is then pending and (iv) the Commitments may not be
terminated if any Advances are then outstanding and may not be reduced below the
principal amount of Advances then outstanding. The Commitments or any portion
thereof terminated or reduced pursuant to this Section 2.4(a), whether optional
or mandatory, may not be reinstated. The Borrowers shall immediately prepay the
Loans to the extent they exceed the reduced aggregate Commitments pursuant
hereto, and any reduction hereunder shall reduce the Commitment amount of each
Bank proportionately in accordance with the respective Commitment amounts for
each such Bank.

 

2.5 Fees. (a) The Borrowers agree to pay to the Banks a facility fee on the
amount of the Commitments, whether used or unused, for the period from the
Effective Date to but excluding the Termination Date, at a rate equal to the
Applicable Margin. Accrued facility fees shall be payable quarterly in arrears
on the last Business Day of each March, June, September and December, commencing
with the last Business Day of December, 2005, and on the Termination Date.

 

(b) On or before the date of issuance of any Letter of Credit, the Borrowers
agree (i) to pay to the Banks a fee at a rate equal to the Applicable Margin per
annum, of the maximum amount available to be drawn from time to time under such
Letter of Credit for the period from and including the date of issuance of such
Letter of Credit to and including the stated expiry date of such Letter of
Credit, which fees shall be payable annually in advance (with the first such
annual payment payable on the date of issuance of such Letter of Credit and each
twelve months thereafter if such Letter of Credit is renewed)

 

18

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based upon the Applicable Margin at the time each such payment is made, and
(ii) to pay an additional fee to the Agent for its own account computed at the
rate of 0.125% per annum of such maximum amount for such period. If such Letter
of Credit does not remain outstanding through its stated expiry date, the Banks
will refund a pro rata portion of any such fees to the extent paid in advance
for the period cancelled. The Borrowers further agree to pay to the Agent, on
demand, such other customary administrative fees, charges and expenses of the
Agent in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.

 

(c) The Borrowers agree to pay to the Agent an agency fee for its services as
Agent under this Agreement in such amounts as may from time to time be agreed
upon by the Borrowers and the Agent.

 

2.6 Disbursement of Advances. (a) Any Borrower shall give the Agent notice of
its request for each Advance (excluding Swingline Loans) in substantially the
form of Exhibit D hereto not later than 10:00 a.m. Detroit time (i) three
Eurocurrency Business Days prior to the date such Advance is requested to be
made if such Borrowing is to be made as a Eurocurrency Rate Loan denominated in
Dollars and five Eurocurrency Business Days prior to the date such Advance is
requested to be made if such Borrowing is to be made as a Eurocurrency Rate Loan
denominated in any Optional Currency and (ii) five Business Days prior to the
date any Letter of Credit Advance is requested to be made and (iii) on the date
such Revolving Credit Loan is requested to be made in all other cases, which
notice shall specify whether a Eurocurrency Rate Loan, Floating Rate Loan or a
Letter of Credit Advance is requested and, in the case of each requested
Eurocurrency Rate Loan, the Interest Period to be initially applicable to such
Loan and the Permitted Currency in which such Loan or Letter of Credit Advance
is to be denominated. The Agent, on the same day any such notice is given, shall
provide notice of each such requested Revolving Credit Loan (excluding Swingline
Loans) to each Bank. Subject to the terms and conditions of this Agreement, the
proceeds of each such requested Revolving Credit Loan shall be made available to
the Borrower requesting such Loan by depositing the proceeds thereof, in Same
Day Funds, in the case of any Revolving Credit Loan denominated in Dollars in an
account maintained and designated by such Borrower at the principal office of
the Agent, and, in all other cases, in an account maintained and designated by
such Borrower at a bank acceptable to the Agent in the principal financial
center of the country issuing the Optional Currency in which such Loan is
denominated or in such other place specified by the Agent or such other office
acceptable to the Agent. Subject to the terms and conditions of this Agreement,
the Agent shall, on the date any Letter of Credit Advance is requested to be
made, issue the related Letter of Credit on behalf of the Banks for the account
of the Borrower requesting such Letter of Credit. If legally permissible, the
Agent agrees to use ABN AMRO Bank N.V., Canada Branch as its Applicable Lending
Office for issuing Letters of Credit for the account of the Canadian Borrower.
Notwithstanding anything herein to the contrary, the Agent may decline to issue
any requested Letter of Credit on the basis that the beneficiary, the purpose of
issuance or the terms or the conditions of drawing are unacceptable to it based
upon any legal or ethical concerns in its reasonable discretion.

 

(b) Each Bank, on the date any Revolving Credit Loan is requested to be made,
shall make its pro rata share of such Revolving Credit Loan available in Same
Day Funds for disbursement to the Borrower requesting such Loan pursuant to the
terms and conditions of this Agreement, in the case of any Revolving Credit Loan
denominated in Dollars, at the principal office of the Agent and, in all other
cases, to the account of the Agent at its designated Applicable Lending Office
for such Loan or at such other place specified by the Agent. Unless the Agent
shall have received written notice from any Bank

 

19

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prior to the date such Revolving Credit Loan is requested to be made under this
Section 2.6 that such Bank will not make available to the Agent such Bank’s pro
rata portion of such Loan, the Agent may assume that such Bank has made such
portion available to the Agent on the date such Loan is requested to be made in
accordance with this Section 2.6. If and to the extent such Bank shall not have
so made such pro rata portion available to the Agent, the Agent may (but shall
not be obligated to) make such amount available to such Borrower, and such Bank
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date such amount is made available to
such Borrower by the Agent until the date such amount is repaid to the Agent, at
a rate per annum equal to the Federal Funds Rate (or, in the case of any
Eurocurrency Rate Loan denominated in any Optional Currency, the per annum rate
equivalent to the Federal Funds Rate for such currency as determined by the
Agent) then in effect for the first five days after the date of demand by the
Agent and thereafter at the interest rate applicable to such Loan. If such Bank
shall pay such amount to the Agent together with interest, such amount so paid
shall constitute a Revolving Credit Loan by such Bank as part of the related
Borrowing for purposes of this Agreement. The failure of any Bank to make its
pro rata portion of any such Borrowing available to the Agent shall not relieve
any other Bank of its obligation to make available its pro rata portion of such
Loan on the date such Loan is requested to be made, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent on the date of any such Loan.

 

(c) All Revolving Credit Loans shall be evidenced by the Revolving Credit Notes
and all Swingline Loans shall be evidenced by the Swingline Note, and all such
Loans shall be due and payable and bear interest as provided in Article III.
Each Bank is hereby authorized by the Borrowers to record on the schedule
attached to the Notes, or in its books and records, the date, amount and type of
each Loan and the duration of the related Interest Period (if applicable), the
amount of each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or books and records,
as the case may be, shall constitute prima facie evidence of the information so
recorded, provided, however, that failure of any Bank to record, or any error in
recording, any such information shall not relieve the Borrowers of their
obligation to repay the outstanding principal amount of the Loans, all accrued
interest thereon and other amounts payable with respect thereto in accordance
with the terms of the Notes and this Agreement. Subject to the terms and
conditions of this Agreement, each Borrower may borrow Revolving Credit Loans
and Swingline Loans under this Section 2.6 and under Section 3.3, prepay
Revolving Credit Loans and Swingline Loans pursuant to Section 3.1 and reborrow
Revolving Credit Loans and Swingline Loans under this Section 2.6 and under
Section 3.3.

 

(d) Nothing in this Agreement shall be construed to require or authorize any
Bank to issue any Letter of Credit, it being recognized that the Agent has the
sole obligation under this Agreement to issue Letters of Credit on behalf of the
Banks, and the Commitment of each Bank with respect to Letter of Credit Advances
is expressly conditioned upon the Agent’s performance of such obligations. Upon
such issuance by the Agent, each Bank shall automatically acquire a pro rata
risk participation interest in such Letter of Credit Advance based on the amount
of its respective Commitment. If the Agent shall honor a draft or other demand
for payment presented or made under any Letter of Credit, the Agent shall
provide notice thereof to each Bank on the date such draft or demand is honored
unless a Borrower shall have satisfied its reimbursement obligation under
Section 3.3 by payment to the Agent on such date. Each Bank, on such date, shall
make its pro rata share of the amount paid by the Agent available in Same Day
Funds at the principal office of the Agent for the account of the Agent. If and
to the extent such Bank shall not have made such pro rata portion available to
the Agent, such Bank and the Borrowers severally agree to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount was paid by the Agent until such amount is so made
available to the Agent at a per annum

 

20

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rate equal to (i) in the case of the Borrowers, the interest rate then
applicable to Floating Rate Loans and (ii) in the case of such Bank, the Federal
Funds Rate for the first five days after the date of demand by the Agent and
thereafter at the interest rate then applicable to Floating Rate Loans. If such
Bank shall pay such amount to the Agent together with such interest, such amount
so paid shall constitute a Revolving Credit Loan by such Bank as part of the
Revolving Credit Borrowing disbursed in respect of the reimbursement obligation
of the Company under Section 3.3 for purposes of this Agreement. The failure of
any Bank to make its pro rata portion of any such amount paid by the Agent
available to the Agent shall not relieve any other Bank of its obligation to
make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.

 

2.7 Conditions for First Disbursement. The obligation of each Bank to make its
first Advance hereunder is subject to receipt by each Bank and the Agent of the
following documents and completion of the following matters, in form and
substance reasonably satisfactory to each Bank and the Agent; provided, however,
that, subject to the other terms and conditions of this Agreement, the Banks
shall be obligated to make Advances to the Company upon receipt of the following
documents and completion of the following matters with respect to the Company
and the Banks shall be obligated to make Advances to each other Borrower upon
delivery of such documents and completion of all such matters with respect to
such Borrower:

 

(a) Charter Documents. Certificates of recent date of the appropriate authority
or official of each Borrower’s and Guarantor’s respective jurisdiction of
incorporation or organization listing all charter documents of each Borrower and
Guarantor, on file in that office and certifying as to the good standing and
corporate existence of each Borrower and Guarantor, together with copies of such
charter documents of each Borrower and Guarantor, certified as of a recent date
by such authority or official and certified as true and correct as of the
Effective Date by a duly authorized officer of each Borrower and Guarantor,
respectively;

 

(b) By-Laws and Corporate Authorizations. Copies of the by-laws of each Borrower
and Guarantor together with all authorizing resolutions and evidence of other
corporate action taken by each Borrower and Guarantor to authorize the
execution, delivery and performance by each Borrower and Guarantor of the Loan
Documents to which it is a party and the consummation by each Borrower and
Guarantor of the transactions contemplated hereby, certified as true and correct
as of the Effective Date by a duly authorized officer of each Borrower and
Guarantor, respectively;

 

(c) Incumbency Certificate. Certificates of incumbency of each Borrower and
Guarantor containing, and attesting to the genuineness of, the signatures of
those officers authorized to act on behalf of such Borrower and Guarantor in
connection with the Loan Documents and the consummation by such Borrower and
Guarantor of the transactions contemplated hereby, certified as true and correct
as of the Effective Date by a duly authorized officer of each Borrower and
Guarantor;

 

(d) Notes and Guaranties. The Notes duly executed on behalf of the Borrowers and
the Guaranty duly executed on behalf of the Guarantors;

 

(e) Legal Opinion. The favorable written opinion of counsels for the Borrowers
and the Guarantors (other than any Guarantors that are Foreign Subsidiaries)
addressing the opinions in the form of Exhibit E attached hereto and a favorable
written opinion of such counsels for any Borrower or Guarantor that is a Foreign
Subsidiary as may be required by the Agent;

 

21

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(f) Consents, Approvals, Etc. Copies of all governmental and nongovernmental
consents, approvals, authorizations, declarations, registrations or filings, if
any, required on the part of any Borrower or Guarantor in connection with the
execution, delivery and performance of the Loan Documents, the Related
Transactions or any other transactions contemplated hereby or as a condition to
the legality, validity or enforceability of the Loan Documents, certified as
true and correct and in full force and effect as of the Effective Date by a duly
authorized officer of each Borrower or Guarantor, or, if none is required, a
certificate of such officer to that effect;

 

(g) Fees. The Company shall have paid the Agent and the Banks all fees owing as
of the Effective Date;

 

(h) Financial Statements. The Agent shall have received three year projected
income statements, balance sheets and cash flow statements giving effect to the
Related Transaction and such other financial statements as required by the
Agent, in each case in form and substance satisfactory to the Agent and the
Banks;

 

(i) Solvency Certificate. A solvency and compliance certificate, in form and
substance satisfactory to the Agent, duly executed on behalf of the Borrowers;

 

(j) Closing Certificate, Consents and Permits. A certificate executed by an
officer of the Company on behalf of the Company certifying (i) the matters set
forth in Section 2.8 as of the Effective Date and (ii) the occurrence of the
closing of the Related Transactions and that such closing has been consummated
in accordance with the terms of the Related Agreements without waiver of any
material condition thereof and as to such other matters in connection therewith
requested by the Agent; together with evidence that (x) all necessary
governmental, regulatory, creditor, shareholder, partner and other material
consents, approvals and exemptions required to be obtained by the Company in
connection with the Related Transactions have been duly obtained and are in full
force and effect and (y) all material permits necessary for the operation of any
business(es) acquired in connection with the Related Transactions have been
obtained;

 

(k) Search Results; Lien Terminations. Certified copies of Uniform Commercial
Code and Personal Property Security Act search reports dated a date reasonably
near to the Effective Date, listing all effective financing statements which
name any Loan Party or Crave or any of its Subsidiaries (under their present
names and any previous names) as debtors, together with (i) copies of such
financing statements, (b) payoff letters evidencing repayment in full of all
Indebtedness to be repaid, the termination of all agreements relating thereto
and the release of all Liens granted in connection therewith, with Uniform
Commercial Code or other appropriate termination statements and documents
effective to evidence the foregoing and (c) such other Uniform Commercial Code
termination statements as the Agent may reasonably request;

 

(l) Pro Forma and Due Diligence. A consolidated pro forma balance sheet of the
Company as at July 30, 2005, adjusted to give effect to the consummation of the
Related Transactions and the financings contemplated hereby as if such
transactions had occurred on such date, consistent in all material respects with
the sources and uses of cash as previously described to the Bank and the
forecasts previously provided to the Banks and the completion of such due
diligence with respect to Crave and its Subsidiaries and the Related
Transactions, all of which shall be satisfactory to the Banks;

 

22

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(m) Crave Financials. The Agent shall have received (i) audited consolidated
financial statements for Crave and its Subsidiaries for the fiscal years ending
2002, 2003 and 2004 and the Company and its Subsidiaries for the fiscal years
ending 2003, 2004 and 2005 and (ii) unaudited interim consolidated financial
statements for Crave, the Company and its Subsidiaries for the most recent
quarterly period ended after the latest fiscal year referred to in clause
(i) above and for the monthly period after the most recent quarterly period
referred to above (including year to date and prior year comparisons);

 

(n) Related Agreements. The Agent shall have received all Related Agreements and
shall be satisfied with the form, structure and terms of the Related
Transactions and the legal and regulatory aspects of the Related Transactions
and all other legal (including tax implications), financial and regulatory
matters relating to the Related Transactions; and

 

(o) Miscellaneous. The Agent shall have received such other agreements and
documents and satisfied such other conditions as may be reasonably requested by
the Agent, including without limitation a USA Patriot Act Certificate and the
Agent’s reasonable satisfaction with the insurance program maintained by the
Company and its Subsidiaries and the payment of all fees and expenses due to the
Agent.

 

2.8 Further Conditions for Disbursement. The obligation of each Bank to make any
Advance (including its first Advance), or any continuation or conversion under
Section 2.9, is further subject to the satisfaction of the following conditions
precedent:

 

(a) The representations and warranties contained in Article IV hereof and in any
other Loan Document shall be true and correct in all material respects on and as
of the date such Advance is made, continued or converted (both before and after
such Advance is made, continued or converted) as if such representations and
warranties were made on and as of such date;

 

(b) No Event of Default and no Default shall exist or shall have occurred and be
continuing on the date such Advance is made, continued or converted (whether
before or after such Advance is made, continued or converted); and

 

(c) In the case of any Letter of Credit Advance, the Borrower requesting such
Letter of Credit Advance shall have delivered to the Agent an application for
the related Letter of Credit and other related documentation requested by and
acceptable to the Agent appropriately completed and duly executed on behalf of
such Borrower.

 

Each Borrower shall be deemed to have made a representation and warranty to the
Banks at the time of the making of, and the continuation or conversion of, each
Advance to the effects set forth in clauses (a) and (b) of this Section 2.8. For
purposes of this Section 2.8, the representations and warranties contained in
Section 4.6 hereof shall be deemed made with respect to the most recent
financial statements delivered pursuant to Section 5.1(d)(iii).

 

2.9 Subsequent Elections as to Borrowings. Any Borrower may elect (a) to
continue a Eurocurrency Rate Borrowing of one type, or a portion thereof, as a
Eurocurrency Rate Borrowing of the

 

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then existing type, or (b) may elect to convert a Eurocurrency Rate Borrowing,
or a portion thereof, to a Borrowing of another type or (c) elect to convert a
Floating Rate Borrowing, or a portion thereof, to a Eurocurrency Rate Borrowing,
in each case by giving notice thereof to the Agent in substantially the form of
Exhibit F hereto not later than 10:00 a.m. Detroit time (i) three Eurocurrency
Business Days prior to the date any such continuation of or conversion to a
Eurocurrency Rate Borrowing denominated in Dollars is to be effective, (ii) five
Eurocurrency Business Days prior to the date any such continuation of or
conversion to a Eurocurrency Rate Borrowing denominated in any Optional Currency
is to be effective and (iii) the date such continuation or conversion is to be
effective in all other cases, provided that an outstanding Eurocurrency Rate
Borrowing may only be converted on the last day of the then current Interest
Period with respect to such Borrowing, and provided, further, if a continuation
of a Borrowing as, or a conversion of a Borrowing to, a Eurocurrency Rate
Borrowing is requested, such notice shall also specify the Interest Period to be
applicable thereto upon such continuation or conversion and provided, further,
that Loans may not be converted from one Permitted Currency to a different
Permitted Currency. The Agent, on the day any such notice is given, shall
provide notice of such election to the Banks. If any Borrower shall not timely
deliver such a notice with respect to any outstanding Eurocurrency Rate
Borrowing, the Borrower shall be deemed to have elected to convert such
Eurocurrency Rate Borrowing to a Floating Rate Borrowing on the last day of the
then current Interest Period with respect to such Borrowing, provided that such
Loans owing in any Optional Currency shall not be automatically converted but
shall be due and payable at the end of the relevant Interest Period.

 

2.10 Limitation of Requests and Elections. Notwithstanding any other provision
of this Agreement to the contrary, if, upon receiving a request for a
Eurocurrency Rate Borrowing pursuant to Section 2.6, or a request for a
continuation of a Eurocurrency Rate Borrowing as a Eurocurrency Rate Borrowing
of the then existing type, or a request for conversion of a Eurocurrency Rate
Borrowing of one type to a Eurocurrency Rate Borrowing of another type, or a
request for a conversion of a Floating Rate Borrowing to a Eurocurrency Rate
Borrowing pursuant to Section 2.9, (a) in the case of any Eurocurrency Rate
Borrowing, deposits in the relevant Permitted Currency for periods comparable to
the Interest Period elected by the Borrower are not available to any Bank in the
relevant interbank or secondary market and such Bank has provided to the Agent
and the Borrowers a certificate prepared in good faith to that effect, or
(b) any Bank reasonably determines that the Eurocurrency Base Rate will not
adequately and fairly reflect the cost to such Bank of making, funding or
maintaining the related Eurocurrency Rate Loan and such Bank has provided to the
Agent and the Borrowers a certificate prepared in good faith to that effect, or
(c) by reason of national or international financial, political or economic
conditions or by reason of any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank with any
directive of such authority (whether or not having the force of law), including
without limitation exchange controls, it is impracticable, unlawful or
impossible for any Bank (i) to make or fund the relevant Eurocurrency Rate
Borrowing or (ii) to continue such Eurocurrency Rate Borrowing as a Eurocurrency
Rate Borrowing of the then existing type or (iii) to convert a Loan to such a
Eurocurrency Rate Loan, and such Bank has provided to the Agent and the
Borrowers a certificate prepared in good faith to that effect, then the
Borrowers shall not be entitled, so long as such circumstances continue, to
request a Eurocurrency Rate Borrowing of the affected type pursuant to
Section 2.6 or a continuation of or conversion to a Eurocurrency Rate Borrowing
of the affected type pursuant to Section 2.9. In the event that such
circumstances no longer exist, the Banks shall again honor requests, subject to
this Agreement, for Eurocurrency Rate Borrowings of the affected type pursuant
to Section 2.6, and requests for continuations of and conversions to
Eurocurrency Rate Borrowings of the affected type pursuant to Section 2.9.

 

24

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ARTICLE III.

PAYMENTS AND PREPAYMENTS

 

3.1 Principal Payments. (a) Unless earlier payment is required under this
Agreement, the Borrowers shall pay to the Banks on the Termination Date the
entire outstanding principal amount of the Advances.

 

(b) In addition to all other payments required hereunder, as of the last
Business Day of each month, as of the date of any mandatory reduction in the
Commitments under Section 2.4(a) or any other reduction in the Commitments and
as of any other date requested by the Agent, if the Equivalent in Dollars of the
outstanding principal amount of all Advances exceeds the aggregate amount of the
Commitments, the Borrowers shall prepay the Advances, in such order as
determined by the Borrowers, in an amount such that the Equivalent in Dollars of
the outstanding principal amount of all Advances does not exceed the aggregate
amount of the Commitments as of such date, together with all amounts owing to
the Banks under Section 3.9 in connection therewith, if any.

 

(c) In addition to all other payments required hereunder, as of the last
Business Day of each month and as of any other date requested by the Agent, if
the Equivalent in Dollars of the outstanding principal amount of all Advances in
Optional Currencies (other than Swingline Canadian Loans) exceeds $50,000,000,
the Borrowers shall prepay the Advances, in such order as determined by the
Borrowers, in an amount such that the Equivalent in Dollars of the outstanding
principal amount of all Advances in Optional Currencies (other than Swingline
Canadian Loans) does not exceed $50,000,000 as of such date, together with all
amounts owing to the Banks under Section 3.9 in connection therewith, if any.

 

(d) In addition to all other payments required hereunder, as of the last
Business Day of each month and as of any other date requested by the Agent, if
the Equivalent in Dollars of the outstanding principal amount of all Swingline
Canadian Loans exceeds $10,000,000, the Canadian Borrower shall prepay the
Swingline Canadian Loans in an amount such that the Equivalent in Dollars of the
outstanding principal amount of all Swingline Canadian Loans does not exceed
$10,000,000 as of such date, together with all amounts owing to the Banks under
Section 3.9 in connection therewith, if any.

 

(e) In addition to all other payments required hereunder, as of the last
Business Day of each month and as of any other date requested by the Agent, if
the Equivalent in Dollars of the outstanding principal amount of all Swingline
Loans (other than Swingline Canadian Loans) exceeds $20,000,000, the Borrowers
shall prepay the Swingline Loans in an amount such that the Equivalent in
Dollars of the outstanding principal amount of all Swingline Loans (other than
Swingline Canadian Loans) does not exceed $20,000,000 as of such date, together
with all amounts owing to the Banks under Section 3.9 in connection therewith,
if any.

 

(f) The Borrowers may at any time and from time to time prepay all or a portion
of the Loans without premium or penalty, provided that (i) a Borrower may not
prepay any portion of any Loan as to which an election for continuation of or
conversion to a Eurocurrency Rate Loan is pending pursuant to Section 2.9,
(ii) a Borrower may not prepay any portion of a Swingline Loan as to a fixed
rate is payable for a certain period of time prior to end of such time period,
(iii) unless a Borrower

 

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pays all amounts required pursuant to Section 3.9, any Eurocurrency Rate Loan
may only be prepaid on the last day of the then current Interest Period with
respect to such Loan and (iv) such prepayment shall only be permitted if a
Borrower shall have given not less than one Business Days’ notice thereof with
respect to prepayment of Floating Rate Loans and three Eurocurrency Business
Days’ notice thereof with respect to prepayment of Eurocurrency Rate Loan, such
notice specifying the Loan or portion thereof to be so prepaid and shall have
paid to the Banks, together with such prepayment of principal, all accrued
interest to the date of payment on such Loan or portion thereof so prepaid and
all amounts owing to the Banks under Section 3.9 in connection with such
prepayment. Upon the giving of such notice, the aggregate principal amount of
such Loan or portion thereof so specified in such notice, together with such
accrued interest and other amounts, shall become due and payable on the
specified date.

 

(g) If, pursuant to Section 2.9, a Loan, or portion thereof, is continued, such
Loan or portion thereof shall be repaid on the last day of the related Interest
Period in the Permitted Currency in which such Loan is then denominated and the
Agent shall readvance to the Company the same amount of such Permitted Currency
as has been so repaid. For purposes of effecting the repayment required by this
Section 3.1(e), the Agent shall apply the proceeds of such readvance toward the
repayment of such Loan or portion thereof on the last day of the related
Interest Period. On the last day of such Interest Period, the Original Dollar
Amount of such Loan or portion thereof shall be adjusted to the amount in
Dollars resulting from the conversion of the amount of such Permitted Currency
so readvanced to Dollars determined as of the second Business Day preceding such
day. On the date of each such continuation, if the Equivalent in Dollars on such
date of all Advances, including the Advances being continued, exceeds the
aggregate amount of the Commitments of the Banks, the Borrowers shall prepay the
Advances, in such order as determined by the Borrowers, in an amount such that
the Equivalent in Dollars of the outstanding principal amount of all Advances
does not exceed the aggregate amount of the Commitments as of such date,
together with all amounts owing to the Banks under Section 3.9 in connection
therewith, if any.

 

3.2 Interest Payments. The Borrowers shall pay interest to the Banks on the
unpaid principal amount of each Loan, for the period commencing on the date such
Loan is made until such Loan is paid in full, on each Interest Payment Date and
at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:

 

(a) With respect to Revolving Credit Loans:

 

(i) During such periods that such Loan is a Floating Rate Loan, the Floating
Rate.

 

(ii) During such periods that such Loan is a Eurocurrency Rate Loan, the
Eurocurrency Rate applicable to such Loan for each related Interest Period.

 

(b) With respect to Swingline Loans, the rate agreed to by the applicable
Swingline Bank and Borrower, provided that, if any Swingline Loan is refunded by
Floating Rate Loans or the Banks are required to purchase participations therein
under Section 2.1(b)(iii), such Swingline Loan shall bear interest at the
greater of the Floating Rate or the rate otherwise applicable to such Swingline
Loan.

 

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Notwithstanding the foregoing paragraphs (a) and (b), the Borrowers shall pay
interest on demand at the Overdue Rate on the outstanding principal amount of
any Loan and any other amount payable by the Borrowers hereunder (other than
interest) on and after an Event of Default.

 

For the purposes of the Interest Act (Canada) hereunder (i) whenever interest
payable pursuant to this Agreement is calculated with respect to any monetary
obligation relating to Loans to the Canadian Borrower on the basis of a period
other than a calendar year (the “Calculation Period”), each rate of interest
determined pursuant to such calculation expressed as an annual rate is
equivalent to such rate as so determined, multiplied by the actual number of
days in the calendar year in which the same is to be ascertained and divided by
the number of days in the Calculation Period; (ii) the principle of deemed
reinvestment of interest with respect to any monetary obligation relating to
Loans in Canadian Dollars shall not apply to any interest calculation under this
Agreement, and (iii) the rates of interest with respect to any monetary
obligation relating to Loans to the Canadian Borrower stipulated in this
Agreement are intended to be nominal rates and not effective rates or yields.

 

3.3 Letter of Credit Reimbursement Payments. (a)(i) The Borrowers agree to pay
to the Banks, on the day on which the Agent shall honor a draft or other demand
for payment presented or made under any Letter of Credit, an amount equal to the
amount paid by the Agent in respect of such draft or other demand under such
Letter of Credit and all expenses paid or incurred by the Agent relative
thereto. Unless a Borrower shall have made such payment to the Banks on such
day, upon each such payment by the Agent, the Agent shall be deemed to have
disbursed to the Borrower for whose benefit the Letter of Credit was issued, and
such Borrower shall be deemed to have elected to satisfy its reimbursement
obligation by, a Revolving Credit Loan bearing interest at the Floating Rate for
the account of the Banks in an amount equal to the amount so paid by the Agent
in respect of such draft or other demand under such Letter of Credit. Such
Revolving Credit Loan shall be disbursed notwithstanding any failure to satisfy
any conditions for disbursement of any Loan set forth in Article II hereof and,
to the extent of the Revolving Credit Loan so disbursed, the reimbursement
obligation of the Borrowers under this Section 3.3 shall be deemed satisfied;
provided, however, that nothing in this Section 3.3 shall be deemed to
constitute a waiver of any Default or Event of Default caused by the failure to
the conditions for disbursement or otherwise.

 

(ii) If, for any reason (including without limitation as a result of the
occurrence of an Event of Default with respect to any Borrower pursuant to
Section 6.1(i)), Floating Rate Loans may not be made by the Banks as described
in Section 3.3(a)(i), then (A) the Borrowers agree that each reimbursement
amount not paid pursuant to the first sentence of Section 3.3(a)(i) shall bear
interest, payable on demand by the Agent, at the interest rate then applicable
to Floating Rate Loans, and (B) effective on the date each such Floating Rate
Loan would otherwise have been made, each Bank severally agrees that it shall
unconditionally and irrevocably, without regard to the occurrence of any Default
or Event of Default, in lieu of deemed disbursement of loans, to the extent of
such Bank’s Commitment, purchase a participating interest in each reimbursement
amount. Each Bank will immediately transfer to the Agent, in Same Day Funds, the
amount of its participation. Each Bank shall share on a pro rata basis
(calculated by reference to its Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Bank shall
not have so made the amount of such participating interest available to the
Agent, such Bank and the Borrowers severally agree to pay to the Agent forthwith
on demand such amount together with interest thereon, for each day from the date
of demand by the Agent until the date such amount is paid to the Agent, at
(x) in the case of the Borrowers, the interest rate then applicable to Floating
Rate Loans and (y) in the case of such Bank, the Federal Funds Rate for the
first five days after the date of demand by the Agent and thereafter at the
interest rate then applicable to Floating Rate Loans.

 

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(b) The reimbursement obligation of the Borrowers under this Section 3.3 shall
be absolute, unconditional and irrevocable and shall remain in full force and
effect until all obligations of the Borrowers to the Banks hereunder shall have
been satisfied, and such obligations of the Borrowers shall not be affected,
modified or impaired upon the happening of any event, including without
limitation, any of the following, whether or not with notice to, or the consent
of, the Borrowers:

 

(i) Any lack of validity or enforceability of any Letter of Credit or any
documentation relating to any Letter of Credit or to any transaction related in
any way to such Letter of Credit (the “Letter of Credit Documents”);

 

(ii) Any amendment, modification, waiver, consent, or any substitution, exchange
or release of or failure to perfect any interest in collateral or security, with
respect to any of the Letter of Credit Documents;

 

(iii) The existence of any claim, setoff, defense or other right which any
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Agent or any Bank or any other person or
entity, whether in connection with any of the Letter of Credit Documents, the
transactions contemplated herein or therein or any unrelated transactions;

 

(iv) Any draft or other statement or document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

 

(v) Payment by the Agent to the beneficiary under any Letter of Credit against
presentation of documents which do not comply with the terms of the Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit;

 

(vi) Any failure, omission, delay or lack on the part of the Agent or any Bank
or any party to any of the Letter of Credit Documents to enforce, assert or
exercise any right, power or remedy conferred upon the Agent, any Bank or any
such party under this Agreement or any of the Letter of Credit Documents, or any
other acts or omissions on the part of the Agent, any Bank or any such party;

 

(vii) Any other event or circumstance that would, in the absence of this clause,
result in the release or discharge by operation of law or otherwise of any
Borrower from the performance or observance of any obligation, covenant or
agreement contained in this Section 3.3.

 

No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which any Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to any Borrower
against the Agent or any Bank.

 

Nothing in this Section 3.3 shall limit the liability, if any, of the Banks to
the Borrower pursuant to Section 9.5.

 

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(c) For purposes of this Agreement, a Letter of Credit Advance (i) shall be
deemed outstanding in an amount equal to the sum of the maximum amount available
to be drawn under the related Letter of Credit on or after the date of
determination and on or before the stated expiry date thereof plus the amount of
any draws under such Letter of Credit that have not been reimbursed as provided
in Section 3.3 and (ii) shall be deemed outstanding at all times on and before
such stated expiry date or such earlier date on which all amounts available to
be drawn under such Letter of Credit have been fully drawn, and thereafter until
all related reimbursement obligations have been paid pursuant to this
Section 3.3. As provided in this Section 3.3, upon each payment made by the
Agent in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance outstanding immediately prior
to such payment shall be automatically reduced by the amount of each Revolving
Credit Loan deemed advanced in respect of the related reimbursement obligation
of the Borrower.

 

3.4 Payment Method. (a) All payments to be made by the Borrowers hereunder will
be made to the Agent for the account of the Banks (or to the applicable
Swingline Bank in the case of Swingline Loans for the account of such Swingline
Bank) (i) in the case of principal and interest on any Loan, in the Permitted
Currency in which such Loan is denominated and (ii) in all other cases, in the
otherwise specified or relevant currency, and in all cases in immediately
available, freely transferable, cleared funds not later than 1:00 p.m. at the
place for payment on the date on which such payment shall become due (x) in the
case of principal and interest on any Loan denominated in a Permitted Currency
other than Dollars, by credit to the account of the Agent at its designated
branch or correspondent bank in the country issuing the relevant Permitted
Currency or in such other place specified by the Agent with respect to such Loan
pursuant to Section 2.6(b), and (y) in all other cases to the Agent at the
address of its principal office specified in Section 9.2. Payments received
after 1:00 p.m. at the place for payment shall be deemed to be payments made
prior to 1:00 p.m. at the place for payment on the next succeeding Business Day.
Each Borrower hereby authorizes the Agent to charge its account with the Agent
in order to cause timely payment of amounts due hereunder to be made (subject to
sufficient funds being available in such account for that purpose).

 

(b) At the time of making each such payment, a Borrower shall, subject to the
other terms and conditions of this Agreement, specify to the Agent that
Borrowing or other obligation of the Borrowers hereunder to which such payment
is to be applied. In the event that a Borrower fails to so specify the relevant
obligation or if an Event of Default shall have occurred and be continuing, the
Agent may apply such payments as it may determine in its sole discretion to
obligations of the Borrowers to the Banks arising under this Agreement.

 

(c) On the day such payments are deemed received, the Agent shall remit to the
Banks their pro rata shares of such payments in Same Day Funds, (i) in the case
of payments of principal and interest on any Borrowing denominated in a
Permitted Currency other than Dollars, at an account maintained and designated
by each Bank at a bank in the principal financial center of the country issuing
the Permitted Currency in which such Borrowing is denominated or in such other
place specified by the Agent and (ii) in all other cases, to the Banks at their
respective address in the United States specified for notices pursuant to
Section 9.2. Such pro rata shares shall be determined with respect to each such
Bank, (i) in the case of payments of principal and interest on any Borrowing, by
the ratio which the outstanding principal balance of its Loan included in such
Borrowing bears to the outstanding principal balance of the Loans of all of the
Banks included in such Borrowing and (ii) in the case of fees paid pursuant to
Section 2.5 and other amounts payable hereunder (other than the Agent’s fees
payable pursuant to Section 2.5(c) and

 

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amounts payable to any Bank under Section 3.7 or 3.9) by the ratio which the
Commitment of such Bank bears to the Commitments of all the Banks.

 

(d) This Agreement arises in the context of an international transaction, and
the specification of payment in a specific currency at a specific place pursuant
to this Agreement is of the essence. Such specified currency shall be the
currency of account and payment under this Agreement. The obligations of the
Borrowers hereunder shall not be discharged by an amount paid in any other
currency or at another place, whether pursuant to a judgment or otherwise, to
the extent that the amount so paid, on prompt conversion into the applicable
currency and transfer to the Banks under normal banking procedure, does not
yield the amount of such currency due under this Agreement. In the event that
any payment, whether pursuant to a judgment or otherwise, upon conversion and
transfer, does not result in payment of the amount of such currency due under
this Agreement, the Banks shall have an independent cause of action against the
Borrowers for the currency deficit.

 

(e) If for purposes of obtaining judgment in any court it becomes necessary to
convert any currency due hereunder into any other currency, the Borrowers will
pay such additional amount, if any, as may be necessary to ensure that the
amount paid in respect of such judgment is the amount in such other currency
which, when converted at the Agent’s spot rate of exchange prevailing on the
date of payment, would yield the same amount of the currency due hereunder. Any
amount due from the Borrowers under this Section 3.4(e) will be due as a
separate debt and shall not be affected by judgment being obtained for any other
sum due under or in respect of this Agreement.

 

3.5 No Setoff or Deduction. All payments of principal of and interest on the
Loans and other amounts payable by any Borrower hereunder shall be made by such
Borrower without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority, unless required by applicable laws.
If any such taxes, levies, imposts, duties, fees, assessments, or other charges
are required to be withheld from any amounts payable hereunder with respect to
any Advance in any Optional Currency, the amounts so payable shall be increased
to the extent necessary to yield to the payee thereof the interest or any such
other amounts payable hereunder at the rates and in the amounts specified in
this Agreement.

 

3.6 Payment on Non-Business Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, any Loan or any other amount due hereunder becomes
due and payable on a day which is not a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, in the case of any
installment of principal, interest shall be payable thereon at the rate per
annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period,
except interest on Loans denominated in British Pounds Sterling or any other
Optional Currency for which it is required or customary to calculate interest
based on a 365-day year shall be calculated for actual days elapsed on the basis
of a 365-day year.

 

3.7 Additional Costs. (a) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not currently applicable to any Bank

 

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or the Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank or the Agent with any directive of any such
authority (whether or not having the force of law), shall (i) affect the basis
of taxation of payments to any Bank or the Agent of any amounts payable by any
Borrower under this Agreement (other than taxes imposed on the overall net
income of the Bank or the Agent, by the jurisdiction, or by any political
subdivision or taxing authority of any such jurisdiction, in which any Bank or
the Agent, as the case may be, has its principal office), or (ii) shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Bank or the Agent, as the case may be, or (iii) shall impose any other
condition with respect to this Agreement, the Commitments, the Notes or the
Advances, and the result of any of the foregoing is to increase the cost to any
Bank or the Agent, as the case may be, of making, funding or maintaining any
Eurocurrency Rate Loan or to reduce the amount of any sum receivable by any Bank
or the Agent, thereon, then the Borrowers shall pay to such Bank or the Agent,
as the case may be, from time to time, upon request by such Bank (with a copy of
such request to be provided to the Agent) or the Agent, additional amounts
sufficient to compensate such Bank or the Agent, as the case may be, for such
increased cost or reduced sum receivable to the extent, in the case of any
Eurocurrency Rate Loan or Swingline Loan, such Bank or the Agent, as the case
may be, is not compensated therefor in the computation of the interest rate
applicable to such Eurocurrency Rate Loan or Swingline Loan. Each Bank or the
Agent, as the case may be, seeking compensation hereunder shall deliver to the
Borrowers a statement setting forth (i) such increased cost or reduced sum
receivable as such Bank or the Agent, as the case may be, has calculated in good
faith, (ii) a description of the event giving rise thereto, (iii) a calculation
in reasonable detail of the amounts requested and (iv) a statement that such
Bank or the Agent, as the case may be, has not allocated to its Commitment,
Borrowings or outstanding Loans a proportionately greater amount than is
attributable to each of its other credit extensions that are affected similarly
by compliance by such Bank or the Agent, as the case may be, whether or not such
Bank or the Agent, as the case may be, allocates any portion of such amount to
such other commitments or credit extensions. Before delivery of such statement
each Bank or the Agent, as the case may be, shall use reasonable efforts in
accordance with its normal practices and procedures to reduce amounts payable
under this Section 3.7(a). Such statement as to the amount of such increased
cost or reduced sum receivable, prepared in good faith and in reasonable detail
by such Bank or the Agent, as the case may be, and submitted by such Bank or the
Agent, as the case may be, to the Borrowers, shall be conclusive and binding for
all purposes absent manifest error in computation.

 

(b) In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not currently
applicable to any Bank or the Agent, but applicable to banks or financial
institutions generally, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank or the Agent with any directive of any such
authority (whether or not having the force of law), including any risk-based
capital guidelines, affects the amount of capital required or expected to be
maintained by such Bank or the Agent (or any corporation controlling such Bank
or the Agent) and such Bank or the Agent, as the case may be, determines that
the amount of such capital is increased by or based upon the existence of such
Bank’s or the Agent’s obligations hereunder and such increase has the effect of
reducing the rate of return on such Bank’s or the Agent’s (or such controlling
corporation’s) capital as a consequence of such obligations hereunder to a level
below that which such Bank or the Agent (or such controlling corporation) could
have achieved but for such circumstances (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Bank or the Agent
to be material, then the Borrowers shall pay to such Bank or the Agent, as the
case may be, from time to time, upon request by such Bank (with a copy of such
request to be provided to the Agent) or the Agent, additional amounts

 

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sufficient to compensate such Bank or the Agent (or such controlling
corporation) for any reduced rate of return which such Bank or the Agent
reasonably determines to be allocable to the existence of such Bank’s or the
Agent’s obligations hereunder. Each Bank or the Agent, as the case may be,
seeking compensation hereunder shall deliver to the Borrowers a statement
setting forth (i) such increased cost or reduced sum receivable as such Bank or
the Agent, as the case may be, has calculated in good faith, (ii) a description
of the event giving rise thereto, (iii) a calculation in reasonable detail of
the amounts requested and (iv) a statement that such Bank or the Agent, as the
case may be, has not allocated to its Commitment, Borrowings or outstanding
Loans a proportionately greater amount than is attributable to each of its other
credit extensions that are affected similarly by compliance by such Bank or the
Agent, as the case may be, whether or not such Bank or the Agent, as the case
may be, allocates any portion of such amount to such other commitments or credit
extensions. Before delivery of such statement each Bank or the Agent, as the
case may be, shall use reasonable efforts in accordance with its normal
practices and procedures to reduce amounts payable under this Section 3.7(b).
Such statement as to the amount of such compensation, prepared in good faith and
in reasonable detail by such Bank or the Agent, as the case may be, and
submitted by such Bank or the Agent to the Borrowers, shall be conclusive and
binding for all purposes absent manifest error in computation.

 

3.8 Illegality and Impossibility. In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not currently applicable to any Bank, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank with any
directive of such authority (whether or not having the force of law), including
without limitation exchange controls, shall make it unlawful or impossible for
any Bank to maintain any Eurocurrency Rate Loan or Swingline Loan under this
Agreement or shall make it impracticable, unlawful or impossible for, or shall
in any way limit or impair the ability of, any Borrower to make or any Bank to
receive any payment under this Agreement at the place specified for payment
hereunder, or to freely convert any amount paid into Dollars at market rates of
exchange or to transfer any amount paid or so converted to the address of its
principal office specified in Section 9.2, the Borrowers shall upon receipt of
notice thereof from such Bank, repay in full the then outstanding principal
amount of each Eurocurrency Rate Loan or Swingline Loan so affected, together
with all accrued interest thereon to the date of payment and all amounts owing
to such Bank under Section 3.9, (a) on the last day of the then current Interest
Period applicable to such Loan if such Bank may lawfully continue to maintain
such Loan to such day, or (b) immediately if such Bank may not continue to
maintain such Loan to such day.

 

3.9 Indemnification. If any Borrower makes any payment of principal with respect
to any Eurocurrency Rate Loan on any other date than the last day of an Interest
Period applicable thereto (whether pursuant to Section 3.8 or Section 6.2 or
otherwise), or if any Borrower fails to borrow any Eurocurrency Rate Loan after
notice has been given to the Banks in accordance with Section 2.6, the Borrowers
shall reimburse each Bank on demand for any resulting net loss or expense
incurred by each such Bank after giving credit for any earnings or other
quantifiable financial benefit to such Bank from such Bank’s investment or other
amounts prepaid or not reborrowed, including without limitation any loss
incurred in obtaining, liquidating or employing deposits from third parties,
whether or not such Bank shall have funded or committed to fund such Loan. A
statement as to the amount of such loss or expense, prepared in good faith and
in reasonable detail by such Bank and submitted by such Bank to the Borrowers,
shall be conclusive and binding for all purposes absent manifest error in
computation, provided that before delivery of such statement, each Bank shall
use reasonable efforts in accordance with its normal practices and procedures to
reduce amounts payable under this Section. Calculation of all amounts payable to
such

 

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Bank under this Section 3.9 shall be made as though such Bank shall have
actually funded or committed to fund the relevant Eurocurrency Rate Loan through
the purchase of an underlying deposit in an amount equal to the amount of such
Loan and having a maturity comparable to the related Interest Period; provided,
however, that such Bank may fund any Eurocurrency Rate Loan in any manner it
sees fit and the foregoing assumption shall be utilized only for the purpose of
calculation of amounts payable under this Section 3.9.

 

3.10 Tax Documents. (a) At least five Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any Bank, each
Bank that is not incorporated under the laws of the United States of America or
a state thereof agrees that it will deliver to each of the Company and the Agent
two duly completed copies of United States Internal Revenue Service Form W-8BEN
or W-8ECI and Form W-8 or W-9 and any additional forms necessary for claiming
complete exemption from United States withholding taxes (or any successor or
substitute forms), certifying in either case that such Bank is entitled to
receive payments under this Agreement and the Loans without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form W-8BEN or W-8ECI and a Form W-8 or W-9 and any additional forms
necessary for claiming complete exemption from United States withholding taxes
(or any successor or substitute forms) further undertakes to deliver to each of
the Company and the Agent two additional copies of such forms (or any successor
or substitute forms) on or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Company or the Agent to
the extent it may lawfully do so, in each case certifying that such Bank is
entitled to receive payments under this Agreement and the Loans without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises the Company and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.

 

(b) If at any time any Subsidiary Borrower is a Foreign Subsidiary organized
under the laws of the United Kingdom or any political subdivision thereof, each
Bank which is neither a resident of the United Kingdom nor a bank carrying on a
bona fide banking business in the United Kingdom agrees to furnish, to the
extent it is able to do so, on or before the date such Bank makes a Loan to any
Borrower in the United Kingdom, to the Agent and the relevant Borrower evidence
satisfactory to the Agent and such Borrower that such Bank has filed with the
United Kingdom Inland Revenue a “Claim on Behalf of a United States Domestic
Corporation to Relief from United Kingdom Income Tax on Interest and Royalties
Arising in the United Kingdom” or other appropriate form or forms of exemption
from withholding tax and received from the Inland Revenue authority that
payments to such Bank by such Borrower hereunder may be made gross; provided
that such Bank’s failure to furnish such evidence shall not relieve such
Borrower of any of its obligations under this Agreement.

 

(c) The Swingline Canadian Bank, if it is created or organized under the laws of
a jurisdiction other than Canada or a Province thereof, shall deliver to the
Company and the Agent on the Effective Date (or on the date on which such Bank
becomes the Swingline Canadian Bank hereunder), evidence that either (i) the
Swingline Canadian Bank is an authorized foreign bank and that any payments
received by the Swingline Canadian Bank under the Swingline Canadian Loans is in
respect of such entity’s Canadian banking business, all for the purposes of
subsection 212(13.3) of the Income Tax Act

 

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(Canada), or (ii) the Minister of National Revenue is satisfied that payments
made to the Swingline Canadian Bank hereunder are not subject to Canadian
withholding taxes pursuant to Regulation 805(2) of the Income Tax Act (“Evidence
of Canadian Tax Exemption”). In addition, from time to time after the Effective
Date (or the date on which such Bank becomes the Swingline Canadian Bank
hereunder) upon the reasonable request of the Company or the Agent, each such
Bank further agrees to deliver to the Company and the Agent further Evidence of
Canadian Tax Exemption, unless any change in treaty, law, regulation or official
interpretation thereof prevents such Bank from duly providing same.
Notwithstanding anything in this Section 3.10 to the contrary, the Canadian
Borrower shall not have any obligation to pay any withholding taxes or to
indemnify the Swingline Canadian Bank for any withholding taxes to the extent
that such taxes result from the failure of such Bank to comply with its
obligations under this paragraph.

 

(d) If any governmental authority of any jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered or was not properly
executed, or because such Bank failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason relating to such Bank’s failure to
comply with the terms of this Agreement) such Bank shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including attorney costs). The obligations
of the Bank under this subsection shall survive the payment of all Bank
Obligations.

 

3.11 Applicable Lending Office. Each Bank and the Agent may make and book its
Loans and, in the case of the Agent, issue Letters of Credit, at any Applicable
Lending Office(s) selected by such Bank or the Agent, as the case may be, and
each Bank and the Agent may change its Applicable Lending Office(s) from time to
time. Each Bank may, by written notice to the Agent and the applicable Borrower,
designate one or more Applicable Lending Offices which are to make and book
Loans and for whose account Loan payments are to be made. The Agent, each Bank
and each Swingline Bank may, by written notice to the applicable Borrower,
designate one or more Applicable Lending Offices which are to make and book
Loans and issue and book Letters of Credit and for whose accounts Loan payments
and Letter of Credit reimbursements are to be made and through which its
functions are to be performed. All terms of this Agreement shall apply to any
such Applicable Lending Office(s) and the Notes shall be deemed held by each
Bank and the Agent, as the case may be, for the benefit of such Applicable
Lending Office.

 

3.12 Substitution of Bank. If (i) the obligation of any Bank to make or maintain
Eurocurrency Rate Loans has been suspended pursuant to Section 3.8 when not all
Banks’ obligations have been suspended, (ii) any Bank is a Defaulting Bank, or
(iii) in connection with a request by the Company to obtain the consent of the
Banks to a waiver, amendment or modification of any provision of this Agreement
or any other Loan Document that requires the consent of all Banks, any Bank at
such time has declined to agree to such request when the Required Banks have
agreed to such request, the Company shall have the right, if no Default or Event
of Default then exists, to replace such Bank (a “Replaced Bank”) with one or
more other Banks or other lenders (collectively, the “Replacement Bank”)
acceptable to the Agent, provided that (x) at the time of any replacement
pursuant to this Section 3.12, the Replacement Bank shall enter into one or more
Assignment and Acceptances, pursuant to which the Replacement Bank shall acquire
the Commitments and outstanding Advances and other obligations of the Replaced
Bank and, in connection therewith, shall pay to the Replaced Bank in respect
thereof an amount

 

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equal to the sum of (A) the amount of principal of, and all accrued interest on,
all outstanding Loans of the Replaced Bank, (B) the amount of all accrued, but
theretofore unpaid, fees owing to the Replaced Bank under Section 2.5 and
(C) the amount which would be payable by the Borrowers to the Replaced Bank
pursuant to Section 3.9 if the Borrowers prepaid at the time of such replacement
all of the Loans of such Replaced Bank outstanding at such time and (y) all
obligations of the Borrowers then owing to the Replaced Bank (other than those
specifically described in clause (x) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Acceptances, the payment of amounts referred to in
clauses (x) and (y) above and, if so requested by the Replacement Bank, delivery
to the Replacement Bank of the appropriate Note or Notes executed by the
Borrowers, the Replacement Bank shall become a Bank hereunder and the Replaced
Bank shall cease to constitute a Bank hereunder. The provisions of this
Agreement (including without limitation Sections 3.7, 3.9 and 9.5) shall
continue to govern the rights and obligations of a Replaced Bank with respect to
any Loans made or any other actions taken by such Bank while it was a Bank.
Nothing herein shall release any Defaulting Bank from any obligation it may have
to the Borrowers, the Agent or any other Bank. Each Bank agrees to take such
actions, at the Company’s expense, as may be reasonably necessary to effect the
foregoing if it shall become a Replaced Bank.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants to the Agent and the Banks that, both
before and after giving effect to the Related Transactions and each Advance:

 

4.1 Corporate Existence and Power. Each Borrower is a Person duly organized,
validly existing and in good standing under the laws of the state or other
political subdivision of its jurisdiction of incorporation or organization, as
the case may be, and is duly qualified to do business, and is in good standing,
in all additional jurisdictions where such qualification is necessary under
applicable law, except where the failure to be so qualified would not result in
a Material Adverse Change. Each Borrower has all requisite corporate power to
own or lease the properties used in its business and to carry on its business as
now being conducted and as proposed to be conducted, and to execute and deliver
this Agreement and the Notes and to engage in the transactions contemplated by
this Agreement.

 

4.2 Corporate Authority. The execution, delivery and performance by each
Borrower of this Agreement and the Notes have been duly authorized by all
necessary corporate action and are not in contravention of any material law,
rule or regulation, or any judgment, decree, writ, injunction, order or award of
any arbitrator, court or governmental authority, or of the terms of such
Borrower’s charter or by-laws, or of any material contract or undertaking to
which the Borrower is a party or by which the Borrower or its property is bound
or affected and do not result in the imposition of any Lien except for Permitted
Liens.

 

4.3 Binding Effect. This Agreement is, and the Notes when delivered hereunder
will be, legal, valid and binding obligations of each Borrower enforceable
against each Borrower in accordance with their respective terms; except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors’ rights and except that
the remedy of

 

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specific performance and injunctive and other forms of equitable relief are
subject to equitable defenses and to the discretion of the court before which
any proceedings may be brought.

 

4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate name,
jurisdiction of incorporation and ownership of each Subsidiary of each Borrower.
Each Subsidiary and each corporation becoming a Subsidiary of any Borrower after
the date hereof is and will be a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and is
and will be duly qualified to do business in each additional jurisdiction where
such qualification is or may be necessary under applicable law, except where the
failure to be so qualified would not result in a Material Adverse Change. Each
Subsidiary of any Borrower has and will have all requisite corporate power to
own or lease the properties used in its business and to carry on its business as
now being conducted and as proposed to be conducted. All outstanding shares of
capital stock of each class of each Subsidiary of any Borrower have been and
will be validly issued and are and will be fully paid and nonassessable and,
except as otherwise indicated in Schedule 4.4 hereto or disclosed in writing to
the Agent from time to time, are and will be owned, beneficially and of record,
by a Borrower or another Subsidiary of a Borrower free and clear of any Liens.

 

4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no action,
suit or proceeding pending or, to the best of each Borrower’s knowledge,
threatened against or affecting any Borrower or any of their respective
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided would result, either individually or collectively, in a
Material Adverse Change and, to the best of the Company’s knowledge, there is no
basis for any such action, suit or proceeding.

 

4.6 Financial Condition. The consolidated balance sheet of the Company and its
Subsidiaries and the consolidated statements of income and cash flow of the
Company and its Subsidiaries for the fiscal year ended April 30, 2005 and
reported on by PricewaterhouseCoopers, LLP independent certified public
accountants, and the consolidated balance sheet of the Company and its
Subsidiaries and the consolidated statements of income and cash flow of the
Company and its Subsidiaries for the fiscal quarter ended July 30, 2005 and
prepared by the Company, copies of which have been furnished to the Banks,
fairly present, and the financial statements of the Company and its Subsidiaries
delivered pursuant to Section 5.1(d) will fairly present the consolidated
financial position of the Company and its Subsidiaries as at the respective
dates thereof, and the consolidated results of operations of the Company and its
Subsidiaries for the respective periods indicated, all in accordance with
Generally Accepted Accounting Principles consistently applied (subject, in the
case of said interim statements, to year-end audit adjustments). There has been
no Material Adverse Change since April 30, 2005.

 

4.7 Use of Loans. Each Borrower will use the proceeds of the Advances for
necessary working capital requirements and general corporate purposes of the
Borrowers, to refinance the debt described in Section 2.7(g), for the
Acquisition of Crave and other Acquisitions and capital expenditures by the
Borrowers to the extent permitted hereunder and for dividends and stock
redemptions to the extent permitted hereunder. No Borrower nor any of their
respective Subsidiaries extends or maintains, in the ordinary course of
business, credit for the purpose, whether immediate, incidental, or ultimate, of
buying or carrying Margin Stock, and no part of the proceeds of any Loan will be
used for the purpose, whether immediate, incidental, or ultimate, of buying or
carrying any such Margin Stock or maintaining or extending credit to others for
such purpose. After applying the proceeds of each Loan, such Margin Stock will
not constitute more than 25% of the value of the assets (either of any Borrower
alone or of the Borrowers and

 

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their respective Subsidiaries on a consolidated basis) that are subject to any
provisions of this Agreement that may cause the Loans to be deemed secured,
directly or indirectly, by Margin Stock.

 

4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Borrowers pursuant to
Section 2.7(f), if any, each of which is in full force and effect, no consent,
approval or authorization of or declaration, registration or filing with any
governmental authority or any nongovernmental person, including without
limitation any creditor, lessor or stockholder of any Borrower or Guarantor, is
required on the part of any Borrower or Guarantor in connection with the
execution, delivery and performance of the Loan Documents, or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of the Loan Documents. The Company and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties if failure to comply
therewith could result in a Material Adverse Change.

 

4.9 Taxes. The Company and its Subsidiaries have filed all material tax returns
(federal, state, provincial and local) required to be filed and have paid all
taxes shown thereon to be due, including interest and penalties, or have
established adequate financial reserves on their respective books and records
for payment thereof except where the failure to file such returns, pay such
taxes or establish such reserves would not result in a Material Adverse Change.

 

4.10 Title to Properties. Except as otherwise disclosed in the latest balance
sheet delivered pursuant to this Agreement, the Company or one or more of its
Subsidiaries have good and marketable fee simple title to all of the real
property, and a valid and indefeasible ownership interest in all of the other
properties and assets reflected in said balance sheet or subsequently acquired
by the Company or any such Subsidiary material to the business or financial
condition of the Company and its Subsidiaries taken as a whole, except for title
defects that would not result in a Material Adverse Change. All of such
properties and assets are free and clear of any Lien, except for Permitted
Liens.

 

4.11 ERISA. The Borrowers, their respective Subsidiaries, their ERISA Affiliates
and their respective Plans are in substantial compliance in all material
respects with those provisions of ERISA and of the Code which are applicable
with respect to any Plan. No Prohibited Transaction and no Reportable Event has
occurred with respect to any such Plan which would cause an Event of Default. No
Borrower, any of their respective Subsidiaries nor any of their ERISA Affiliates
is an employer with respect to any Multiemployer Plan. The Borrowers, their
respective Subsidiaries and their ERISA Affiliates have met the minimum funding
requirements under ERISA and the Code with respect to each of their respective
Plans, if any, and have not incurred any liability to the PBGC, other than
premiums which are not yet due and payable. The execution, delivery and
performance of this Agreement and the Notes does not constitute a Prohibited
Transaction. There is no material Unfunded Benefit Liability, determined in
accordance with Section 4001(a)(18) of ERISA, with respect to any Plan of any
Borrower, their respective Subsidiaries or their ERISA Affiliates.

 

4.12 Environmental and Safety Matters. Except as disclosed on Schedule 4.12,
each Borrower and each Subsidiary of each Borrower is in substantial compliance
with all material federal, state, provincial and local laws, ordinances and
regulations relating to safety and industrial hygiene or to the environmental
condition, including without limitation all material Environmental Laws in
jurisdictions in which any Borrower or any such Subsidiary owns or operates, or
has owned or operated, a facility or site, or

 

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arranges or has arranged for disposal or treatment of hazardous substances,
solid waste, or other wastes, accepts or has accepted for transport any
hazardous substances, solid wastes or other wastes or holds or has held any
interest in real property or otherwise. Except as disclosed on Schedule 4.12, no
written demand, claim, notice, suit, suit in equity, action, administrative
action, investigation or inquiry whether brought by any governmental authority,
private person or otherwise, arising under, relating to or in connection with
any Environmental Laws is pending or, to the best of each Borrower’s knowledge,
threatened against any Borrower or any such Subsidiary, any real property in
which any Borrower or any such Subsidiary holds or has held an interest or any
past or present operation of any Borrower or any such Subsidiary which would
result in a Material Adverse Change. Neither any Borrower nor any Subsidiary of
any Borrower (a) is the subject of any federal, state or provincial
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, or (b) has received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any Environmental Laws. As to
such matters disclosed on Schedule 4.12, none will result in a Material Adverse
Change. Except as set forth on Schedule 4.12, to the best of each Borrower’s
knowledge, no release, threatened release or disposal of hazardous waste, solid
waste or other wastes is occurring or has occurred on, under or to any real
property in which any Borrower or any of their respective Subsidiaries holds any
interest or performs any of its operations, in violation of any Environmental
Law.

 

4.13 Borrowing Base. The Senior Debt is equal to or less than the Borrowing
Base.

 

4.14 Investment Company Act. Neither the Company nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940.

 

4.15 Public Utility Holding Company Act. Neither the Company nor any Subsidiary
is a “holding company”, or a “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company” or of a “subsidiary company”, within the
meaning of the Public Utility Holding Company Act of 1935.

 

4.16 Solvency, etc. On the Effective Date, and immediately prior to and after
giving effect to the issuance of each Advance hereunder and the use of the
proceeds thereof, (a) each Borrower’s and Guarantor’s assets will exceed its
liabilities and (b) each of the Borrowers and Guarantors will be solvent, will
be able to pay its debts as they mature, will own property with fair saleable
value greater than the amount required to pay its debts and will have capital
sufficient to carry on its business as then constituted.

 

4.17 Intellectual Property. The Company and each Subsidiary owns and possesses
or has a license or other right to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights and copyrights as are necessary for the conduct of the business of the
Company and its Subsidiaries, without any infringement upon rights of others
which could result in a Material Adverse Change.

 

4.18 Burdensome Obligations. Neither the Company nor any Subsidiary is a party
to any agreement or contract or subject to any corporate or partnership
restriction which could result in a Material Adverse Change.

 

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4.19 Labor Matters. Neither the Company nor any Subsidiary is subject to any
labor or collective bargaining agreement. There are no existing or threatened
strikes, lockouts or other labor disputes involving the Company or any
Subsidiary that singly or in the aggregate could result in a Material Adverse
Change. Hours worked by and payment made to employees of the Company and its
Subsidiaries are not in violation of the Fair Labor Standards Act or any other
applicable law, rule or regulation dealing with such matters.

 

4.20 No Default. No Event of Default or Default exists or would result from the
incurring by the Company of any Advances hereunder.

 

4.21 Related Agreements, etc. (a) The Company has heretofore furnished the Agent
a true and correct copy of the Related Agreements.

 

(b) Each Loan Party and, to the Company’s knowledge, each other party to the
Related Agreements, has duly taken all necessary corporate, partnership or other
organizational action to authorize the execution, delivery and performance of
the Related Agreements and the consummation of transactions contemplated
thereby.

 

(c) The Related Transactions will comply with all applicable legal requirements,
and all necessary governmental, regulatory, creditor, shareholder, partner and
other material consents, approvals and exemptions required to be obtained by the
Loan Parties and, to the Company’s knowledge, each other party to the Related
Agreements in connection with the Related Transactions will be, prior to
consummation of the Related Transactions, duly obtained and will be in full
force and effect. As of the date of the Related Agreements, all applicable
waiting periods with respect to the Related Transactions will have expired
without any action being taken by any competent governmental authority which
restrains, prevents or imposes material adverse conditions upon the consummation
of the Related Transactions.

 

(d) The execution and delivery of the Related Agreements do not, and the
consummation of the Related Transactions will not, violate any statute or
regulation of the United States (including any securities law) or of any state
or other applicable jurisdiction, or any order, judgment or decree of any court
or governmental body binding on any Loan Party or, to the Company’s knowledge,
any other party to the Related Agreements, or result in a breach of, or
constitute a default under, any material agreement, indenture, instrument or
other document, or any judgment, order or decree, to which any Loan Party is a
party or by which any Loan Party is bound or, to the Company’s knowledge, to
which any other party to the Related Agreements is a party or by which any such
party is bound.

 

(e) No statement or representation made in the Related Agreements by any Loan
Party or, to the Company’s knowledge, any other Person, contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading in any
material respect.

 

(f) Simultaneously with the first Advance hereunder, the Company will own, free
and clear of all Liens other than those allowed hereunder, 100% of the Capital
Stock of Crave and shall have otherwise completed the Related Transactions in
accordance in all material respects with the Related Agreements and in
accordance in all material respects with all laws, rules and regulations,

 

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whether foreign or domestic, and all orders or other determinations of any
governmental authority. The total consideration paid or payable (including
without limitation all Indebtedness assumed, guaranties or other liabilities
incurred, all deferred payments and all other direct or indirect consideration)
for the Crave Acquisition and the other Related Transactions will not exceed
(i) $127,000,000 on or before the Effective Date, and (ii) $23,000,0000 after
the Effective Date. The aggregate fees, expenses and similar amounts paid or
payable by the Company of any of its Subsidiaries in connection with the Crave
Acquisition and the other Related Transactions will not exceed $5,000,000. Since
December 31, 2004 there has been no material adverse change in the business,
property, prospects, condition (financial or otherwise) or results of operations
of Crave and its Subsidiaries taken as a whole.

 

ARTICLE V.

COVENANTS

 

5.1 Affirmative Covenants. Each Borrower covenants and agrees that, until the
Termination Date and thereafter until irrevocable payment in full of the
Obligations, unless the Required Banks shall otherwise consent in writing, it
shall, and shall cause each of its Subsidiaries to:

 

(a) Preservation of Corporate Existence, Etc. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, except to the extent permitted by Section 5.2(f), and its
qualification as a foreign corporation in good standing in each jurisdiction in
which such qualification is necessary under applicable law, other than where
failure to so qualify will not result in a Material Adverse Change.

 

(b) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
whether federal, state, local or foreign (including without limitation ERISA,
the Code and Environmental Laws), in effect from time to time; and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income, revenues or property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid, might give rise to Liens
upon such properties or any portion thereof, except to the extent that payment
of any of the foregoing is then being contested in good faith by appropriate
legal proceedings, and except where failure to comply would not result in a
Material Adverse Change.

 

(c) Maintenance of Properties; Insurance. Maintain, preserve and protect all
property that is material to the conduct of the business of any Borrower or any
of their respective Subsidiaries and keep such property in good repair, working
order and condition and from time to time make, or cause to be made all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times in accordance with customary and prudent
business practices for similar businesses; and, maintain in full force and
effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks, as is
usually carried by companies engaged in similar businesses and owning similar
properties similarly situated and maintain in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with any of its activities or any
properties owned, occupied or controlled by it, in such amount as it shall
reasonably deem necessary.

 

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(d) Reporting Requirements. Furnish to the Banks and the Agent the following:

 

(i) Promptly and in any event within three calendar days after becoming aware of
the occurrence of (A) any Event of Default or Default, (B) the commencement of
any material litigation against, by or affecting any Borrower or any of their
respective Subsidiaries, and any material developments therein, or (C) entering
into any material contract or undertaking that is not entered into in the
ordinary course of business if such contract or undertaking is publicly
disclosed, a statement of a Financial Officer setting forth details of such
Event of Default or Default or such litigation and the action which such
Borrower or such Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;

 

(ii) As soon as available and in any event within 50 days after the end of each
fiscal quarter of the Company, the consolidated balance sheet of the Company and
its Subsidiaries as of the end of such quarter, and the related consolidated
statements of income and cash flow for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by a Financial Officer as
having been prepared in accordance with Generally Accepted Accounting
Principles, together with a certificate of a Financial Officer stating (A) that
no Event of Default or Default has occurred and is continuing or, if an Event of
Default or Default has occurred and is continuing, a statement setting forth the
details thereof and the action which the Company has taken and proposes to take
with respect thereto, and (B) that a computation (which computation shall
accompany such certificate and shall be in reasonable detail) showing compliance
with Section 5.2(a), (b), (c) and (d) hereof is in conformity with the terms of
this Agreement;

 

(iii) As soon as available and in any event within 100 days after the end of
each fiscal year of the Company, a copy of the consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and cash flow of the Company and its
Subsidiaries for such fiscal year, with a customary audit report of
PricewaterhouseCoopers, LLP or other independent certified public accountants
selected by the Company and acceptable to the Required Banks, without
qualifications unacceptable to the Required Banks, accompanied by any management
letter prepared by said accountants and together with a certificate of such
accountants stating (A) that they have reviewed this Agreement and stating
further whether, in the course of their review of such financial statements,
they have become aware of any Event of Default or Default and if an Event of
Default or Default then exists and is continuing, a statement setting forth the
nature and status thereof, and (B) that a computation by the Company (which
computation shall accompany such certificate and shall be in reasonable detail)
showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity
with the terms of this Agreement;

 

(iv) Promptly after the sending or filing thereof, copies of all reports, proxy
statements and financial statements which the Company sends to or files with any
of their respective security holders or any securities exchange or the
Securities and Exchange Commission or any successor agency thereof;

 

(v) As soon as available, but in any event within 60 days after the beginning of
each fiscal year of the Company, a copy of the plan and forecast (including a
projected

 

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consolidated balance sheet, income statement and cash flow statement) of the
Company and its Subsidiaries for such fiscal year and for each fiscal year
thereafter which begins on or before the Termination Date;

 

(vi) Promptly and in any event within 10 calendar days after receiving or
becoming aware thereof (A) a copy of any notice of intent to terminate any Plan
of any Borrower, their respective Subsidiaries or any ERISA Affiliate filed with
the PBGC, (B) a statement of a Financial Officer setting forth the details of
the occurrence of any Reportable Event with respect to any such Plan, (C) a copy
of any notice that any Borrower, any of their respective Subsidiaries or any
ERISA Affiliate may receive from the PBGC relating to the intention of the PBGC
to terminate any such Plan or to appoint a trustee to administer any such Plan,
or (D) a copy of any notice of failure to make a required installment or other
payment within the meaning of Section 412(n) of the Code or Section 302(f) of
ERISA with respect to any such Plan; and

 

(vii) Promptly, such other information respecting the business, properties,
operations or condition, financial or otherwise, of any Borrower or any of their
respective Subsidiaries as any Bank or the Agent may from time to time
reasonably request.

 

(e) Accounting; Access to Records, Books, Etc. Maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with Generally Accepted
Accounting Principles and to comply with the requirements of this Agreement and,
at any reasonable time and from time to time with prior notice to the Company,
permit any Bank or the Agent or any agents or representatives thereof to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrowers and their respective Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrowers and their respective
Subsidiaries with their respective directors, officers, employees and
independent auditors, provided that representatives of the Company selected by
the Company are present during any such visit or discussion, and by this
provision the Company does hereby authorize such persons to discuss such
affairs, finances and accounts with any Bank or the Agent subject to the above
terms and conditions.

 

(f) Guaranties. Cause to be executed and delivered to the Banks and the Agent
Guaranties of certain present and future Domestic Subsidiaries, such that at all
times all Domestic Subsidiaries which are not Guarantors do not, if considered
in the aggregate as a single Subsidiary, constitute a Material Subsidiary, in
each case together with the other documentation relating to such Guaranty
similar to that required to be delivered by or on behalf of the Borrowers under
Section 2.7 (a), (b), (c), (e) and (f). Foreign Subsidiaries will also be
required to be Guarantors and deliver such other documentation if a material
adverse tax consequence would not result from such Foreign Subsidiary executing
a Guaranty.

 

(g) Further Assurances. Will, and will cause each Guarantor to, execute and
deliver within 30 days after request therefor by the Required Banks or the
Agent, all further instruments and documents and take all further action that
may be necessary or desirable, in order to give effect to, and to aid in the
exercise and enforcement of the rights and remedies of the Banks and the Agent
under, this Agreement, the Notes and the other Loan Documents. In addition, the
Company agrees to deliver to the Agent and the Banks from time to time upon the
acquisition or creation of any Subsidiary not listed in Schedule 4.4 hereto
supplements to Schedule 4.4 such that such Schedule, together with such
supplements, shall at all times accurately reflect the information provided for
thereon.

 

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5.2 Negative Covenants. Until the Termination Date and thereafter until
irrevocable payment in full of the Obligations, each Borrower agrees that,
unless the Required Banks shall otherwise consent in writing it shall not, and
shall not permit any of its Subsidiaries to:

 

(a) Debt Service Coverage Ratio. Permit or suffer the Debt Service Coverage
Ratio to be less than 1.75 to 1.0 as of the end of any fiscal quarter of the
Company

 

(b) Leverage Ratio. Permit or suffer the Leverage Ratio to be greater than
(i) 3.25 to 1.0 at any time prior to April 30, 2006, (ii) 3.00 to 1.0 at any
time from and including April 30, 2006 to but excluding April 30, 2007 or
(iii) 2.75 to 1.0 at any time thereafter.

 

(c) Net Worth. Permit or suffer consolidated Net Worth of the Company and its
Subsidiaries at any time to be less than $228,524,800, plus 50% of consolidated
Net Income of the Company and its Subsidiaries for each fiscal quarter of the
Company ending after July 30, 2005, provided that if such consolidated Net
Income is negative for any such fiscal quarter, the amount added for such fiscal
quarter shall be zero and it shall not reduce the amount added for any other
fiscal quarter.

 

(d) Borrowing Base. Permit or suffer the aggregate Senior Debt to exceed the
Borrowing Base at any time.

 

(e) Liens. Create, incur or suffer to exist any Lien on any of the assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether now owned or hereafter acquired, of the Company or any of its
Subsidiaries, other than:

 

(i) Liens for taxes not delinquent or for taxes being contested in good faith by
appropriate proceedings and as to which adequate financial reserves have been
established on its books and records;

 

(ii) Liens (other than any Lien imposed by ERISA) created and maintained in the
ordinary course of business which are not material in the aggregate, and which
would not result in a Material Adverse Change and which constitute (A) pledges
or deposits under worker’s compensation laws, unemployment insurance laws or
similar legislation, (B) good faith deposits in connection with bids, tenders,
contracts or leases to which the Company or any of its Subsidiaries is a party
for a purpose other than borrowing money or obtaining credit, including rent
security deposits, (C) liens imposed by law, such as those of carriers,
warehousemen and mechanics and Canadian Statutory Claims, if payment of the
obligation secured thereby is not yet past due, (D) Liens securing taxes,
assessments or other governmental charges or levies not yet subject to penalties
for nonpayment, and (E) pledges or deposits to secure public or statutory
obligations of the Company or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Company or any of its Subsidiaries is a party;

 

(iii) Liens affecting real property which constitute minor survey exceptions or
defects or irregularities in title, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of such real property, provided that all of the
foregoing, in the aggregate, do not at any time materially detract from the
value of said properties or materially impair their use in the operation of the
businesses of the Company and its Subsidiaries taken as a whole;

 

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(iv) Each Lien described in Schedule 5.2(e) hereto may be suffered to exist upon
the same terms as those existing on the date hereof, including extensions,
renewals and replacements thereof so long as such extension, renewal or
replacement does not increase the principal amount of the Indebtedness secured
or extend such Lien to any other property, assets, rights or revenues;

 

(v) (A) any Lien in property or in rights relating thereto to secure any rights
granted with respect to such property in connection with the provision of all or
a part of the purchase price or cost of the construction of such property
created contemporaneously with, or within 360 days after such acquisition or the
completion of such construction, or (B) any Lien in property existing in such
property at the time of acquisition thereof, whether or not the debt secured
thereby is assumed by the Company or a Subsidiary, or (C) any Lien existing in
the property of a corporation at the time such corporation is merged into or
consolidated with the Company or a Subsidiary or at the time of a sale, lease,
or other disposition of the properties of a corporation or firm as an entirety
or substantially as an entirety to the Company or a Subsidiary; provided, in the
case of (A), (B) and (C), no such Liens shall exceed 100% of the fair market
value of the related property and not more than one such Lien shall encumber
such property at any one time;

 

(vi) Liens granted by any Subsidiary which is not a Guarantor in favor of the
Company or any Guarantor;

 

(vii) The interest or title of a lessor under any lease otherwise permitted
under this Agreement with respect to the property subject to such lease to the
extent performance of the obligations of the Company or its Subsidiary
thereunder is not delinquent; and

 

(viii) Other Liens on fixed assets, provided that the aggregate outstanding
amount of all Indebtedness and other obligations secured by all such Liens does
not exceed $15,000,000.

 

(f) Merger; Etc. Merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, provided, however, if no Event of
Default or Default shall have occurred and be continuing or would result
therefrom on a pro forma basis reasonably acceptable to the Agent and subject to
Section 5.2(h) and the other terms of this Agreement, (i) the Company may merge
or consolidate with any Person that is not a Subsidiary and is organized under
the laws of, and located in, the United States of America, Canada, Mexico or any
nation that is a member state of the European Union as of the date of this
Agreement and each Subsidiary may merge or consolidate with any such other
Person, provided, further, that in the case of any such merger or consolidation
involving the Company, another Borrower or a Guarantor, as the case may be, the
Company, such Borrower or such Guarantor is the surviving corporation, (ii) a
Subsidiary of the Company may merge with the Company, provided that the Company
shall be the surviving corporation, (iii) a Subsidiary of the Company may merge
or consolidate with a Guarantor, provided that the Guarantor shall be the
surviving corporation and (iv) a Subsidiary which is not a Guarantor may merge
or consolidate with another wholly owned Subsidiary of the Company.

 

(g) Disposition of Assets; Etc. Sell, lease, license, transfer, assign or
otherwise dispose of any of its business, assets, rights, revenues or property,
real, personal or mixed, tangible or intangible, whether in one or a series of
transactions, other than inventory sold in the ordinary

 

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course of business upon customary credit terms and sales of scrap or obsolete
material or equipment, provided, however, that this Section 5.2(g) shall not
prohibit any such sale, lease, license, transfer, assignment or other
disposition if the aggregate book value (disregarding any write-downs of such
book value other than ordinary depreciation and amortization) of all of the
business, assets, rights, revenues and property disposed of in any consecutive
twelve month period shall be less than 10% percent of such aggregate book value
of the Consolidated total assets of the Company and its Subsidiaries as of the
beginning of the twelve month period ending with the date of any such sale,
lease, license, transfer, assignment or other disposition, and if immediately
after such transaction, no Default or Event of Default shall exist or shall have
occurred and be continuing. Notwithstanding the foregoing, each of the following
shall be permitted and shall be excluded in determining the amount allowed to be
sold or otherwise disposed of pursuant to the first sentence of this
Section 5.2(g), (i) any Subsidiary may sell, lease, transfer or otherwise
dispose of its assets to the Company or any Domestic Subsidiary, (ii) the
Company may sell, lease, transfer or otherwise dispose of its assets to a
Guarantor, and (iii) the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of its assets in excess of the limitation set forth above so
long as the proceeds of such sale are used (x) to purchase or committed to
purchase other property of a similar nature of at least equivalent value within
six (6) months of such sale or (y) to prepay the Advances (and to permanently
reduce the Commitments by a like amount).

 

(h) Acquisitions. Make any Acquisition (other than the Crave Acquisition) unless
each of the following conditions is satisfied: (i) the total consideration,
whether cash or non-cash and including all deferred payments, Indebtedness
assumed, the fair market value of Capital Stock or other non-cash consideration
and other acquisition costs shall not exceed $35,000,000 for any individual
Acquisition or $100,000,000 in the aggregate for all Acquisitions after the
Effective Date; (ii) immediately before and after giving effect to such
Acquisition, no Event of Default or Default shall exist or shall have occurred
and be continuing and the representations and warranties contained in Article IV
and in the other Loan Documents shall be true and correct on and as of the date
thereof (both before and after such Acquisition is consummated) as if made on
the date such Acquisition is consummated and giving effect to such Acquisition,
(iii) at least five Business Days’ prior to the consummation of such
Acquisition, the Company shall have provided to the Banks a certificate of a
Financial Officer attaching pro forma computations acceptable to the Agent to
demonstrate compliance with all financial covenants hereunder, and stating that
such Acquisition complies with this Section 5.2(h), all laws and regulations and
that any other conditions under this Agreement relating to such transaction have
been satisfied, (iv) the Company shall have delivered to the Agent all
acquisition documents and other agreements and documents relating to such
Acquisition as requested by the Agent, (v) after giving effect to such
Acquisition, the Company will be able to borrow at least $20,000,000 of
additional Loans on a pro forma basis acceptable to the Agent and (vi) the Board
of Directors (or similar governing body) and the management of the target of
such Acquisition has approved such Acquisition.

 

(i) Nature of Business. Make or suffer any substantial change in the nature of
its business from that engaged in on the date hereof or engage in any other
businesses other than those in which it is engaged on the date hereof or which
are directly related to the businesses in which it is engaged in on the date
hereof.

 

(j) Investments, Loans and Advances. Purchase or otherwise acquire any Capital
Stock of or other ownership interest in, or debt securities of or other
evidences of Indebtedness of, any other person; nor acquire all or any material
portion of the assets of any person; nor make any loan or advance of any of its
funds or property or make any other extension of credit to, or make any
investment or

 

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acquire any interest whatsoever in, any other person; nor permit any Subsidiary
to do any of the foregoing; other than (i) extensions of trade credit made in
the ordinary course of business on customary credit terms and commission,
travel, relocation and similar advances made to officers and employees in the
ordinary course of business, (ii) loans and advances to Guarantors,
(iii) Acquisitions permitted pursuant to Section 5.2(h), (iv) advances in the
ordinary course of business for proprietary products, (v) existing loans,
advances and investments described in Schedule 5.2(j) hereto, but no increase in
the amount thereof, and (vi) other investments, loans and advances in and to any
Subsidiary of the Company in an aggregate amount at any time outstanding not to
exceed 10% of consolidated Net Worth of the Company and its Subsidiaries. In
connection with any loan or advance permitted under this Section 5.2(j), the
Company acknowledges and agrees that any such loan or advance shall be evidenced
by an enforceable promissory note and/or other agreements in form and substance
reasonably acceptable to the Agent providing for an enforceable obligation in
favor of the Company or a Guarantor to repay such loan or advance on or before
the occurrence of any Event of Default hereunder, and the Company will not, and
will not permit any of its Subsidiaries, to amend, waive, forgive or otherwise
modify in any way any such obligation to repay any such loan or advance.

 

(k) Limitations on Restrictive Agreements. (i) Enter into any agreement with any
person other than the Agent and the Banks pursuant hereto which prohibits or
limits the ability of any Borrower to create, incur, assume or suffer to exist
any Lien upon any of its assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, whether now owned or hereafter acquired;

 

(ii) enter into, or suffer to exist, any agreement with any Person which in any
way restricts or limits the ability of the Company to amend, modify, supplement
or otherwise alter the terms applicable to the Bank Obligations or this
Agreement; or

 

(iii) enter into, or suffer to exist, any agreement with any Person which in any
way restricts or limits the ability of any Subsidiary to (x) pay dividends or
make other distributions to the Company or prepay any Indebtedness owed to the
Company or (y) transfer any of its property or assets to the Company.

 

(l) Payments and Modification of Debt. (i) Amend or otherwise modify any
instrument or agreement under which any of the Borrowers’ or any of their
Subsidiaries’ Indebtedness is issued or created or otherwise related thereto,
except for any amendment which does not (A) increase the interest rate, fees or
other amounts payable thereon, (B) change to any earlier dates any dates upon
which any payments of principal, interest or other amounts are due thereon,
(C) change any event of default or condition to an event of default with respect
thereto (other than to eliminate any such existing event of default or make it
more favorable to the applicable Borrower or to conform such default to a
comparable Event of Default contained in this Agreement), (D) change any
affirmative or negative covenant in any significant respect (other than to
eliminate such covenant or make it more favorable to the applicable Borrower or
to conform any such covenants to covenants contained in this Agreement or to
make any financial covenants more restrictive than the financial covenants
contained in this Agreement), (E) change the redemption, prepayment or
defeasance provisions thereof (other than any change which would make such
provisions more favorable to the applicable Borrower) or (F) make any other
amendment or modification which, together with all other amendments or
modifications made, would increase materially the obligations of the obligor
thereunder or confer any additional rights on the holders of such Indebtedness
which would be adverse to any Borrower or Guarantor or to the Agent or any

 

46

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Banks, or (ii) other than the Indebtedness to the Banks and the Agent pursuant
hereto, make, or permit any Subsidiary to make, any optional payment, prepayment
or redemption of any of its or any of its Subsidiaries’ Indebtedness or enter
into any agreement or arrangement providing for the defeasance of any of such
Indebtedness, provided that any such existing Indebtedness may be refinanced and
extended provided that such refinancing does not decrease the amount of or allow
any payment on such Indebtedness other than those currently required, shorten
the maturity of any such Indebtedness, including any installments due on such
Indebtedness or impose any more restrictive covenants or defaults than imposed
by such existing Indebtedness.

 

(m) Additional Covenants. If at any time any Borrower shall enter into or be a
party to any instrument or agreement, including all such instruments or
agreements in existence as of the date hereof and all such instruments or
agreements entered into after the date hereof, relating to or amending any
provisions applicable to any of its Indebtedness which includes covenants or
defaults not substantially provided for in this Agreement or more favorable to
the lender or lenders thereunder than those provided for in this Agreement, then
the Borrowers shall promptly so advise the Agent and the Banks. Thereupon, if
the Agent or the Required Banks shall request, upon notice to the Borrowers, the
Agents and the Banks shall enter into an amendment to this Agreement or an
additional agreement (as the Agent may request), providing for substantially the
same covenants and defaults as those provided for in such instrument or
agreement to the extent required and as may be selected by the Agents. In
addition to the foregoing, any covenants or defaults in any existing agreements
or other documents evidencing or relating to any Indebtedness of any Borrower
not substantially provided for in this Agreement or more favorable to the
holders of such Indebtedness, are hereby incorporated by reference into this
Agreement to the same extent as if set forth fully herein, and no subsequent
amendment, waiver or modification thereof shall affect any such covenants or
defaults as incorporated herein.

 

(n) Indebtedness and Contingent Liabilities. Create, incur, assume or in any
manner become liable in respect of or suffer to exist, any Indebtedness or
Contingent Liabilities other than:

 

(i) the Bank Obligations;

 

(ii) the Indebtedness and Contingent Liabilities described on Schedule 5.2(n)
hereto and refinancings thereof , but in each case no increase in the amount
thereof (as such amount is reduced from time to time) and no modification of the
terms thereof which are less favorable to the Company or any of its Subsidiaries
or more restrictive on the Company or any of its Subsidiaries in any material
manner shall be permitted;

 

(iii) Indebtedness of the Company or any Subsidiary owing to the Company or to
any other Subsidiary to the extent permitted under Section 5.2(j); and

 

(iv) Guaranties by the Company of obligations of its Foreign Subsidiaries
organized under the laws of the United Kingdom owing to their vendors in the
ordinary course of business and not to exceed an aggregate outstanding amount
equal to the Equivalent in Dollars of $65,000,000; and

 

(v) other Indebtedness and Contingent Liabilities not exceeding an aggregate
outstanding amount equal to ten percent (10%) of the consolidated Net Worth of
the Company and its Subsidiaries at any time.

 

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(o) Transactions with Affiliates. Enter into, become a party to, or become
liable in respect of, any contract or undertaking with any Affiliate (other than
a Guarantor) except in the ordinary course of business and on terms not less
favorable to the Company or such Subsidiary than those which could be obtained
if such contract or undertaking were an arms length transaction with a person
other than an Affiliate.

 

(p) Dividends, Redemptions and Other Distributions. Make, pay, declare or
authorize any dividend, payment or other distribution in respect of any class of
its Capital Stock or any dividend, payment or distribution in connection with
the redemption, purchase, retirement or other acquisition, directly or
indirectly, of any shares of its Capital Stock other than such dividends,
payments or other distributions to the extent payable solely in shares of
Capital Stock of the Company, provided, however, that the Company may make, pay,
declare or authorize any of the foregoing such dividends, payments and other
distributions subject to the satisfaction of each of the following conditions:
(i) the aggregate amount thereof on and after the Effective Date shall not
exceed the sum of $50,000,000 plus 50% of the consolidated Adjusted Net Income
of the Company and its Subsidiaries, commencing with the first fiscal quarter
ending after the Effective Date, (ii) immediately before and after giving effect
to such dividend, payment or other distribution, no Event of Default or Default
shall exist or shall have occurred and be continuing and the representations and
warranties contained in Article IV and in the other Loan Documents shall be true
and correct on and as of the date thereof (both before and after giving effect
to such dividend, payment or other distribution) as if made on the date of such
dividend, payment or other distribution, and (iii) both before and after giving
effect to such dividend, payment or other distribution, the Company was and will
be able to borrow at least $20,000,000 of additional Loans on a pro forma basis
acceptable to the Agent. The Company will not issue any Disqualified Stock.

 

ARTICLE VI.

DEFAULT

 

6.1 Events of Default. The occurrence of any one of the following events or
conditions shall be deemed an “Event of Default” hereunder unless waived by the
Required Banks pursuant to Section 9.1:

 

(a) Nonpayment of Principal. Any Borrower shall fail to pay when due any
principal of the Notes or any reimbursement obligation under Section 3.3
(whether by deemed disbursement of a Revolving Credit Loan or otherwise); or

 

(b) Nonpayment of Interest. Any Borrower shall fail to pay when due any interest
or any fees or any other amount payable hereunder and such failure shall remain
unremedied for three Business Days; or

 

(c) Misrepresentation. Any representation or warranty made by any Borrower or
any Guarantor in Article IV hereof, any other Loan Document or any other
certificate, report, financial statement or other document furnished by or on
behalf of any Borrower or any Guarantor in connection with this Agreement shall
prove to have been incorrect in any material respect when made or deemed made;
or

 

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(d) Certain Covenants. Any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.1(d) or Section 5.2 hereof; or

 

(e) Other Defaults. Any Borrower or any Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement or any
other Loan Document, and any such failure shall remain unremedied for 10
calendar days after notice thereof shall have been given to such Borrower or
such Guarantor, as the case may be, by the Agent; or

 

(f) Cross Default. Any Borrower, any Guarantor or any of their respective
Subsidiaries shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under any of its
Indebtedness (other than Indebtedness hereunder), beyond any period of grace
provided with respect thereto, which individually or together with other such
Indebtedness as to which any such failure exists has an aggregate outstanding
principal amount in excess of $10,000,000; or if any Borrower, any Guarantor or
any of their respective Subsidiaries fails to perform or observe any other term,
covenant or agreement contained in any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate outstanding
principal amount, or under which any such Indebtedness was issued or created,
beyond any period of grace, if any, provided with respect thereto; or

 

(g) Judgments. One or more judgments or orders for the payment of money in an
aggregate amount of $10,000,000 shall be rendered against any Borrower, any
Guarantor or any of their respective Subsidiaries, or any other judgment or
order (whether or not for the payment of money) shall be rendered against or
shall affect any Borrower, any Guarantor or any of their respective Subsidiaries
which causes or could result in a Material Adverse Change, and either (i) such
judgment or order shall have remained unsatisfied or uninsured for a period of
21 days and such Borrower or such Subsidiary shall not have taken action
necessary to stay enforcement thereof by reason of pending appeal or otherwise,
prior to the expiration of the applicable period of limitations for taking such
action or, if such action shall have been taken, a final order denying such stay
shall have been rendered, or (ii) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order; or

 

(h) ERISA. The occurrence of a Reportable Event that results in or could result
in liability of any Borrower, any Guarantor, any Subsidiary of any Borrower or
their ERISA Affiliates to the PBGC or to any Plan and such Reportable Event is
not corrected within thirty (30) days after the occurrence thereof; or the
occurrence of any Reportable Event which could constitute grounds for
termination of any Plan of any Borrower, any Guarantor, their respective
Subsidiaries or their ERISA Affiliates by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan and such Reportable Event is not corrected within thirty (30) days after
the occurrence thereof; or the filing by any Borrower, any Guarantor, any
Subsidiary of any Borrower or any of their ERISA Affiliates of a notice of
intent to terminate a Plan or the institution of other proceedings to terminate
a Plan; or any Borrower, any Guarantor, any Subsidiary of any Borrower or any of
their ERISA Affiliates shall fail to pay when due any liability to the PBGC or
to a Plan; or the PBGC shall have instituted proceedings to terminate, or to
cause a trustee to be appointed to administer, any Plan of any Borrower, any
Guarantor, their respective Subsidiaries or their ERISA Affiliates; or any
person engages in a Prohibited Transaction with respect to any Plan which
results in or could result in liability of any Borrower, any Guarantor, any
Subsidiary of any Borrower, any of their ERISA Affiliates, any Plan of any
Borrower, any Guarantor, their respective Subsidiaries or their ERISA Affiliates
or fiduciary of any such Plan; or failure by any Borrower, any Guarantor, any
Subsidiary of any Borrower or any of their ERISA Affiliates to

 

49

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make a required installment or other payment to any Plan within the meaning of
Section 302(f) of ERISA or Section 412(n) of the Code that results in or could
result in liability of any Borrower, any Guarantor, any Subsidiary of any
Borrower or any of their ERISA Affiliates to the PBGC or any Plan; or the
withdrawal of any Borrower, any Guarantor, any of their respective Subsidiaries
or any of their ERISA Affiliates from a Plan during a plan year in which it was
a “substantial employer” as defined in Section 4001(9a)(2) of ERISA; or any
Borrower, any Guarantor, any of their respective Subsidiaries or any of their
ERISA Affiliates becomes an employer with respect to any Multiemployer Plan
without the prior written consent of the Required Banks; provided, however, that
this Section 6.1(h) shall apply only to events or occurrences which, when
aggregated with all other events and occurrences described in this
Section 6.1(h), could result in liability to the Borrowers or their respective
Subsidiaries greater than $10,000,000; or

 

(i) Insolvency, Etc. Any Borrower, any Guarantor or any of their respective
Subsidiaries shall be dissolved or liquidated (or any judgment, order or decree
therefor shall be entered) other than any voluntary dissolution of a Subsidiary
by the Company pursuant to which all of the assets of such Subsidiary are
transferred to the Company or a Guarantor, or shall generally not pay its debts
as they become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
shall institute, or there shall be instituted against any Borrower, any
Guarantor or any of their respective Subsidiaries, any proceeding or case
seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief or protection of debtors or seeking the entry of an
order for relief, or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its assets, rights,
revenues or property, and, if such proceeding is instituted against such
Borrower or such Subsidiary and is being contested by such Borrower or such
Subsidiary, as the case may be, in good faith by appropriate proceedings, such
proceeding shall remain undismissed or unstayed for a period of 60 days; or such
Borrower or such Subsidiary shall take any action (corporate or other) to
authorize or further any of the actions described above in this subsection; or

 

(j) Change of Control. The Company shall experience a Change of Control. For
purposes of this Section 6.1(j), a “Change of Control” shall occur if during any
twelve-month period (i) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13D-3 promulgated by
the Securities and Exchange Commission under said Act) of 35% or more in voting
power of the voting shares of the Company that were outstanding as of the date
of this Agreement and (ii) a majority of the board of directors of the Company
shall cease for any reason to consist of individuals who as of a date twelve
months prior to any date compliance herewith is determined were directors of the
Company; or

 

(k) Guaranties. Any Guaranty shall cease to be in full force and effect or any
Guarantor (or any person by, through or on behalf of such Guarantor) shall
contest in any manner the validity, binding nature or enforceability of any
Guaranty; or

 

(l) Licenses/Contracts. Any material license or contract of the Company or any
of its Subsidiaries is amended in any manner or terminated and such amendment or
termination could result in a Material Adverse Change; or

 

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(m) Material Adverse Change. The occurrence of any Material Adverse Change; or

 

(n) Related Transactions. Any of the Related Transactions shall be unwound,
reversed or otherwise rescinded in whole or in any material part for any reason.

 

6.2 Remedies. (a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may and, upon being directed to do so by the Required Banks,
shall by notice to the Company (i) terminate the Commitments or (ii) declare the
outstanding principal of, and accrued interest on, the Notes and all other
amounts owing under this Agreement to be immediately due and payable, or
(iii) demand immediate delivery of cash collateral, and the Borrowers agree to
deliver such cash collateral upon demand, in an amount equal to the maximum
amount that may be available to be drawn at any time prior to the stated expiry
of all outstanding Letters of Credit, or any one or more of the foregoing,
whereupon the Commitments shall terminate forthwith and all such amounts,
including cash collateral, shall become immediately due and payable, provided
that in the case of any event or condition described in Section 6.1(i) with
respect to any Borrower, the Commitments shall automatically terminate forthwith
and all such amounts, including cash collateral, shall automatically become
immediately due and payable without notice; in all cases without demand,
presentment, protest, diligence, notice of dishonor or other formality, all of
which are hereby expressly waived. Such cash collateral delivered in respect of
outstanding Letters of Credit shall be deposited in a special cash collateral
account to be held by the Agent as collateral security for the payment and
performance of the Borrowers’ obligations under the Loan Documents to the Banks
and the Agent.

 

(b) The Agent may and, upon being directed to do so by the Required Banks,
shall, in addition to the remedies provided in Section 6.2(a), exercise and
enforce any and all other rights and remedies available to it or the Banks,
whether arising under this Agreement, the Notes, any other Loan Document or
under applicable law, in any manner deemed appropriate by the Agent, including
suit in equity, action at law, or other appropriate proceedings, whether for the
specific performance (to the extent permitted by law) of any covenant or
agreement contained in this Agreement, in the Notes or in any other Loan
Document or in aid of the exercise of any power granted in this Agreement, the
Notes or any other Loan Document.

 

(c) Upon the occurrence and during the continuance of any Event of Default, each
Bank may at any time and from time to time exercise any of its rights of set off
or bankers lien that it may possess by common law or statute without prior
notice to the Borrowers, provided that each Bank may also set off against any
deposit whether or not it is then matured. Each Bank agrees to promptly notify
the Company after any such setoff and application, provided that the failure to
give such notice shall not effect the validity of such setoff and application.
The rights of such Bank under this Section 6.2(c) are in addition to other
rights and remedies which such Bank may have.

 

ARTICLE VII.

THE AGENT AND THE BANKS

 

7.1 Appointment and Authorization. Each Bank hereby irrevocably (subject to
Section 7.10) appoints, designates and authorizes the Agent to take such action
on its behalf under the

 

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provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duty or responsibility except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Bank or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
“agent” herein and in other Loan Documents with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.

 

7.2 Letters of Credit. The Agent shall act on behalf of the Banks (according to
their pro rata shares) with respect to any Letters of Credit issued by it and
the documents associated therewith. The Agent shall have all of the benefits and
immunities (a) provided to the Agent in this Article VII with respect to any
acts taken or omissions suffered by the Agent in connection with Letters of
Credit issued by it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of Credit as fully
as if the term “Agent”, as used in this Article VII, included the Agent with
respect to such acts or omissions and (b) as additionally provided in this
Agreement with respect to the Agent.

 

7.3 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.

 

7.4 Exculpation of Agent. None of the Agent nor any of its directors, officers,
employees or agents shall (a) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except to the extent
resulting from its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein as determined by a final, nonappealable
judgment by a court of competent jurisdiction), or (b) be responsible in any
manner to any Bank or participant for any recital, statement, representation or
warranty made by any Loan Party or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of any Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of any
Borrower or any of the Company’s Subsidiaries or Affiliates.

 

7.5 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice,

 

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consent, certificate, electronic mail message, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate and, if it so requests, confirmation from
the Banks of their obligation to indemnify the Agent against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon each Bank. For purposes of determining compliance with the
conditions specified in Sections 2.6 and 2.7, each Bank that has signed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Bank unless the
Agent shall have received written notice from such Bank prior to the proposed
Effective Date specifying its objection thereto.

 

7.6 Notice of Default. The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Event of Default or Default except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Event of Default or Default and stating that such notice is a
“notice of default”. The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Event of Default
or Default as may be requested by the Required Banks in accordance with
Section 13; provided that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Default as it shall deem advisable or in the best interest of the Banks.

 

7.7 Credit Decision. Each Bank acknowledges that the Agent has not made any
representation or warranty to it, and that no act by the Agent hereafter taken,
including any consent and acceptance of any assignment or review of the affairs
of the Loan Parties, shall be deemed to constitute any representation or
warranty by the Agent to any Bank as to any matter, including whether the Agent
has disclosed material information in its possession. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties, and made its own decision to enter into this Agreement and to extend
credit to the Borrowers hereunder. Each Bank also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects, operations,
property, financial or other condition or creditworthiness of the Borrowers
which may come into the possession of the Agent.

 

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7.8 Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Bank shall indemnify upon demand the Agent and its directors,
officers, employees and agents (to the extent not reimbursed by or on behalf of
the Borrowers and without limiting the obligation of the Borrowers to do so),
according to its applicable pro rata share, from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that no Bank shall be
liable for any payment to any such Person of any portion of the Indemnified
Liabilities to the extent determined by a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from the applicable Person’s
own gross negligence or willful misconduct. No action taken in accordance with
the directions of the Required Banks shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the foregoing, each Bank shall reimburse the Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including attorney
fees and costs and taxes) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrowers. The undertaking in this Section shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the Letters of
Credit, any foreclosure under, or modification, release or discharge of, any or
all of the Collateral Documents, termination of this Agreement and the
resignation or replacement of the Agent.

 

7.9 Agent in Individual Capacity. LaSalle and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Loan Parties and Affiliates as
though LaSalle were not the Agent hereunder and without notice to or consent of
any Bank. Each Bank acknowledges that, pursuant to such activities, LaSalle or
its Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliate) and acknowledge that the Agent shall be
under no obligation to provide such information to them. With respect to their
Loans (if any), LaSalle and its Affiliates shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though
LaSalle were not the Agent, and the terms “Bank” and “Banks” include LaSalle and
its Affiliates, to the extent applicable, in their individual capacities.

 

7.10 Successor Agent. The Agent may resign as Agent upon 30 days’ notice to the
Banks. If the Agent resigns under this Agreement, the Required Banks shall, with
(so long as no Event of Default exists) the consent of the Company (which shall
not be unreasonably withheld or delayed), appoint from among the Banks a
successor agent for the Banks. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Company, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term “Agent” shall mean such successor agent, and the
retiring Agent’s appointment, powers and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Article VII and Section 9.5 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
no successor agent has accepted appointment as Agent by the date which is 30
days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above.

 

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7.11 Collateral Matters. The Banks irrevocably authorize the Agent, at its
option and in its discretion, (a) to release any Lien, if any, granted to or
held by the Agent under any Loan Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of the
Borrowers hereunder and the expiration or termination of all Letters of Credit;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to
Section 9.1, if approved, authorized or ratified in writing by the Required
Banks; or (b) to subordinate its interest in any collateral to any holder of a
Lien on such collateral which is permitted by this Agreement (it being
understood that the Agent may conclusively rely on a certificate from the
Company in determining whether the debt secured by any such Lien is permitted
hereby). Upon request by the Agent at any time, the Banks will confirm in
writing the Agent’s authority to release, or subordinate its interest in,
particular types or items of Collateral pursuant to this Section 7.11. Each Bank
hereby authorizes the Agent to give blockage notices in connection with any
subordinated debt at the direction of Required Banks and agrees that it will not
act unilaterally to deliver such notices.

 

7.12 Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan Party,
the Agent (irrespective of whether the principal of any Loan shall then be due
and payable as herein expressed or by declaration or otherwise and irrespective
of whether the Agent shall have made any demand on the Borrowers) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Banks and the Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Banks and the Agent and their respective agents and counsel and all other
amounts due the Banks and the Agent the Loan Documents) allowed in such judicial
proceedings; and

 

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

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Bank to make such payments to the Agent and, in the event that the Agent
shall consent to the making of such payments directly to the Banks, to pay to
the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under the Loan Documents.

 

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

 

7.13 Other Agents; Arrangers and Managers. None of the Banks or other Persons
identified on the facing page or signature pages of this Agreement as a
“Co-Syndication Agent,”

 

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“Documentation Agent,” “co-agent,” “book manager,” “lead manager,” “arranger,”
“lead arranger” or “co-arranger”, if any, shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than,
in the case of such Banks, those applicable to all Banks as such. Without
limiting the foregoing, none of the Banks or other Persons so identified shall
have or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks or
other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

 

7.14 Sharing of Payments. The Banks agree among themselves that, in the event
that any Bank shall obtain payment in respect of any Advance or any other
obligation owing to the Banks under this Agreement through the exercise of a
right of set-off, banker’s lien, counterclaim or otherwise in excess of its
ratable share of payments received by all of the Banks on account of the
Advances and other obligations (or if no Advances are outstanding, ratably
according to the respective amounts of the Commitments), such Bank shall
promptly purchase from the other Banks participations in such Advances and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all of the Banks share such payment in
accordance with such ratable shares. The Banks further agree among themselves
that if payment to a Bank obtained by such Bank through the exercise of a right
of set-off, banker’s lien, counterclaim or otherwise as aforesaid shall be
rescinded or must otherwise be restored, each Bank which shall have shared the
benefit of such payment shall, by repurchase of participations theretofore sold,
return its share of that benefit to each Bank whose payment shall have been
rescinded or otherwise restored. The Borrowers agree that any Bank so purchasing
such a participation may, to the fullest extent permitted by law, exercise all
rights of payment, including set-off, banker’s lien or counterclaim, with
respect to such participation as fully as if such Bank were a holder of such
Advance or other obligation in the amount of such participation. The Banks
further agree among themselves that, in the event that amounts received by the
Banks and the Agent hereunder are insufficient to pay all such obligations or
insufficient to pay all such obligations when due, the fees and other amounts
owing to the Agent in such capacity shall be paid therefrom before payment of
obligations owing to the Banks under this Agreement, other than agency fees
payable pursuant to Section 2.5(c) of this Agreement which shall be paid on a
pro rata basis with amounts owing to the Banks. Except as otherwise expressly
provided in this Agreement, if any Bank or the Agent shall fail to remit to the
Agent or any other Bank an amount payable by such Bank or the Agent to the Agent
or such other Bank pursuant to this Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Bank at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Banks and the Agent that if the Agent or any
Bank shall engage in any other transactions with any Borrower and shall have the
benefit of any collateral or security therefor which does not expressly secure
the obligations arising under this Agreement except by virtue of a so-called
dragnet clause or comparable provision, the Agent or such Bank shall be entitled
to apply any proceeds of such collateral or security first in respect of the
obligations arising in connection with such other transaction before application
to the obligations arising under this Agreement.

 

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ARTICLE VIII.

GUARANTY

 

As an inducement to the Banks and the Agent to enter into the transactions
contemplated by this Agreement, the Company agrees with the Banks and the Agent
as follows:

 

8.1 Guarantee of Obligations. (a) The Company hereby (i) guarantees, as
principal obligor and not as surety only, to the Banks the prompt payment of the
principal of and any and all accrued and unpaid interest (including interest
which otherwise may cease to accrue by operation of any insolvency law, rule,
regulation or interpretation thereof) on the Advances and all other Obligations
of the Borrowing Subsidiaries to the Banks and the Agent under this Agreement
when due, whether by scheduled maturity, acceleration or otherwise, all in
accordance with the terms of this Agreement and the Notes, including, without
limitation, default interest, indemnification payments and all reasonable costs
and expenses incurred by the Banks and the Agent in connection with enforcing
any obligations of the Borrowing Subsidiaries hereunder, including without
limitation the reasonable fees and disbursements of counsel, (ii) guarantees the
prompt and punctual performance and observance of each and every term, covenant
or agreement contained in this Agreement and the other Loan Documents to be
performed or observed on the part of the Borrowing Subsidiaries and (iii) agrees
to make prompt payment, on demand, of any and all reasonable costs and expenses
incurred by the Banks or the Agent in connection with enforcing the obligations
of the Company hereunder, including, without limitation, the reasonable fees and
disbursements of counsel (all of the foregoing being collectively referred to as
the “Guaranteed Obligations”).

 

(b) If for any reason any duty, agreement or obligation of any Borrowing
Subsidiary contained in this Agreement shall not be performed or observed by any
Borrowing Subsidiary as provided therein, or if any amount payable under or in
connection with this Agreement shall not be paid in full when the same becomes
due and payable, the Company undertakes to perform or cause to be performed
promptly each of such duties, agreements and obligations and to pay forthwith
each such amount to the Agent for the account of the Banks regardless of any
defense or setoff or counterclaim which any Borrowing Subsidiary may have or
assert, and regardless of any other condition or contingency.

 

8.2 Nature of Guaranty. The obligations of the Company hereunder constitute an
absolute and unconditional and irrevocable guaranty of payment and not a
guaranty of collection and are wholly independent of and in addition to other
rights and remedies of the Banks and the Agent and are not contingent upon the
pursuit by the Banks and the Agent of any such rights and remedies, such pursuit
being hereby waived by the Company.

 

8.3 Waivers and Other Agreements. The Company hereby unconditionally (a) waives
any requirement that the Banks or the Agent, upon the occurrence of an Event of
Default first make demand upon, or seek to enforce remedies against any
Borrowing Subsidiary before demanding payment under or seeking to enforce the
obligations of the Company hereunder, (b) covenants that the obligations of the
Company hereunder will not be discharged except by complete performance of all
obligations of the Borrowing Subsidiary contained in this Agreement and the
Notes, (c) agrees that the obligations of the Company hereunder shall remain in
full force and effect without regard to, and shall not be affected or impaired,
without limitation, by any invalidity, irregularity or unenforceability in whole
or in part of this Agreement, the Notes or any other Loan Document, or any
limitation on the liability of the Borrowing Subsidiaries thereunder, or any
limitation on the method or terms of payment thereunder which may or hereafter
be caused or imposed in any manner whatsoever (including, without limitation,
usury laws), (d) waives diligence, presentment and protest with respect to, and
any notice of default or dishonor in the payment of any amount at any time
payable by the Borrowing Subsidiaries under or in connection with this
Agreement, the Notes or any other Loan Document, and further waives any
requirement of notice of acceptance of, or other formality relating to, the
obligations of the Company hereunder and (e) agrees that the Guaranteed
Obligations shall include any amounts paid by the Borrowing Subsidiaries to the
Banks or

 

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the Agent which may be required to be returned to the Borrowing Subsidiaries or
to its representative or to a trustee, custodian or receiver for any Borrowers.

 

8.4 Obligations Absolute. The obligations, covenants, agreements and duties of
the Company under this Agreement shall not be released, affected or impaired by
any of the following whether or not undertaken with notice to or consent of the
Company: (a) an assignment or transfer, in whole or in part, of the Advances
made to the Borrowing Subsidiary or of this Agreement or any Note although made
without notice to or consent of the Company, or (b) any waiver by any Bank or
the Agent or by any other person, of the performance or observance by any
Borrowing Subsidiary of any of the agreements, covenants, terms or conditions
contained in this Agreement or in the other Loan Documents, or (c) any
indulgence in or the extension of the time for payment by any Borrowing
Subsidiary of any amounts payable under or in connection with this Agreement or
any other Loan Document, or of the time for performance by any Borrowing
Subsidiary of any other Obligations or the extension or renewal thereof, or
(d) the modification, amendment or waiver (whether material or otherwise) of any
duty, agreement or obligation of any Borrowing Subsidiary set forth in this
Agreement or any other Loan Document (the modification, amendment or waiver from
time to time of this Agreement and the other Loan Documents being expressly
authorized without further notice to or consent of the Company), or (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of any Borrowing Subsidiary or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings, affecting
any Borrowing Subsidiary or any of its assets, or (f) the merger or
consolidation of any Borrowing Subsidiary or the Company with any other person,
or (g) the release or discharge of any Borrowing Subsidiary or the Company from
the performance or observance of any agreement, covenant, term or condition
contained in this Agreement or any other Loan Document, by operation of law or
otherwise, or (h) any other cause whether similar or dissimilar to the foregoing
which would release, affect or impair the obligations, covenants, agreements or
duties of the Company hereunder.

 

8.5 No Investigation by Banks or Agent. The Company hereby waives
unconditionally any obligation which, in the absence of such provision, the
Banks or the Agent might otherwise have to investigate or to assure that there
has been compliance with the law of any jurisdiction with respect to the
Guaranteed Obligations recognizing that, to save both time and expense, the
Company has requested that the Banks and the Agent not undertake such
investigation. The Company hereby expressly confirms that the obligations of the
Company hereunder shall remain in full force and effect without regard to
compliance or noncompliance with any such law and irrespective of any
investigation or knowledge of any Bank or the Agent of any such law.

 

8.6 Indemnity. As a separate, additional and continuing obligation, the Company
unconditionally and irrevocably undertakes and agrees with the Banks and the
Agent that, should the Guaranteed Obligations not be recoverable from the
Company under Section 8.1 for any reason whatsoever (including, without
limitation, by reason of any provision of this Agreement, the Notes or any other
Loan Document or any other agreement or instrument executed in connection
herewith being or becoming void, unenforceable, or otherwise invalid under any
applicable law) then, notwithstanding any knowledge thereof by any Bank or the
Agent at any time, the Company as sole, original and independent obligor, upon
demand by the Agent, will make payment to the Agent for the account of the Banks
and the Agent of the Guaranteed Obligations by way of a full indemnity in such
currency and otherwise in such manner as is provided in this Agreement and the
Notes.

 

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8.7 Subordination, Subrogation, Etc. The Company agrees that any present or
future indebtedness, obligations or liabilities of any Borrowing Subsidiary to
Company shall be fully subordinate and junior in right and priority of payment
to any present or future indebtedness, obligations or liabilities of the
Borrowing Subsidiaries to the Banks and the Agent. The Company waives any right
of subrogation to the rights of any Bank or the Agent against any Borrowing
Subsidiary or any other person obligated for payment of the Guaranteed
Obligations and any right of reimbursement or indemnity whatsoever arising or
accruing out of any payment which the Company may make pursuant to this
Agreement and the Notes, and any right of recourse to security for the debts and
obligations of each Borrowing Subsidiary, unless and until the entire principal
balance of and interest on the Guaranteed Obligations shall have been
indefeasibly paid in full.

 

ARTICLE IX.

MISCELLANEOUS

 

9.1 Amendments, Etc. (a) No amendment, modification, termination or waiver of
any provision of this Agreement nor any consent to any departure therefrom shall
be effective unless the same shall be in writing and signed by the Borrowers and
the Required Banks and, to the extent any rights or duties of the Agent may be
affected thereby, the Agent, and, to the extent any rights or duties of any
Swingline Bank may be affected thereby, such Swingline Bank, provided, however,
that no such amendment, modification, termination, waiver or consent shall,
without the consent of the Agent and all of the Banks, (i) authorize or permit
the extension of time for, or any reduction of the amount of, any payment of the
principal of, or interest on, the Notes or any Letter of Credit reimbursement
obligation, or any fees or other amount payable hereunder, (ii) amend or
terminate the respective Commitment of any Bank (except to the extent permitted
by Section 9.1(b)) or modify the provisions of this Section regarding the taking
of any action under this Section or the provisions of Section 9.10 or the
definition of Required Banks, or (iii) provide for the discharge of any
Guarantor, except to the extent provided in this Agreement.

 

(b) New lenders (“New Banks”) may become Banks hereunder and party to this
Agreement and existing Banks may increase their Commitments hereunder by
executing an assumption agreement and other agreements and documents in form and
substance acceptable to the Company and the Agent, provided that (i) the Company
and the Agent consent thereto and (ii) without the prior written consent of all
of the Banks, the aggregate Commitments may not be increased by more than
$30,000,000 in excess of the aggregate Commitments in effect on the Effective
Date.

 

(c) Any Subsidiary may become a Borrower hereunder, subject to the conditions
described in the definition of Borrowing Subsidiaries.

 

(d) Any such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

(e) Notwithstanding anything herein to the contrary, no Defaulting Bank shall be
entitled to vote (whether to consent or to withhold its consent) with respect to
any amendment, modification, termination or waiver of any provision of this
Agreement or any departure therefrom or any direction from the Banks to the
Agent, and, for purposes of determining the Required Banks at any time when any
Bank is a Defaulting Bank under this Agreement, the Commitments and Advances of
such Defaulting Banks shall be disregarded.

 

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9.2 Notices. (a) Except as otherwise provided in Section 9.2(c) hereof, all
notices and other communications hereunder shall be in writing and shall be
delivered or sent to the Borrowers at 500 Kirts Blvd., Troy, Michigan 48084,
Attention: chief financial officer, vice president – controller, treasurer or
assistant treasurer, Facsimile No. (248) 362-3656, and to the Agent and the
Banks at the respective addresses and numbers for notices set forth on the
signatures pages hereof, or to such other address as may be designated by any
Borrower, the Agent or any Bank by notice to the other parties hereto. All
notices and other communications shall be deemed to have been given at the time
of actual delivery thereof to such address, or if sent by certified or
registered mail, postage prepaid, to such address, on the third day after the
date of mailing, or if deposited prepaid with Federal Express or other
nationally recognized overnight delivery service prior to the deadline for next
day delivery, on the Business Day next following such deposit, provided,
however, that notices to the Agent shall not be effective until received.

 

(b) Notices by a Borrower to the Agent with respect to terminations or
reductions of the Commitments pursuant to Section 2.4, requests for Advances
pursuant to Section 2.6, requests for continuations or conversions of Loans
pursuant to Section 2.9 and notices of prepayment pursuant to Section 3.1 shall
be irrevocable and binding on the Borrowers.

 

(c) Any notice to be given by a Borrower to the Agent pursuant to Sections 2.6
or 2.9 and any notice to be given by the Agent or any Bank hereunder, may be
given by telephone, and all such notices given by a Borrower must be immediately
confirmed in writing in the manner provided in Section 9.2(a). Any such notice
given by telephone shall be deemed effective upon receipt thereof by the party
to whom such notice is to be given.

 

9.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on the part
of the Agent or any Bank, nor any delay or failure on the part of the Agent or
any Bank in exercising any right, power or privilege hereunder shall operate as
a waiver of such right, power or privilege or otherwise prejudice the Agent’s or
such Bank’s rights and remedies hereunder; nor shall any single or partial
exercise thereof preclude any further exercise thereof or the exercise of any
other right, power or privilege. No right or remedy conferred upon or reserved
to the Agent or any Bank under this Agreement, the Notes or any other Loan
Document is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative, except as limited by this Agreement, and
in addition to every other right or remedy granted thereunder or now or
hereafter existing under any applicable law. Every right and remedy granted by
this Agreement, the Notes or any other Loan Document or by applicable law to the
Agent or any Bank may be exercised from time to time and as often as may be
deemed expedient by the Agent or any Bank and, unless contrary to the express
provisions of this Agreement, the Notes or such other Loan Document,
irrespective of the occurrence or continuance of any Default or Event of
Default.

 

9.4 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of any Borrower or any Guarantor made
herein, in any Guaranty or in any certificate, report, financial statement or
other document furnished by or on behalf of any Borrower or any Guarantor in
connection with this Agreement shall be deemed to be material and to have been
relied upon by the Banks, notwithstanding any investigation heretofore or
hereafter made by any Bank or on such Bank’s behalf, and those covenants and
agreements of the Borrowers set forth in Sections 3.7, 3.9 and 9.5 hereof shall
survive the repayment in full of the Advances and the termination of the
Commitments.

 

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9.5 Expenses. (a) The Borrowers agree to pay, or reimburse the Agent for the
payment of, on demand, (i) the reasonable fees and expenses of counsel to the
Agent, including without limitation the fees and expenses of Dickinson Wright
PLLC in connection with the preparation, execution, delivery and administration
of this Agreement, the Notes and the other Loan Documents and the consummation
of the transactions contemplated hereby, and in connection with advising the
Agent as to its rights and responsibilities with respect thereto, and in
connection with any amendments, waivers or consents in connection therewith, and
(ii) all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing or recording of this Agreement,
the Notes, the Loan Documents and the consummation of the transactions
contemplated hereby, and any and all liabilities with respect to or resulting
from any delay in paying or omitting to pay such taxes or fees, and (iii) all
reasonable costs and expenses of the Agent and any Bank (including without
limitation reasonable fees and expenses of counsel, including without limitation
counsel who are employees of the Agent or any Bank, and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Default or
Event of Default or the enforcement of, or the exercise or preservation of any
rights under, this Agreement, the Notes or any other Loan Document or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement and (iv) all reasonable costs and expenses of the
Agent and the Banks (including reasonable fees and expenses of counsel) in
connection with any action or proceeding relating to a court order, injunction
or other process or decree restraining or seeking to restrain the Agent from
paying any amount under, or otherwise relating in any way to, any Letter of
Credit and any and all costs and expenses which any of them may incur relative
to any payment under any Letter of Credit.

 

(b) Each Borrower hereby indemnifies and agrees to hold harmless the Banks and
the Agent, and their respective officers, directors, employees and agents,
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses of any kind or nature whatsoever which the Banks or the Agent
or any such person may incur or which may be claimed against any of them by
reason of or in connection with any Letter of Credit, and neither any Bank nor
the Agent or any of their respective officers, directors, employees or agents
shall be liable or responsible for: (i) the use which may be made of any Letter
of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Borrowers shall not be required to indemnify the
Banks and the Agent and such other persons, and the Agent shall be liable to the
Borrowers to the extent, but only to the extent, of any direct, as opposed to
consequential or incidental, damages suffered by the Borrowers which were caused
by (A) the Agent’s wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit, or (B) the Agent’s payment to the beneficiary under
any Letter of Credit against presentation of documents which do not comply with
the terms of the Letter of Credit to the extent, but only to the extent, that
such payment constitutes gross negligence or willful misconduct of the Agent. It
is understood that in making any payment under a Letter of Credit the Agent will
rely on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further investigation and regardless of any
notice or information to the contrary, and such reliance and payment against
documents

 

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presented under a Letter of Credit substantially complying with the terms
thereof shall not be deemed gross negligence or willful misconduct of the Agent
in connection with such payment.

 

(c) Each Borrower agrees to indemnify the Agent and each Bank, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee at any time in connection with
any investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of the Loan Documents, any actual or proposed use of proceeds
of the Advances, any transactions relating to any of the foregoing, any act or
omission of any Borrower or any Guarantor or any environmental liability of any
Borrower or any Guarantor; provided that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee’s own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.

 

9.6 Successors and Assigns. (a) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, provided that no Borrower may, without the prior consent of the Banks,
assign its rights or obligations hereunder or under the Notes and the Banks
shall not be obligated to make any Loan hereunder to any entity other than the
Borrowers.

 

(b) Any Bank may sell to any financial institution or institutions, and such
financial institution or institutions may further sell, a participation interest
(undivided or divided) in, the Loans and such Bank’s rights and benefits under
this Agreement, the Notes and the other Loan Documents, and to the extent of
that participation interest such participant or participants shall have the same
rights and benefits against the Borrowers under Section 3.7, 3.9 and 6.2(c) as
it or they would have had if such participant or participants were the Bank
making the Loans to the Borrowers hereunder, provided, however, that (i) such
Bank’s obligations under this Agreement shall remain unmodified and fully
effective and enforceable against such Bank, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Bank shall remain the holder of its Notes for all purposes of this
Agreement, (iv) the Borrowers, the Agent and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank’s rights
and obligations under this Agreement, and (v) such Bank shall not grant to its
participant (other than a participant which is an Affiliate of that Bank) any
rights to consent or withhold consent to any action taken by such Bank or the
Agent under this Agreement other than action requiring the consent of all of the
Banks hereunder.

 

(c) The Agent from time to time in its sole discretion may appoint agents for
the purpose of servicing and administering this Agreement and the transactions
contemplated hereby and enforcing or exercising any rights or remedies of the
Agent provided under this Agreement, the Notes, the other Loan Documents or
otherwise. In furtherance of such agency, the Agent may from time to time direct
that the Borrowers provide notices, reports and other documents contemplated by
this Agreement (or duplicates thereof) to such agent. Each Borrower hereby
consents to the appointment of such agent and agrees to provide all such
notices, reports and other documents and to otherwise deal with such agent
acting on behalf of the Agent in the same manner as would be required if dealing
with the Agent itself.

 

(d) Each Bank may, with the prior consent of the Company (which consent may not
be unreasonably withheld and shall not be required during the continuance of any
Event of Default)

 

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and the Agent, assign to one or more banks or other entities all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Loans owing to it and the Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
uniform, and not a varying, percentage of all rights and obligations,
(ii) except in the case of an assignment of all of a Bank’s rights and
obligations under this Agreement, (A) the amount of the Commitment of the
assigning Bank being assigned pursuant to each such assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than $10,000,000, and in integral multiples of $1,000,000
thereafter, or such lesser amount to which the Agent and, if no Event of Default
exists, Company may consent, and (B) if such assignment is not of the Bank’s
entire Commitment, after giving effect to each such assignment the amount of the
Commitment of the assigning Bank shall in no event be less than $10,000,000 or
such lesser amount to which the Agent and, if no Event of Default exists,
Company may consent, (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of Exhibit G hereto (an “Assignment and
Acceptance”), together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500, and (iv) any Bank may without the
consent of the Company or the Agent assign or sell a participation interest to
any Affiliate of such Bank that is a bank or financial institution all or a
portion of its rights and obligations under this Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (y) the Bank assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Bank’s rights and obligations under this Agreement, such Bank shall cease to be
a party hereto).

 

(e) By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of any Borrower or the
performance or observance by any Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.6 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent, such
assigning Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Bank.

 

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(f) The Agent shall maintain at its address designated on the signature pages
hereof a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank from
time to time (the “Register”). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Company, the
Borrowing Subsidiaries, the Agent and the Banks may treat each person whose name
is recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Company or any
Bank at any reasonable time and from time to time upon reasonable prior notice.

 

(g) Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and an assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five Business Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit B hereto.

 

(h) No Borrower shall be liable for any costs or expenses of any Bank in
effectuating any participation or assignment under this Section 9.6.

 

(i) The Banks may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.6, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Borrowers.

 

(j) Notwithstanding any other provision set forth in this Agreement, any Bank
may at any time create a security interest in, or assign, all or any portion of
its rights under this Agreement (including, without limitation, the Loans owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System; provided that such creation of a security interest or assignment shall
not release such Bank from its obligations under this Agreement.

 

9.7 Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Agreement by signing any such
counterpart.

 

9.8 Governing Law; Consent to Jurisdiction. This Agreement is a contract made
under, and shall be governed by and construed in accordance with, the law of the
State of Michigan applicable to contracts made and to be performed entirely
within such State and without giving effect to choice of law principles of such
State. Each Borrower further agrees that any legal action or proceeding with
respect to this Agreement, the Notes or any other Loan Document or the
transactions contemplated hereby may be brought in any court of the State of
Michigan, or in any court of the United States of

 

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America sitting in Michigan, and each Borrower hereby irrevocably submits to and
accepts generally and unconditionally the jurisdiction of those courts with
respect to its person and property.

 

9.9 Table of Contents and Headings. The table of contents and the headings of
the various subdivisions hereof are for the convenience of reference only and
shall in no way modify any of the terms or provisions hereof.

 

9.10 Construction of Certain Provisions. If any provision of this Agreement
refers to any action to be taken by any person, or which such person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such person, whether or not expressly
specified in such provision.

 

9.11 Integration and Severability. This Agreement, the Notes and the other Loan
Documents embody the entire agreement and understanding between the Borrowers
and the Agent and the Banks, and supersede all prior agreements and
understandings, relating to the subject matter hereof. In case any one or more
of the obligations of any Borrower under this Agreement, the Notes or any other
Loan Document shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining obligations of such
Borrower and the other Borrowers shall not in any way be affected or impaired
thereby, and such invalidity, illegality or unenforceability in one jurisdiction
shall not affect the validity, legality or enforceability of the obligations of
the Borrowers under this Agreement, the Notes or any other Loan Document in any
other jurisdiction.

 

9.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
such condition exists.

 

9.13 Interest Rate Limitation. Notwithstanding any provisions of this Agreement,
the Notes or any other Loan Document, in no event shall the amount of interest
paid or agreed to be paid by any Borrower exceed an amount computed at the
highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any other Loan Document at the time performance of such provision shall
be due, shall involve exceeding the interest rate limitation validly prescribed
by law which a court of competent jurisdiction may deem applicable hereto, then,
ipso facto, the obligations to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under applicable law, and
if for any reason whatsoever any Bank shall ever receive as interest an amount
which would be deemed unlawful under such applicable law such interest shall be
automatically applied to the payment of principal of such Bank’s Advances
outstanding hereunder (whether or not then due and payable) and not to the
payment of interest, or shall be refunded to the Borrowers if such principal and
all other obligations of the Borrowers to such Bank have been paid in full.

 

9.14 Margin Stock. Each Bank represents that it in good faith is not relying,
either directly or indirectly, upon any Margin Stock as collateral security for
the extension or maintenance by it or any credit provided for in this Agreement.

 

9.15 Joint Obligations; Contribution Rights; Savings Clause. (a) Notwithstanding
anything to the contrary set forth herein or in any Note, the obligations of the
Borrowers hereunder and under the Notes are joint, provided that Borrowers which
are Foreign Subsidiaries shall not be jointly liable

 

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for any obligations of the Company or any other Borrower which is a Domestic
Subsidiary if such joint obligation would result in a material adverse tax
liability to such Foreign Subsidiary.

 

(b) If any Borrower makes a payment in respect of the Bank Obligations it shall
have the rights of contribution set forth below against the other Borrowers;
provided that such Borrower shall not exercise its right of contribution until
all the Bank Obligations shall have been paid in full. If any Borrower makes a
payment in respect of the Bank Obligations that is smaller in proportion to its
Payment Share (as hereinafter defined) than such payments made by the other
Borrowers are in proportion to the amounts of their respective Payment Shares,
the Borrower making such proportionately smaller payment shall, when permitted
by the preceding sentence, pay to the other Borrowers an amount such that the
net payments made by the Borrower in respect of the Bank Obligations shall be
shared among the Borrowers pro rata in proportion to their respective Payment
Shares. If any Borrower receives any payment that is greater in proportion to
the amount of its Payment Shares than the payments received by the other
Borrowers are in proportion to the amounts of their respective Payment Shares,
the Borrower receiving such proportionately greater payment shall, when
permitted by the second preceding sentence, pay to the other Borrowers an amount
such that the payments received by the Borrowers shall be shared among the
Borrowers pro rata in proportion to their respective Payment Shares.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Borrower that shall accrue pursuant
to this paragraph shall be paid nor shall it be deemed owed pursuant to this
paragraph until all of the Bank Obligations shall be paid in full.

 

For purposes hereof, the “Payment Share” of each Borrower shall be the sum of
(a) the aggregate proceeds of the Bank Obligations received by such Borrower
(and, if received subject to a repayment obligation remaining unpaid on the
Obligation Date, as hereinafter defined), plus (b) the product of (i) the
aggregate Bank Obligations remaining unpaid on the date such Bank Obligations
become due and payable in full, whether by stated maturity, acceleration, or
otherwise (the “Obligation Date”) reduced by the amount of such Bank Obligations
attributed to Borrowers pursuant to clause (a) above, times (ii) a fraction, the
numerator of which is such Borrower’s Net Worth on the effective date of this
Agreement (determined as of the end of the immediately preceding fiscal
reporting period of the Borrower), and the denominator of which is the aggregate
Net Worth of all Borrowers on such effective date.

 

(c) It is the intent of each Borrower, the Agent and the Banks that each
Borrower’s maximum Bank Obligations shall be in, but not in excess of:

 

(i) in a case or proceeding commenced by or against such Borrower under the
Bankruptcy Code on or within one year from the date on which any of the Bank
Obligations is incurred, the maximum amount that would not otherwise cause the
Bank Obligations (or any other obligations of such Borrower to the Agent and the
Banks) to be avoidable or unenforceable against such Borrower under
(A) Section 548 of the Bankruptcy Code or (B) any state fraudulent transfer or
fraudulent conveyance act or statute applied in such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or

 

(ii) in a case or proceeding commenced by or against such Borrower under the
Bankruptcy Code subsequent to one year from the date on which any of the Bank
Obligations are incurred, the maximum amount that would not otherwise cause the
Bank Obligations (or any other obligations of such Borrower to the Agent and the
Banks) to be avoidable or unenforceable against such

 

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Borrower under any state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding by virtue of Section 544 of the
Bankruptcy Code;

 

(iii) in a case or proceeding commenced by or against such Borrower under any
law, statute or regulation other than the Bankruptcy Code (including, without
limitation, any other bankruptcy, reorganization, arrangement, moratorium,
readjustment of debt, dissolution, liquidation or similar debtor relief laws),
the maximum amount that would not otherwise cause the Bank Obligations (or any
other obligations of such Borrower to the Agent and the Banks) to be avoidable
or unenforceable against such Borrower under such law, statute or regulation
including, without limitation, any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding.

 

(d) The Borrowers acknowledge and agree that they have requested that the Banks
make credit available to the Borrowers with each Borrowing Subsidiary expecting
to derive benefit, directly and indirectly, from the loans and other credit
extended by the Banks to the Borrowers.

 

9.16 Confidentiality. The Banks and the Agent shall hold all confidential
information obtained pursuant to the requirements of this Agreement which has
been identified as such by the Company in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with this Agreement or as reasonably
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Note or participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process. Without limiting the foregoing, it is expressly understood that
such confidential information shall not include information which, at the time
of disclosure is in the public domain or, which after disclosure, becomes part
of the public domain or information which is obtained by any Bank or the Agent
prior to the time of disclosure and identification by the Company under this
Section, or information received by any Bank or the Agent from a third party.
Nothing in this Section or otherwise shall prohibit any Bank or the Agent from
disclosing any confidential information to the other Banks or the Agent or
render any of them liable in connection with any such disclosure.

 

9.17 Waiver of Jury Trial. The Banks and the Agent and each Borrower, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right any of them may have to a trial by
jury in any litigation based upon or arising out of this Agreement or any
related instrument or agreement or any of the transactions contemplated by this
Agreement or any course of conduct, dealing, statement (whether oral or written)
or actions of any of them. Neither any Bank, the Agent, nor any Borrower shall
seek to consolidate, by counterclaim or otherwise, any such action in which a
jury trial has been waived with any other action in which a jury trial cannot be
or has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by any party thereto except by a written
instrument executed by such party.

 

9.18 Customer Identification - USA Patriot Act Notice. Each Bank and LaSalle
(for itself and not on behalf of any other party) hereby notifies the Loan
Parties that, pursuant to the requirements of the USA Patriot Act, Title III of
Pub. L. 107-56, signed into law October 26, 2001 (the “Act”), it is required to
obtain, verify and record information that identifies the Loan Parties, which
information includes the name and address of the Loan Parties and other
information that will allow such Bank or LaSalle, as applicable, to identify the
Loan Parties in accordance with the Act.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

 

HANDLEMAN COMPANY By:    

Title:

    HANDLEMAN COMPANY OF CANADA LIMITED By:    

Title:

   

 

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Address for Notices:

      LASALLE BANK MIDWEST NATIONAL ASSOCIATION, as a Bank and as Agent 2600
West Big Beaver Road       By:    

Troy, Michigan 48084

     

Title:

   

Attention: Lakshmi Sundaram

           

Facsimile No.: (248) 637-5003

           

Telephone No.: (248) 822-5748

           

Address for Notices:

      ABN AMRO BANK N.V., CANADA BRANCH, as the Swingline Canadian Bank
______________________________       By:    

______________________________

     

Title:

   

Attention:                                             

           

Facsimile No.:                                    

           

Telephone No.:                                   

           

 

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Address for Notices:

     

KEYBANK NATIONAL ASSOCIATION, as a Bank
and as a Co-Syndication Agent

127 Public Square       By:    

Mail Code: Oh-01-27-0606

     

Title:

   

Cleveland, OH 44114

           

Attention: J.T. Taylor

           

Facsimile No.: 216-689-4981

           

Telephone No.:216-689-3589

           

 

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Address for Notices:

     

COMERICA BANK, as a Bank and as a

Co-Syndication Agent

500 Woodward Ave., 9th Floor       By:    

Detroit, Michigan 48226

     

Title:

   

Attention: Jessica M. Migliore

           

Facsimile No.: 313-222-8622

           

Telephone No.: 313-222-9452

           

 

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Address for Notices:

     

US BANK, N.A., as a Bank

and as a Co-Syndication Agent

425 Walnut Street, ML CN-WN-08       By:    

Cincinnati, OH 45201

     

Title:

   

Attention: Richard Neltner

           

Facsimile No.: 513-632-2068

           

Telephone No.: 513-632-4073

                         

 

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Address for Notices:

     

NATIONAL CITY BANK OF THE MIDWEST, as a

Bank and as the Documentation Agent

__________________________       By:     __________________________      

Title:

   

Attention:                                     

           

Facsimile No.:                             

           

Telephone No.:                             

                         

 

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Address for Notices:

      CHARTER ONE BANK, N.A. __________________________       By:    

__________________________

     

Title:

   

Attention:                                   

           

Facsimile No.:                           

           

Telephone No.:                         

           

 

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Address for Notices:

      THE HUNTINGTON NATIONAL BANK 801 W. Big Beaver Rd.       By:    

Troy, MI 48084

         

Joseph K. Zayance

Attention: Joseph K. Zayance

     

Title:

 

Vice President

Facsimile No.: 248-244-3587

           

Telephone No.: 248-244-3589

           

 

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Address for Notices:

      FIFTH THIRD BANK __________________________       By:    

__________________________

     

Title:

   

Attention:                                   

           

Facsimile No.:                           

           

Telephone No.:                         

           

 

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EXHIBIT A

 

AMENDED AND RESTATED GUARANTY AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTY AGREEMENT, dated as of November 22, 2005
(this “Guaranty”), is made by HANDLEMAN CATEGORY MANAGEMENT COMPANY, a Michigan
corporation, HANDLEMAN ENTERTAINMENT RESOURCES L.L.C., a Michigan limited
liability company, LIFETIME HOLDING, INC., a Michigan corporation, HANDLEMAN UK
LIMITED, a company registered under the laws of England and Wales, HANDLEMAN
COMPANY OF CANADA LIMITED, a corporation organized under the laws of the
Province of Ontario (the foregoing are hereinafter sometimes referred to
individually as a “Guarantor” and collectively as the “Guarantors”), in favor of
the Banks which are parties to the Credit Agreement hereinafter defined and
LASALLE BANK MIDWEST NATIONAL ASSOCIATION, formerly known as Standard Federal
Bank, N.A., as administrative agent (in such capacity, the “Agent”) for such
Banks under the Credit Agreement.

 

RECITALS

 

A. Handleman Company, a Michigan corporation (the “Company”) and certain
borrowing subsidiaries designated thereunder from time to time (the “Borrowing
Subsidiaries” and collectively with the Company, the “Borrowers”), have entered
into an Amended and Restated Credit Agreement, dated as of November 22, 2005 (as
amended or modified from time to time, the “Credit Agreement”), with the Banks,
the Agent, KeyBank National Association, as Co-Syndication Agent, Comerica Bank,
as Co-Syndication Agent, US Bank, N.A., as Co-Syndication Agent, and National
City Bank of the Midwest, as Documentation Agent, pursuant to which the Banks
may make Advances to the Borrowers.

 

B. Each of Handleman Category Management Company, Handleman Entertainment
Resources LLC, Lifetime Holding, Inc., Handleman UK Limited, Handleman Company
of Canada Limited (the “Existing Guarantors”), entered into a Guaranty
Agreement, dated as of August 8, 2001, August 8, 2001, August 8,
2001, October 17, 2002 and October 17, 2002, respectively (the “Existing
Guaranty Agreements”), in favor of the Agent and the Banks.

 

C. As a condition to the effectiveness of the obligations of the Banks under the
Credit Agreement, each Guarantor is required to guarantee, among other things,
the obligations of the Borrowers in respect of the Advances and other
obligations of the Borrowers under the Operative Documents hereinafter defined.
Each of the Existing Guarantors desires and has agreed to amend and restate the
Existing Guaranty Agreements in their entirety as set forth herein.

 

D. Each Guarantor has reviewed the Credit Agreement, the Notes, and all other
documents, agreements, instruments and certificates furnished by or on behalf of
the Borrowers in connection therewith (all of the foregoing, as amended or
modified from time to time and together with any agreements or instruments in
replacement thereof, being herein collectively referred to as the “Operative
Documents”), and each Guarantor has determined that it is in its interest and to
its financial benefit that the parties to the Operative Documents enter into the
transactions contemplated thereby.

 

For valuable consideration, the receipt of which is hereby acknowledged and as
further consideration, and as an inducement to the Banks and the Agent to
maintain the credit facilities established by the Operative Documents, each
Guarantor agrees with the Banks and the Agent as follows and each of the
Existing Guarantors also agrees that the Existing Guaranty Agreements shall be
amended and restated as follows:

 

1. Guarantee of Obligations. (a) Each Guarantor hereby (i) guarantees, as
principal obligor and

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not as surety only, to the Banks the prompt payment of the principal of and any
and all accrued and unpaid interest (including interest which otherwise may
cease to accrue by operation of any insolvency law, rule, regulation or
interpretation thereof) on the Advances and all other obligations of the
Borrowers to the Banks and the Agent under the Credit Agreement when due,
whether by scheduled maturity, acceleration or otherwise, all in accordance with
the terms of the Credit Agreement and the Notes, including, without limitation,
default interest, indemnification payments and all reasonable costs and expenses
incurred by the Banks and the Agent in connection with enforcing any obligations
of the Borrowers hereunder, including without limitation the reasonable fees and
disbursements of counsel, (ii) guarantees the prompt and punctual performance
and observance of each and every term, covenant or agreement contained in the
Credit Agreement and the Notes to be performed or observed on the part of the
Borrowers and (iii) agrees to make prompt payment, on demand, of any and all
reasonable costs and expenses incurred by the Banks or the Agent in connection
with enforcing the obligations of each Guarantor hereunder, including, without
limitation, the reasonable fees and disbursements of counsel (all of the
foregoing being collectively referred to as the “Guaranteed Obligations”).

 

(b) If for any reason any duty, agreement or obligation of any Borrower
contained in the Credit Agreement shall not be performed or observed by any
Borrower as provided therein, or if any amount payable under or in connection
with the Credit Agreement shall not be paid in full when the same becomes due
and payable, each Guarantor undertakes to perform or cause to be performed
promptly each of such duties, agreements and obligations and to pay forthwith
each such amount to the Agent for the account of the Banks regardless of any
defense or setoff or counterclaim which any Borrower may have or assert, and
regardless of any other condition or contingency.

 

(c) Notwithstanding anything in this Guaranty to the contrary, the aggregate
amount of the Guaranteed Obligations payable by any Guarantor organized under
the laws of a jurisdiction outside of the United States of America (such
Guarantors hereinafter sometimes referred to individually as a “Foreign
Guarantor” and collectively as the “Foreign Guarantors”) under this Guaranty at
any time shall not exceed the product of (i) the aggregate outstanding amount of
the principal and accrued interest on the loans made by the Company to such
Foreign Guarantor (the “Intercompany Loans”) at such time, times (ii) a
fraction, the numerator of which is the aggregate principal amount of, premium,
if any, and interest on the Advance at such time, and the denominator of which
is the sum of the aggregate principal amount of, premium, if any, and interest
on the Advances and the Senior Notes at such time. The Foreign Guarantors and
the Company acknowledge and agree that they will notify the Agent of the amount
of the Intercompany Loans within 15 days after the end of each month and they
will not reduce the amount of the Intercompany Loans if such reduction would
cause an Event of Default or a Default.

 

(d) The Guarantors hereby agree to make prompt payment, on demand, of any and
all reasonable costs and expenses incurred by the Banks or the Agent in
connection with enforcing the obligations of the Guarantors hereunder,
including, without limitation, the reasonable fees and disbursements of counsel.
The amounts payable under this clause (d) are in addition to the Guaranteed
Obligations.

 

2. Nature of Guaranty. This Guaranty is an absolute and unconditional and
irrevocable guaranty of payment and not a guaranty of collection and is wholly
independent of and in addition to other rights and remedies of the Banks and the
Agent and is not contingent upon the pursuit by the Banks and the Agent of any
such rights and remedies, such pursuit being hereby waived by each Guarantor.
The obligations of each Guarantor hereunder are joint and several with the
obligations of every other Guarantor under the Credit Agreement.

 

3. Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Banks or the Agent, upon the occurrence of
an Event of Default first make demand upon, or seek to enforce remedies against
any Borrower before demanding payment under or seeking to

 

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enforce this Guaranty, (b) covenants that this Guaranty will not be discharged
except by complete performance of all obligations of the Borrowers contained in
the Operative Documents, (c) agrees that this Guaranty shall remain in full
force and effect without regard to, and shall not be affected or impaired,
without limitation, by any invalidity, irregularity or unenforceability in whole
or in part of any of the Operative Documents, or any limitation on the liability
of the Borrowers thereunder, or any limitation on the method or terms of payment
thereunder which may or hereafter be caused or imposed in any manner whatsoever
(including, without limitation, usury laws), (d) waives diligence, presentment
and protest with respect to, and any notice of default or dishonor in the
payment of any amount at any time payable by any Borrower under or in connection
with any of the Operative Documents, and further waives any requirement of
notice of acceptance of, or other formality relating to this Guaranty and
(e) agrees that the Guaranteed Obligations shall include any amounts paid by any
Borrower to the Banks or the Agent which may be required to be returned to any
Borrower or to its representative or to a trustee, custodian or receiver for any
Borrower.

 

4. Obligations Absolute. The obligations, covenants, agreements and duties of
each Guarantor under this Guaranty shall not be released, affected or impaired
by any of the following whether or not undertaken with notice to or consent of
any Guarantor: (a) an assignment or transfer, in whole or in part, of the
Advances or any of the Operative Documents although made without notice to or
consent of any Guarantor, or (b) any waiver by any Bank or the Agent or by any
other person, of the performance or observance by any Borrower of any of the
agreements, covenants, terms or conditions contained in any of the Operative
Documents, or (c) any indulgence in or the extension of the time for payment by
any Borrower of any amounts payable under or in connection with any of the
Operative Documents, or of the time for performance by any Borrower of any other
obligations under or arising out of any of the Operative Documents, or the
extension or renewal thereof, or (d) the modification, amendment or waiver
(whether material or otherwise) of any duty, agreement or obligation of any
Borrower set forth in any of the Operative Documents (the modification,
amendment or waiver from time to time of the Credit Agreement or the Notes being
expressly authorized without further notice to or consent of the Company), or
(e) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of any Borrower or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings, affecting
any Borrower or any of its assets, or (f) the merger or consolidation of any
Borrower with any other person, or (g) the release of discharge of any Borrower
from the performance or observance of any agreement, covenant, term or condition
contained in the Credit Agreement or any Operative Document, by operation of
law, or (h) any other cause whether similar or dissimilar to the foregoing which
would release, affect or impair the obligations, covenants, agreements or duties
of any Guarantor hereunder.

 

5. No Investigation by Banks or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in absence of such provision, the Banks or
the Agent might otherwise have to investigate or to assure that there has been
compliance with the law of any jurisdiction with respect to the Guaranteed
Obligations recognizing that, to save both time and expense, each Guarantor has
requested that the Banks and the Agent not undertake such investigation. Each
Guarantor hereby expressly confirms that the obligations of each Guarantor
hereunder shall remain in full force and effect without regard to compliance or
noncompliance with any such law and irrespective of any investigation or
knowledge of any Bank or the Agent of any such law.

 

6. Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the Banks
and the Agent that, should the Guaranteed Obligations not be recoverable from
any Guarantor under paragraph 1 hereof for any reason whatsoever (including,
without limitation, by reason of any provision of this Agreement or the Notes or
any other agreement or instrument executed in connection herewith being or
becoming void, unenforceable, or otherwise invalid under any applicable law)
then, notwithstanding any knowledge thereof by any Bank or the Agent at any
time, each Guarantor as sole, original and independent obligor, upon demand by
the Agent, will make payment to the Agent for the account of the Banks and the
Agent of the Guaranteed Obligations by way

 

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of a full indemnity in such currency and otherwise in such manner as is provided
in this Agreement and the Notes.

 

7. No Setoff or Deduction. (a) All payments of any Guarantor hereunder shall be
made by each such Guarantor without setoff or counterclaim, and free and clear
of, and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of
whatever nature, imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority (collectively,
“Taxes”).

 

(b) If the Agent or any Bank shall be required by law to deduct or withhold any
Taxes from or in respect of any sum payable hereunder to the Agent or any Bank:

 

(i) the sum payable shall be increased as necessary so that, after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section), such Bank or the
Agent, as the case may be, receives and retains an amount equal to the sum it
would have received and retained had no such deductions or withholdings been
made;

 

(ii) each Guarantor shall make such deductions and withholdings;

 

(iii) each Guarantor shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law;
and

 

(iv) each Guarantor shall also pay to each Bank or the Agent for the account of
such Bank, Taxes in the amount that the respective Bank specifies as necessary
to preserve the amount such Bank would have received if such Taxes had not been
imposed.

 

(c) Each Guarantor agrees to indemnify and hold harmless each Bank and the Agent
for the full amount of Taxes in the amount that the respective Bank or the Agent
specifies as necessary to preserve the amount such Bank or the Agent would have
received if such Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 5 days after the date
the applicable Bank or the Agent makes written demand therefor.

 

(d) Within 5 days after the day of any payment by any Guarantor of Taxes, such
Guarantor shall furnish to each Bank or the Agent the original or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to such Bank or the Agent.

 

8. Subordination, Subrogation, Etc. Each Guarantor agrees that any present or
future indebtedness, obligations or liabilities of any Borrower to such
Guarantor shall be fully subordinate and junior in right and priority of payment
to any present or future indebtedness, obligations or liabilities of the
Borrowers to the Banks and the Agent. Each Guarantor waives any right of
subrogation to the rights of any Bank or the Agent against any Borrower or any
other person obligated for payment of the Guaranteed Obligations and any right
of reimbursement or indemnity whatsoever arising or accruing out of any payment
which such Guarantor may make pursuant to this Agreement and the Notes, and any
right of recourse to security for the debts and obligations of each Borrower,
unless and until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full.

 

9. Representations and Warranties. Each Guarantor represents and warrants that
(a) the execution, delivery and performance by such Guarantor of this Guaranty
are within its corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, and do not contravene, or constitute a default under, any
provision of

 

4

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applicable law or regulation or of the articles of incorporation or other
charter documents or bylaws of such Guarantor, or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such Guarantor or its
property; (b) this Guaranty constitutes a legal, valid and binding obligation of
such Guarantor, enforceable against such Guarantor in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors’ rights
and except that the remedy of specific performance and injunctive and other
forms of equitable relief are subject to equitable defenses and to the
discretion of the court for which any proceedings may be brought; and (c) as of
the date hereof, each of the following is true and correct for such Guarantor:
(i) the fair saleable value and the fair valuation of such Guarantor’s property
is greater than the total amount of its liabilities (including contingent
liabilities) and greater than the amount that would be required to pay its
probable aggregate liability on its existing debts as they become absolute and
matured, (ii) such Guarantor’s capital is not unreasonably small in relation to
its current and/or contemplated business or other undertaken transactions, and
(iii) such Guarantor does not intend to incur, or believe that it will incur,
debt beyond its ability to pay such debts as they become due. Each Guarantor
hereby determines and agrees that the execution, delivery and performance of
this Guaranty are necessary and convenient to the conduct, promotion or
attainment of the business of such Guarantor and in furtherance of the corporate
purposes of such Guarantor.

 

10. Amendments, Etc. This Guaranty may be amended from time to time and any
provision hereof may be waived in accordance with the requirements of
Section 9.1 of the Credit Agreement. No such amendment or waiver of any
provision of this Guaranty nor consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Required Banks or all of the Banks, as the case may be, and,
to the extent any rights or duties of the Agent may be affected, the Agent, and
then such amendment, waiver of consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

11. Notices. All notices, demands, requests, consents and other communications
hereunder shall be in writing and made in accordance with Section 9.2 of the
Credit Agreement.

 

12. Conduct No Waiver; Remedies Cumulative. The obligations of each Guarantor
under this Guaranty are continuing obligations and a separate and independent
cause of action shall arise in respect of each enforcement hereunder and default
hereunder or under the Credit Agreement. No course of dealing on the part of any
Bank or the Agent, nor any delay or failure on the part of any Bank or the Agent
in exercising any right, power or privilege hereunder shall operate as a waiver
of such right, power or privilege or otherwise prejudice the rights and remedies
of the Banks and the Agent hereunder; nor shall any single or partial exercise
thereof preclude any further exercise thereof or the exercise of any other
right, power or privilege. No right or remedy conferred upon or reserved to the
Banks or the Agent under this Guaranty is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right or remedy given hereunder or now or hereafter existing
under any applicable law. Every right and remedy given by this Guaranty or by
applicable law to the Banks or the Agent may be exercised from time to time and
as often as may be deemed expedient by them.

 

13. Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of each Guarantor made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be material and to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by any Bank or
the Agent or on its behalf.

 

14. Successors and Assign. The rights and remedies of the Banks and the Agent
hereunder shall inure to the benefit of the Banks and the Agent and their
respective successors and assigns, and the duties and obligations of each
Guarantor hereunder shall be binding upon such Guarantor and its successors and
assigns.

 

5

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15. Governing Law; Consent to Jurisdiction. This Guaranty is a contract made
under, and the rights and obligations of the parties hereunder, shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts to be made and to be performed entirely with such State.
Each Guarantor further agrees that any legal action or proceeding brought with
respect to this Guaranty or the transactions contemplated hereby may be brought
in any court of the State of Michigan, or any court of the United States of
America sitting in Michigan, and each Guarantor hereby irrevocably submits to
and accepts generally and unconditionally the jurisdiction of those courts with
respect to its person and property.

 

16. Definitions; Headings. Terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. The headings of
the various subdivisions hereof are for convenience of reference only and shall
in no way modify any of the terms or provisions hereof.

 

17. Integration; Severability; Enforceability. This Guaranty embodies the entire
agreement and understanding among each Guarantor, the Banks and the Agent, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof. If any one or more provisions of this Guaranty should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected, impaired, prejudiced or disturbed thereby. If at any time any
portion of the obligations of any Guarantor under this Guaranty shall be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable, the remaining portion of the obligations of such Guarantor under this
Guaranty shall not in any way be affected, impaired, prejudiced or disturbed
thereby and shall remain valid and enforceable to the fullest extent permitted
by applicable law. If at any time all or any portion of the obligations of any
Guarantor under this Guaranty would otherwise be determined by a court of
competent jurisdiction to be invalid, unenforceable or avoidable under
Section 548 of the federal Bankruptcy Code or under a similar applicable law of
any jurisdiction, then notwithstanding any other provisions of this Guaranty to
the contrary such obligation or portion thereof of such Guarantor under this
Guaranty shall be limited to the greatest of (i) the value of any quantifiable
economic benefits accruing to such Guarantor as a result of this Guaranty,
(ii) an amount equal to 95% of the excess on the date the relevant Guaranteed
Obligations were incurred of the present fair saleable value of the assets of
such Guarantor over the amount of all liabilities of such Guarantor, contingent
or otherwise, and (iii) the maximum amount for which this Guaranty is determined
to be enforceable.

 

18. Joint and Several Obligations. The obligations of the Guarantors hereunder
shall be joint and several with any other future guarantor of the Guaranteed
Obligations.

 

19. Submission To Jurisdiction; Waivers. (a) Each Guarantor hereby irrevocably
and unconditionally:

 

(i) submits for itself and its property in any legal action or proceeding
relating to this Guaranty, or for recognition and enforcement of any judgment in
respect hereof, to the non-exclusive general jurisdiction of any United States
federal or Michigan state court sitting in Michigan and appellate courts from
any thereof;

 

(ii) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

(iii) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor at the
address specified in

 

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Section 19, or at such other address of which the Agent shall have been notified
pursuant thereto;

 

(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(v) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
subsection any special, exemplary, punitive or consequential damages.

 

20. Foreign Currency. This Guaranty arises in the context of an international
transaction, and the specification of payment in any currency pursuant to the
Operative Documents is of the essence. The currencies designed in the Operative
Documents shall be the currency of account and payment under the Operative
Documents and hereunder. The obligation of the Guarantors shall not be
discharged by an amount paid in any other currency or at another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid, on
prompt conversion into the applicable currency and transfer to the Agent, the
Banks or their Affiliates, as the case may be, under normal banking procedure,
does not yield the amount of the applicable currency due under this Guaranty. In
the event that any payment, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in payment of the amount of the
applicable currency due under this Guaranty, the Agent, the Banks or their
Affiliates, as the case may be, shall have an independent cause of action
against the Guarantors for the applicable currency deficiency.

 

21. Reinstatement. This Guaranty shall remain in full force and effect and
continue to be effective in the event any petition be filed by or against any
Borrower or any Guarantor for liquidation or reorganization, in the event any
Borrower or any Guarantor becomes insolvent or makes an assignment for the
benefit of creditors or in the event a receiver or trustee be appointed for all
or any significant part of the Company’s or any Guarantor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Agent or any Bank, whether as a “voidable
preference”, “fraudulent conveyance”, or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

 

7

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IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly executed
and delivered as of the day and year first above written.

 

HANDLEMAN CATEGORY MANAGEMENT COMPANY By:        

Title:

    HANDLEMAN ENTERTAINMENT RESOURCES L.L.C. By:        

Title:

    LIFETIME HOLDING, INC. By:        

Title:

    HANDLEMAN UK LIMITED By:        

Title:

    HANDLEMAN COMPANY OF CANADA LIMITED By:        

Title:

   

 

8

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

Accepted and agreed:

 

LASALLE BANK MIDWEST NATIONAL ASSOCIATION, as Agent

 

By:

   

Title:

   

 

9

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EXHIBIT B

REVOLVING CREDIT NOTE

 

$                        November 22, 2005

 

FOR VALUE RECEIVED, HANDLEMAN COMPANY, a Michigan corporation (the “Company”),
hereby promises to pay to the order of                                         
    , a                                               (the “Bank”), at the place
and currency and manner designated in the Credit Agreement referred to below and
in immediately available funds, the principal sum
of                                                       Dollars
($                    ) (or the Equivalent thereof in such Permitted Currencies
outstanding hereunder), or such lesser amount as is recorded on the schedule
attached hereto, or in the books and records of the Bank, on the Termination
Date; and to pay interest on the unpaid principal balance hereof from time to
time outstanding, in like money and funds, for the period from the date hereof
until the Revolving Credit Loans evidenced hereby shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement referred to
below.

 

The Bank is hereby authorized by the Company to record on the schedule attached
to this Revolving Credit Note, or on its books and records, the date, currency,
amount and type of each Revolving Credit Loan, the duration of the related
Interest Period (if applicable), the amount of each payment or prepayment of
principal thereon and the other information provided for on such schedule, which
schedule or such books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, provided, however, that any
failure by the Bank to record any such information shall not relieve the Company
of its obligation to repay the outstanding principal amount of such Revolving
Credit Loans, all accrued interest thereon and any amount payable with respect
thereto in accordance with the terms of this Revolving Credit Note and the
Credit Agreement.

 

The Company and each endorser or guarantor hereof waives demand, presentment,
protest, diligence, notice of dishonor and any other formality in connection
with this Revolving Credit Note. Should the indebtedness evidenced by this
Revolving Credit Note or any part thereof be collected in any proceeding or be
placed in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, interest and other sums due and payable hereon, all
costs of collecting this Revolving Credit Note, including attorneys’ fees and
expenses (including without limitation allocated costs and expenses of attorneys
who are employees of the Bank).

 

This Revolving Credit Note evidences one or more Revolving Credit Loans made
under an Amended and Restated Credit Agreement, dated as of the date hereof (as
amended or modified from time to time, the “Credit Agreement”), by and among the
Company, certain Borrowing Subsidiaries designated therein from time to time,
the Banks (including the Bank) named therein and LaSalle Bank Midwest National
Association, formerly known as Standard Federal Bank, N.A., as administrative
agent for the Banks (in such capacity, the “Agent”), KeyBank National
Association, as a co-syndication agent (in such capacity, a “Co-Syndication
Agent”), Comerica Bank, as co-syndication agent (in such capacity, a
“Co-Syndication Agent”), US Bank, N.A., as a co-syndication agent (in such
capacity, a “Co-Syndication Agent”) and National City Bank of the Midwest, as
documentation agent (in such capacity, the “Documentation Agent”), to which
reference is hereby made for a statement of the circumstances under which this
Revolving Credit Note is subject to prepayment and under which its due date may
be accelerated. Capitalized terms used but not defined in this Revolving Credit
Note shall have the respective meanings assigned to them in the Credit
Agreement.

 

1

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This Revolving Credit Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan in the same manner
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State.

 

HANDLEMAN COMPANY

By:

       

Its:

   

 

2

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

Schedule to Revolving Credit Note, dated

November     , 2005, made by Handleman Company

in favor of                                         .

 

Transaction

Date

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

  

Principal

Amount of

Loan

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

  

Type

of

Loan*

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

  

Interest

Rate

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

  

Interest

Period (if

applicable)

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

  

Principal

Amount

Paid, Pre-

paid or

Converted

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

  

Principal

Balance

Outstanding

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

  

Notation

Made by

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

                                                                                
                                                                  

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

* E - Eurocurrency Rate

  F - Floating Rate

 

3

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EXHIBIT C

SWINGLINE NOTE

 

$                        November 22, 2005

 

FOR VALUE RECEIVED,                                         , a
                                     (the “Company”), hereby promises to pay to
the order of              (the “Swingline [Canadian] Bank”), at the place and
currency and manner designated in the Credit Agreement referred to below and in
immediately available funds, the principal sum of
                                                          Dollars
($                    ) (or the equivalent thereof in such Permitted Currencies
outstanding hereunder, or the equivalent thereof in such Permitted Currencies
outstanding hereunder, and including the amount by which the outstanding
Swingline [Canadian] Loans may exceed such amount due to exchange rate
fluctuations), or such lesser amount as is recorded on the schedule attached
hereto or in the books and records of the Swingline [Canadian] Bank, on the
Termination Date or such earlier date as the Swingline [Canadian] Bank may
require in its sole discretion; and to pay interest on the unpaid principal
balance hereof from time to time outstanding, in like money and funds, for the
period from the date hereof until the Swingline [Canadian] Loans evidenced
hereby shall be paid in full, at the rates per annum and on the dates provided
in the Credit Agreement referred to below.

 

The Swingline [Canadian] Bank is hereby authorized by the Company to record on
the schedule attached to this Swingline Note, or on its books and records, the
date and the amount of each Swingline [Canadian] Loan, the applicable interest
rate and type and the duration of the related Interest Period (if applicable),
the amount of each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or such books and
records, as the case may be, shall constitute prime facie evidence of the
information so recorded, provided, however, that any failure by the Swingline
[Canadian] Bank to record any such notation shall not relieve the Company of its
obligation to repay the outstanding principal amount of this Note, all accrued
interest hereon and any amount payable with respect hereto in accordance with
the terms of this Note and the Credit Agreement.

 

The Company and each endorser or guarantor hereof waives presentment, protest,
notice of dishonor and any other formality in connection with this Note. Should
the indebtedness evidenced by this Note or any part thereof be collected in any
proceeding or be placed in the hands of attorneys for collection, the Company
agrees to pay, in addition to the principal, interest and other sums due and
payable hereon, all costs of collection of this Note, including attorneys’ fees
and expenses.

 

This Note evidences Swingline [Canadian] Loans made under an Amended and
Restated Credit Agreement, dated as of the date hereof (as amended or modified
from time to time, the “Credit Agreement”), by and among the Company, certain
Borrowing Subsidiaries designated therein from time to time, the Banks named
therein and LaSalle Bank Midwest National Association, formerly known as
Standard Federal Bank, N.A., as administrative agent for the Banks (in such
capacity, the “Agent”), KeyBank National Association, as a co-syndication agent
(in such capacity, a “Co-Syndication Agent”), Comerica Bank, as co-syndication
agent (in such capacity, a “Co-Syndication Agent”), US Bank, N.A., as a
co-syndication agent (in such capacity, a “Co-Syndication Agent”) and National
City Bank of the Midwest, as documentation agent (in such capacity, the
“Documentation Agent”), to which reference is hereby made for a statement of the
circumstances under which this Note is subject to prepayment and under which its
due date may be accelerated. Capitalized terms used but not defined in this Note
shall have the respective meanings assigned to them in the Credit Agreement.

 

1

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

This Note is made under, and shall be governed by and construed in accordance
with, the laws of the State of Michigan in the same manner applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.

 

  By:        

Its:

   

 

2

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

Schedule to Swingline Note dated November __, 2005

made by                                              

in favor of                                                              

 

Transaction

Date

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

  

Principal

Amount

of Loan

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

  

Applicable

Interest Rate

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

  

Interest

Period

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

  

Principal

Amount Paid

or Prepaid

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

  

Principal

Balance

Outstanding

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

  

Notation

Made By

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

                                                                                
                                              

 

3

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

EXHIBIT D

 

REQUEST FOR ADVANCE

 

To each Bank party to

the referenced Credit Agreement

c/o LaSalle Bank Midwest National Association

formerly known as Standard Federal Bank, N.A.,

as Agent for the Banks

2600 West Big Beaver Road

Troy, Michigan 48084

 

Attention: Michigan Banking Division

 

                                                             , a
                         corporation (the “Borrower”) hereby requests a [insert
Revolving Credit Loan, or Letter of Credit Advance] pursuant to Section 2.6 of
the Amended and Restated Credit Agreement, dated as of November __, 2005 (as
amended or modified from time to time, the “Credit Agreement”), among Handleman
Company, the Borrowing Subsidiaries designated from time to time, the Banks
referenced therein and you, as Agent for the Banks.

 

[A Revolving Credit Loan is requested to be made in the amount of
                 (specify amount of Dollars or, in the case of Revolving Credit
Loans, the relevant Permitted Currency), to be made on                     ,
             and evidenced by the Borrowers’ Revolving Credit Notes. If a
Revolving Credit Loan is requested, such Loan shall be a [insert Eurocurrency
Rate Loan or Floating Rate Loan] and the initial Interest Period, if such
requested Loan is a Fixed Rate Loan, shall be [insert permitted Interest
Period].]

 

[Such Letter of Credit Advance shall be made by the issuance by the Agent of its
Letter of Credit for the account of the Borrower in the maximum stated amount of
$                         to and for the benefit of                      with a
stated expiry date of                             ,                 , and
containing the further terms and conditions set forth in the attached letter of
credit application to the Agent.]

 

In support of this request, the Borrower hereby represents and warrants to the
Agent and the Banks that:

 

1. The representations and warranties contained in Article IV of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof, and will be true and correct in all material respects on the date such
Advance is made (both before and after such Advance is made), as if such
representations and warranties were made on and as of such dates.

 

2. No Event of Default or Default has occurred and is continuing or will exist
on the date such Advance is made and such Advance shall not cause an Event of
Default or Default.

 

1

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

Acceptance of the proceeds of such Advance by the Borrower shall be deemed to be
a further representation and warranty that the representations and warranties
made herein are true and correct in all material respects at the time such
proceeds are disbursed.

 

Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Credit Agreement.

 

  By:        

Its:

   

 

Dated:                                 ,             

 

2

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

EXHIBIT E

 

[Form of Opinion of Counsel]

 

LaSalle Bank Midwest National Association

formerly known as Standard Federal Bank, N.A.,

as Agent, and each Bank which is a party

to the Credit Agreement (as defined below)

2600 West Big Beaver Road

Troy, Michigan 48084

 

  Re: Amended and Restated Credit Agreement, dated as of November __, 2005, by
and among Handleman Company, the signatory Borrowing Subsidiaries and Banks
thereto, and LaSalle Bank Midwest National Association formerly known as
Standard Federal Bank, N.A., as Agent (the “Agreement”)

 

Ladies and Gentlemen:

 

We have acted as counsel to Handleman Company, a Michigan corporation (the
“Company”) and each other Borrower and Guarantor (the “Guarantors” and
collectively with the Company, the “Obligors”), in connection with the
Agreement, the Notes, the Guaranties and the transactions contemplated thereby.
This opinion is being delivered to you pursuant to paragraph 2.7(e) of the
Agreement. Except as otherwise defined in this opinion, capitalized terms used
herein shall have the meanings given to them in the Agreement.

 

We have examined such records, documents, certificates and other instruments and
have made such investigation of fact and law as we deem necessary to render this
opinion. As to various questions of fact relevant to this opinion, we have
relied upon statements and certificates of officers and employees of the Company
and the Subsidiaries and of public officials.

 

In our examination, we have assumed the legal capacity of all natural persons,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as copies, and the
authenticity of the originals of such copies.

 

Based on the foregoing, it is our opinion that:

 

1. Each Obligor is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and has all requisite corporate
power and authority to own or lease its property and to carry on its business as
now conducted.

 

2. Each Obligor has full corporate power and authority to execute and deliver
the Loan Documents to which it is a party and to engage in the transactions
contemplated thereby. The execution, delivery and performance by each Obligor of
the Loan Documents to which it is a party have been duly authorized by all
necessary corporate action and are not in contravention of (i) the Company’s or
the Guarantor’s Articles of Incorporation and Bylaws, or (ii) based solely on
our actual knowledge and on a certificate of an officer of the Company and the
Guarantor and

 

1

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

with no independent investigation or verification, any contract or undertaking
to which the Company or the Guarantor is a party or by which the Company or the
Guarantor or their respective property is bound.

 

3. No authorization or approval of, filing with, or notice to any governmental
authority or regulatory body is required on behalf of the Company or the
Guarantor to authorize, or is required in connection with the execution,
delivery and performance by the Company or the Guarantor of the Loan Documents
to which it is a party.

 

4. The Agreement, the Notes and the Guaranties to which they are a party have
been duly executed and delivered and constitute the valid and legally binding
obligations of each Obligor and are enforceable against each Obligor in
accordance with their respective terms.

 

5. We have no actual knowledge of any pending or threatened action or proceeding
against the Company or any of its Subsidiaries before any court, governmental
agency or arbitrator which is required to be described pursuant to Item 103 of
Regulation S-K (Sec. 229.103) under the Securities Exchange Act of 1934, as
amended (the “Act”) in the Company’s reports filed with the Securities and
Exchange Commission pursuant to the Act.

 

6. To our actual knowledge, no Borrower is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation T, U or
X of the Board of Governors of the Federal Reserve System, as amended.

 

The foregoing opinion is subject to and qualified by the following
qualifications:

 

A. We express no opinion concerning any laws other than federal laws of the
United States and the laws of the State of Michigan.

 

B. Whenever we have asserted above that a matter is “to our actual knowledge,”
our knowledge is limited to the actual knowledge of those attorneys in our firm
who have directly participated in this engagement or who are primarily
responsible for the Company and the Guarantor concerning any issue or factual
information addressed herein. Additionally, with respect to factual matters not
independently established by us we have relied upon certificates of officers of
the Company and its Subsidiaries, which reliance we deem appropriate.

 

C. To the extent our opinion relates to the enforceability of any agreement or
obligation, it is subject to and qualified by the following:

 

(1) the effect and application of bankruptcy, insolvency, reorganization,
moratorium and other laws now or hereafter in effect which relate to or limit
creditors’ and secured parties’ rights or remedies generally;

 

(2) the effect and application of general principles of equity, whether
considered in a proceeding in equity or at law;

 

(3) limitation imposed by applicable law on the enforceability of purported
waivers of rights and defenses; and

 

2

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

(4) we express no opinion as to the enforceability of (a) any provision with
respect to indemnification or penalty damages that might be found violative of
public policy or (b) any provision requiring the payment of interest on
interest.

 

D. With respect to the validity and legality of the interest provisions of the
Agreement and the Notes, no opinion is expressed as to the effect of the
Michigan criminal usury statute (MCLA Sec. 438.41) if the applicable rate of
interest on the Loans at any time exceeds the applicable rate specified in such
statute (25% per annum simple interest).

 

E. We have made no independent investigation as to the accuracy or completeness
of any of the statements set forth in the certificates of representatives of the
Company or the Guarantor or other documents presented to us for our review, but
we have no actual knowledge of any incorrect or misleading statement therein.

 

F. This opinion is given as of the date hereof, and we undertake no obligation
to advise you of any changes in the matters set forth herein.

 

This opinion is addressed to and is for the benefit solely of the Agent and the
Banks and their permissible successors, assigns and participants and may not be
relied upon by any other person, firm or corporation for any purpose whatsoever
and may not be published or disseminated, nor referenced, in any other document
or writing without our express written consent.

 

Very truly yours,

 

HONIGMAN MILLER SCHWARTZ AND COHN

 

3

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

EXHIBIT F

 

REQUEST FOR CONTINUATION OR

CONVERSION OF REVOLVING CREDIT LOAN

 

[Date]

 

To each Bank party to

the referenced Credit Agreement

c/o LaSalle Bank Midwest National Association

formerly known as Standard Federal Bank, N.A.

as Agent for the Banks

2600 West Big Beaver Road

Troy, Michigan 48084

 

Attention: Michigan Banking Division

 

                                                         , a
                     corporation (the “Borrower”), hereby requests that
                     (specify amount of Dollars or relevant Permitted Currency)
of the principal amount of the Revolving Credit Loan originally made on
                    ,                     , which Revolving Credit Loan is
currently a [insert type of Loan], be continued as or converted to, as the case
may be, a [insert type of Loan requested] denominated in                     
(specify Dollars or relevant Permitted Currency) on                     ,
                    . If such Loan is requested to be converted to a
Eurocurrency Rate Loan, the Borrower hereby elects an Interest Period for such
Loan of [insert permitted Interest Period].

 

In support of this request, the Borrower hereby represents and warrants to the
Agent and the Banks that:

 

1. The representations and warranties contained in Article IV of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof, and will be true and correct in all material respects on the date such
Loan is [continued][converted] (both before and after such Loan is
[continued][converted]), as if such representations and warranties were made on
and as of such dates.

 

2. No Event of Default or Default has occurred and is continuing or will exist
on the date such [Loan][Advance] is [continued][converted] (whether before or
after such Loan is [continued][converted]).

 

1

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

Acceptance of the proceeds of such [continued][converted] Loan by the Borrower
shall be deemed to be a further representation and warranty that the
representations and warranties made herein are true and correct in all material
respects at the time of such [continuation] [conversion].

 

Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Amended and Restated Credit Agreement, dated as of
November     , 2005 among Handleman Company, the Borrowing Subsidiaries
designated therein from time to time, the Banks named therein and you as agent
for the Banks.

 

  By:        

Its:

   

 

2

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

EXHIBIT G

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Amended and Restated Credit Agreement dated as of
November __, 2005 (the “Credit Agreement”) among Handleman Company, a Michigan
corporation (the “Company”), certain Borrowing Subsidiaries designated therein
from time to time, the Banks named therein (the “Banks”) and LaSalle Bank
Midwest National Association, formerly known as Standard Federal Bank, N.A., as
administrative agent for the Banks (in such capacity, the “Agent”), Key Bank
National Association, as a co-syndication agent (in such capacity, a
“Co-Syndication Agent”), Comerica Bank, as co-syndication agent (in such
capacity, a “Co-Syndication Agent”), US Bank, N.A., as a co-syndication agent
(in such capacity, a “Co-Syndication Agent”) and National City Bank of the
Midwest, as documentation agent (in such capacity, the “Documentation Agent”).
Terms defined in the Credit Agreement are used herein with the same meaning.

 

The “Assignor” and the “Assignee” referred to on Schedule 1 agree as follows:

 

1. The Assignor hereby sells and assigns (without recourse) to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor’s rights and obligations under the Credit Agreement as of the
date hereof equal to the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement. After giving
effect to such sale and assignment, the Assignee’s Commitments and the amounts
of the Advances owing to the Assignee will be as set forth on Schedule 1.

 

2. The Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Borrower or Guarantor or the
performance or observance by any Borrower or Guarantor of any of its obligations
under the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) attaches the Note or Notes, if any, held by the
Assignor and requests that the Agent exchange such Note or Notes, for a new Note
or Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1.

 

3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement and the other Loan Documents; (iii) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers and

 

1

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

discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms of all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Bank; and
(v) if the Assignee is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States certifying as to the Assignee’s status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.

 

4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the “Assignment Effective Date”) shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.

 

5. Upon such acceptance and recording by the Agent, as of the Assignment
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

 

6. Upon such acceptance and recording by the Agent, from and after the
Assignment Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes for
periods prior to the Assignment Effective Date directly between themselves.

 

7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Michigan.

 

8. This Assignment and Acceptance may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as
delivery of a manually executed counterpart of this Assignment and Acceptance.

 

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

 

2

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

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

[                            , as Assignor, and
                                , as Assignee]

 

Amount of Assignor’s Commitment assigned:   $                          Date of
Assignment and Acceptance:                    , 200   Assignment Effective Date:
                   , 200  

 

                                                 , as Assignor

By:

       

Its:

   

                                                 , as Assignee

By:

       

Its:

   

Address for Notices:

________________________

________________________

Attention:                                         Facsimile No.:
                                 Telephone No.:                             
Commitment amount of the Assignee after giving effect to this Assignment and
Acceptance: $            

 

3

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

Accepted and Agreed:

 

HANDLEMAN COMPANY

 

By:

       

Its:

   

Dated:

   

 

LASALLE BANK MIDWEST NATIONAL ASSOCIATION

formerly known as STANDARD FEDERAL BANK, N.A., as Agent

 

By:

       

Its:

   

Dated:

   

 

4