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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of July 1, 2009
among
iParty Retail Stores Corp.,
as the Lead Borrower
and
THE OTHER BORROWERS FROM TIME TO TIME PARTY HERETO
and
THE GUARANTORS FROM TIME TO TIME PARTY HERETO
and
WELLS FARGO RETAIL FINANCE, LLC,
as Administrative Agent, Collateral Agent and Swing Line Lender
and
THE OTHER LENDERS PARTY HERETO

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TABLE OF CONTENTS
 

     
ARTICLE I
   
 
DEFINITIONS AND ACCOUNTING TERMS
1
1.01
Defined Terms
1
1.02
Other Interpretive Provisions
32
1.03
Accounting Terms
33
1.04
Rounding
33
1.05
Times of Day
33
1.06
Letter of Credit Amounts
33
1.07
Currency Equivalents Generally
34
ARTICLE II
   
 
THE COMMITMENTS AND CREDIT EXTENSIONS
34
2.01
Committed Loans; Reserves
34
2.02
Borrowings, Conversions and Continuations of Committed Loans.
35
2.03
Letters of Credit.
37
2.04
Swing Line Loans.
45
2.05
Prepayments.
48
2.06
Termination or Reduction of Commitments.
50
2.07
Repayment of Loans
50
2.08
Interest.
50
2.09
Fees
51
2.10
Computation of Interest and Fees
51
2.11
Evidence of Debt.
52
2.12
Payments Generally; Administrative Agent’s Clawback.
54
2.13
Sharing of Payments by Lenders
54
2.14
Settlement Amongst Lenders.
54
ARTICLE III
   
 
TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER
55
3.01
Taxes.
55
3.02
Illegality
57
3.03
Inability to Determine Rates
57
3.04
Increased Costs; Reserves on LIBO Rate Loans.
57
3.05
Compensation for Losses
59
3.06
Mitigation Obligations; Replacement of Lenders.
59
3.07
Survival
60
3.08
Designation of Lead Borrower as Borrowers’ Agent.
60
ARTICLE IV
   
 
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
60
4.01
Conditions of Initial Credit Extension
60
4.02
Conditions to all Credit Extensions
63

 
 
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ARTICLE V
  64
 
REPRESENTATIONS AND WARRANTIES
64
5.01
Existence, Qualification and Power
65
5.02
Authorization; No Contravention
65
5.03
Governmental Authorization; Other Consents
65
5.04
Binding Effect
65
5.05
Financial Statements; No Material Adverse Effect.
66
5.06
Litigation
66
5.07
No Default
66
5.08
Ownership of Property; Liens.
67
5.09
Environmental Compliance.
68
5.10
Insurance
68
5.11
Taxes
68
5.12
ERISA Compliance.
69
5.13
Subsidiaries; Equity Interests
69
5.14
Margin Regulations; Investment Company Act; Public Utility Holding Company Act.
69
5.15
Disclosure
70
5.16
Compliance with Laws
70
5.17
Intellectual Property; Licenses, Etc
70
5.18
Labor Matters.
71
5.19
Security Documents.
72
5.20
Solvency.
72
5.21
Deposit Accounts; Credit Card Arrangements.
73
5.22
Brokers
73
5.23
Customer and Trade Relations
73
5.24
Material Contracts
73
5.25
Casualty
73
5.26
Anti-Terrorism Laws.
73
ARTICLE VI
   
 
AFFIRMATIVE COVENANTS
74
6.01
Financial Statements
74
6.02
Certificates; Other Information
75
6.03
Notices
77
6.04
Payment of Obligations
78
6.05
Preservation of Existence, Etc
79
6.06
Maintenance of Properties.
79
6.07
Maintenance of Insurance.
80
6.08
Compliance with Laws
81
6.09
Books and Records; Accountants.
82
6.10
Inspection Rights.
82
6.11
Use of Proceeds
82
6.12
Additional Loan Parties
83
6.13
Cash Management.
83
6.14
Information Regarding the Collateral.
84

 
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6.15
Physical Inventories.
85
6.16
Environmental Laws.
86
6.17
Further Assurances.
86
6.18
Compliance with Terms of Leaseholds.
87
6.19
Material Contracts
87
6.20
ERISA.
87
ARTICLE VII
   
 
NEGATIVE COVENANTS
88
7.01
Liens
88
7.02
Investments
88
7.03
Indebtedness; Disqualified Stock.
88
7.04
Fundamental Changes
89
7.05
Dispositions
89
7.06
Restricted Payments
89
7.07
Prepayments of Indebtedness
89
7.08
Change in Nature of Business.
89
7.09
Transactions with Affiliates
90
7.10
Burdensome Agreements
90
7.11
Use of Proceeds
90
7.12
Amendment of Material Documents.
90
7.13
Corporate Name; Fiscal Year.
90
7.14
Deposit Accounts; Blocked Accounts; Credit Card Processors.
91
7.15
Consignments
91
7.16
[Reserved]
91
7.17
Minimum Availability
91
7.18
Capital Expenditures
91
7.19
Locations.
91
7.20
Subordinated Debt Payments
91
ARTICLE VIII
   
 
EVENTS OF DEFAULT AND REMEDIES
92
8.01
Events of Default
92
8.02
Remedies Upon Event of Default
95
8.03
Application of Funds
96
ARTICLE IX
   
 
ADMINISTRATIVE AGENT
97
9.01
Appointment and Authority.
97
9.02
Rights as a Lender
98
9.03
Exculpatory Provisions
98
9.04
Reliance by Agents.
99
9.05
Delegation of Duties
99
9.06
Resignation of Agents
99
9.07
Non-Reliance on Administrative Agent and Other Lenders
100
9.08
Administrative Agent May File Proofs of Claim
101
9.09
Collateral and Guaranty Matters
101

 
 
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9.10
Notice of Transfer.
102
9.11
Reports and Financial Statements.
102
9.12
Agency for Perfection.
103
9.13
Indemnification of Agents
103
9.14
Relation among Lenders
103
9.15
Defaulting Lender.
103
ARTICLE X
   
 
MISCELLANEOUS
104
10.01
Amendments, Etc
104
10.02
Notices, Financial Statements and Other Documents; Effectiveness; Electronic
Communications.
106
10.03
No Waiver; Cumulative Remedies
107
10.04
Expenses; Indemnity; Damage Waiver.
107
10.05
Payments Set Aside
109
10.06
Successors and Assigns.
109
10.07
Treatment of Certain Information; Confidentiality
113
10.08
Right of Setoff
114
10.09
Interest Rate Limitation
114
10.10
Counterparts; Integration; Effectiveness
114
10.11
Survival
115
10.12
Severability
115
10.13
Replacement of Lenders
115
10.14
Governing Law; Jurisdiction; Etc.
116
10.15
Waiver of Jury Trial
117
10.16
No Advisory or Fiduciary Responsibility
117
10.17
USA PATRIOT Act Notice
118
10.18
Foreign Asset Control Regulations
118
10.19
Time of the Essence
118
10.20
Press Releases.
118
10.21
Additional Waivers.
119
10.22
Amendment and Restatement.
120
10.23
No Strict Construction.
121
10.24
Attachments.
121
      SIGNATURES    S-1 

 
 
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SCHEDULES
1.01(a)        Borrowers
1.01(b)        Guarantors
2.01    Commitments and Applicable Percentages
2.03    Existing Letters of Credit
5.01            Loan Parties Organizational Information
5.05    Material Indebtedness
5.06            Litigation
5.08(b)        Leased Real Estate
5.09    Environmental Matters
5.10            Insurance
5.13    Subsidiaries; Other Equity Investments; Equity Interests in the Borrower
5.17            Intellectual Property Matters
5.18            Labor Matters
5.21(a)        DDAs
5.21(b)        Credit Card Arrangements
5.24            Material Contracts
6.02            Financial and Collateral Reporting
7.01    Existing Liens
7.02            Existing Investments
7.03    Existing Indebtedness
10.02          Administrative Agent's Office; Certain Addresses for Notices

 
EXHIBITS
Form of
A
Committed Loan Notice
B
Swing Line Loan Notice
C-1
Committed Loan Note
C-2
Swing Line Loan Note
D
Compliance Certificate
E
Borrowing Base Certificate
F
Assignment and Assumption
G
Credit Card Notification
H
DDA Notification
I
Joinder Agreement
J
Business Plan

 
 
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CREDIT AGREEMENT
 
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into
as of July 1, 2009, among
 
(i)    iPARTY RETAIL STORES CORP., a Delaware corporation (the “Lead Borrower”),
as agent for the Borrowers now or hereafter party hereto,
 
(ii)           the BORROWERS now or hereafter party hereto,
 
(iv)          the GUARANTORS now or hereafter party hereto,
 
(v)           each lender from time to time party hereto (each individually, a
“Lender” and collectively, the “Lenders”), and
 
(vi)          WELLS FARGO RETAIL FINANCE, LLC, as Administrative Agent,
Collateral Agent and Swing Line Lender.
 
WHEREAS, Wells Fargo Retail Finance, LLC (as successor in interest to Wells
Fargo Retail Finance II, LLC), as Lender and the Borrowers are parties to the
Existing Credit Agreement; and
 
WHEREAS, the Lenders, the Borrowers and the Agent are willing to amend and
restate the Existing Credit Agreement on the terms and subject to the conditions
set forth herein; provided, that as of the Closing Date the terms and conditions
related to the grant of security interests pursuant to Article 2 of the Existing
Credit Agreement shall be ratified pursuant to the Security Agreement.
 
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, the receipt and adequacy of which are hereby
acknowledged, the Borrowers, the Lenders and the Agent hereby agree as follows:
 
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
 
1.01    Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:
 
“ACH” means automated clearing house transfers.
 
“Accommodation Payment” as defined in Section 10.21(d).
 
“Account” means “accounts” as defined in the UCC, and also means a right to
payment of a monetary obligation, whether or not earned by performance, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, (c) for a
policy of insurance issued or to be issued, (d) for a secondary obligation
incurred or to be incurred, (e) for energy provided or to be provided, (f) for
the use or hire of a vessel under a charter or other contract, (g) arising out
of the use of a credit or charge card or information contained on or for use
with the card, or (h) as winnings in a lottery or other game of chance operated
or sponsored by a state, governmental unit of a state, or person licensed or
authorized to operate the game by a state or governmental unit of a state.  The
term “Account” includes health-care-insurance receivables.
 
“Acquisition” means, with respect to any Person (a) an Investment in, or a
purchase of a Controlling interest in, the Equity Interests of any other Person,
(b) a purchase or other acquisition of all or substantially all of the assets or
properties of, another Person or of any business unit of another Person, (c) any
merger or consolidation of such Person with any other Person or other
transaction or series of transactions resulting in the acquisition of all or
substantially all of the assets, or a Controlling interest in the Equity
Interests, of any Person, or (d) any acquisition of any Store locations of any
other Person, in each case in any transaction or group of transactions which are
part of a common plan.
 
“Act” shall have the meaning provided in Section 10.17.
 
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“Adjusted LIBO Rate” means:
 
(a)    for any Interest Period with respect to any LIBO Borrowing, an interest
rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent)
equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the
Statutory Reserve Rate; and
 
(b)    for any interest rate calculation with respect to any Base Rate Loan, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one
percent) equal to (i) the LIBO Rate for an Interest Period commencing on the
date of such calculation and ending on the date that is thirty (30) days
thereafter multiplied by (ii) the Statutory Reserve Rate.
 
The Adjusted LIBO Rate will be adjusted automatically as of the effective date
of any change in the Statutory Reserve Rate.
 
“Adjustment Date” means the first day of each Fiscal Quarter, commencing October
1, 2009.
 
“Administrative Agent” means Wells Fargo Retail Finance, LLC, in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.
 
“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify the Lead
Borrower and the Lenders.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
 
“Affiliate” means, with respect to any Person, (i) another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by
or is under common Control with the Person specified, (ii) any director,
officer, managing member, partner, trustee, or beneficiary of that Person, (iii)
any other Person directly or indirectly holding 10% or more of any class of the
Equity Interests of that Person, and (iv) any other Person 10% or more of any
class of whose Equity Interests is held directly or indirectly by that
Person.  Notwithstanding anything herein to the contrary, in no event shall the
Agent or any Lender be considered an “Affiliate” of any Loan Party.
 
“Agent(s)” means, individually, the Administrative Agent or the Collateral
Agent, and collectively means both of them.
 
“Aggregate Commitments” means the Commitments of all the Lenders.
 
“Agreement” means this Credit Agreement.
 
“Allocable Amount” has the meaning specified in Section 10.21(d).
 
“Applicable Margin” means:
 
(a)          From and after the Closing Date until the first Adjustment Date,
the percentages set forth in Level II of the pricing grid below; and
 
(b)          On the first Adjustment Date, and on each Adjustment Date
thereafter, the Applicable Margin shall be determined from the following pricing
grid based upon the average daily Excess Availability during the Fiscal Quarter
ended immediately preceding such Adjustment Date as determined by Lender based
upon the Borrowing Base Certificate(s) delivered pursuant to Section 6.01;
provided, however, that notwithstanding anything to the contrary set forth
herein, upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent may, and at the direction of the Required Lenders
shall, immediately increase the Applicable Margin to that set forth in Level III
(even if the Excess Availability requirements for a different Level have been
met) and interest shall accrue at the Default Rate; provided, further if any of
the financial statements delivered pursuant to Section 6.01 of this Agreement or
any Borrowing Base Certificate is at any time restated or otherwise revised
(including as a result of an audit) or if the information set forth in any such
financial statements or Borrowing Base Certificate otherwise proves to be false
or incorrect such that the Applicable Margin would have been higher than was
otherwise in effect during any period, without constituting a waiver of any
Default or Event of Default arising as a result thereof, interest due under this
Agreement shall be immediately recalculated at such higher rate for any
applicable periods and shall be due and payable on demand.
 
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Level
Excess Availability
LIBOR Margin
Base Rate Margin
 
I
Greater than $6,000,000
3.00%
3.00%
 
II
Less than or equal to $6,000,000 but greater than $3,000,000
3.25%
3.25%
 
III
Less than or equal to $3,000,000
3.50%
3.50%

 
“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time.  If the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the Aggregate
Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.
 
“Applicable Rate” means, at any time of calculation, with respect to Commercial
Letters of Credit and Standby Letters of Credit, a per annum rate equal to the
Applicable Margin for Loans which are LIBO Rate Loans.
 
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
 
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
 
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit F or any other form approved by the
Administrative Agent.
 
“Attributable Indebtedness” means, on any date, in respect of any Capital Lease
Obligation of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.
 
“Audited Financial Statements” means the audited Consolidated balance sheet of
the Parent and its Subsidiaries for the Fiscal Year ended on or about December
27, 2008, and the related consolidated statements of income or operations,
Shareholders’ Equity and cash flows for such Fiscal Year of the Parent and its
Subsidiaries, including the notes thereto.
 
“Auto-Extension Letter of Credit” shall have the meaning specified in Section
2.03(b)(iii).
 
“Availability” means, as of any date of determination thereof by the
Administrative Agent, the result, if a positive number, of:
 
(a)   the Loan Cap
minus
(b)   the aggregate Outstanding Amount of all Credit Extensions to, or for the
account of, the Borrowers.
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In calculating Availability at any time and for any purpose under this
Agreement, the Lead Borrower shall certify to the Administrative Agent that all
accounts payable and Taxes are being paid on a timely basis and consistent with
past practices (absent which the Administrative Agent may establish a Reserve
therefor).
 
“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.02.
 
“Availability Reserves” means, without duplication of any other Reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as the Administrative Agent from time to time determines in its
reasonable discretion as being appropriate (a) to reflect the impediments to the
Agents’ ability to realize upon the Collateral, (b) to reflect claims and
liabilities that the Administrative Agent determines will need to be satisfied
in connection with the realization upon the Collateral, (c) to reflect criteria,
events, conditions, contingencies or risks which adversely affect any component
of the Borrowing Base, or the assets, business, financial performance or
financial condition of any Loan Party, or (d) to reflect that a Default or an
Event of Default then has occurred and is continuing. Without limiting the
generality of the foregoing, Availability Reserves may include (but are not
limited to), in the Administrative Agent’s reasonable discretion, reserves based
on: (i) rent (based upon past due rent and/or whether or not a Collateral Access
Agreement, reasonably acceptable to the Collateral Agent, has been received by
the Collateral Agent); (ii) customs duties, and other costs to release Inventory
which is being imported into the United States; (iii) outstanding Taxes and
other governmental charges, including, without limitation, ad valorem, real
estate, personal property, sales, and other Taxes which may have priority over
the interests of the Collateral Agent in the Collateral; (iv) Customer Credit
Liabilities, (v) warehousemen’s or bailee’s charges and other Permitted
Encumbrances which may have priority over the interests of the Collateral Agent
in the Collateral, (vi) amounts due to vendors on account of consigned goods,
(vii) Cash Management Reserves, (viii) Bank Products Reserves, (ix) payables
(based upon payables which are past due normal trade terms) to the extent
failure to make such payments would have a Material Adverse Effect on the
Borrowers, (x) held or post-dated checks and (xi) the Minimum Availability
Block.
 
“Bank Products” means any services or facilities provided to any Loan Party by a
Lender or any of its Affiliates, including, without limitation, on account of
(a) credit cards, (b) purchase cards, and (c) leasing, but excluding Cash
Management Services.
 
“Bank Products Reserves” means such reserves as the Administrative Agent from
time to time determines in its discretion as being appropriate to reflect the
liabilities and obligations of the Loan Parties with respect to Bank Products
then provided or outstanding.
 
“Bankruptcy Code” means Title 11 of the United States Code, as amended and in
effect.
 
“Base Rate”  means, for any day, a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate, as in effect from time to time, plus one
and one-half of one percent (1.50%), (b) except during any period of time during
which a notice delivered to the Lead Borrower in accordance with Section 3.03
shall remain in full force and effect, the Adjusted LIBO Rate plus one percent
(1.00%), or (c) the rate of interest in effect for such day as publicly
announced from time to time by Wells Fargo Bank as its “prime rate.”  The “prime
rate” is a rate set by Wells Fargo Bank based upon various factors including
Wells Fargo Bank’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.  Any change in such rate
announced by Wells Fargo Bank shall take effect at the opening of business on
the day specified in the public announcement of such change.
 
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“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
 
“Blocked Account” has the meaning provided in Section 6.13(a)(iii).
 
“Blocked Account Agreement” means with respect to a Blocked Account established
by a Loan Party, an agreement, in form and substance reasonably satisfactory to
the Collateral Agent, establishing Control (as defined in the Security
Agreement) of such account by the Collateral Agent.
 
“Blocked Account Bank” means each bank with whom deposit accounts are maintained
in which any funds of any of the Loan Parties from one or more DDAs are
concentrated and with whom a Blocked Account Agreement has been, or is required
to be, executed in accordance with the terms hereof.
 
“Borrowers” means, collectively, the Lead Borrower, each Person listed on
Schedule 1.01(a) annexed hereto, and each other Person who shall from time to
time execute and deliver a Joinder Agreement as a Borrower or such other
document as the Administrative Agent deems appropriate in accordance with
Section 6.12.
 
“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.
 
“Borrowing Base” means, at any time of calculation, an amount equal to:
 
(a)    (i) for the period between October 1st and June 30th, the lesser of (x)
the Cost of Eligible Inventory (net of Inventory Reserves), multiplied by 70%,
and (y) 85% of the Net Retail Liquidation Value of Eligible Inventory (net of
Inventory Reserves) and (ii) for the period between July 1st and September 30th,
the lesser of (x) the Cost of Eligible Inventory (net of Inventory Reserves),
multiplied by 75%, and (y) 90% of the Net Retail Liquidation Value of Eligible
Inventory (net of Inventory Reserves);
plus
(b)    the lesser of (i) the amount of Eligible Credit Card Receivables
multiplied by the Credit Card Advance Rate and (ii) $2,000,000;
plus
(c)    the then amount of all Availability Reserves..
 
“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit E hereto (with such changes therein as may be required by the
Administrative Agent to reflect the components of and Reserves against the
Borrowing Base as provided for hereunder from time to time), executed and
certified as accurate and complete by a Responsible Officer of the Lead Borrower
which shall include appropriate exhibits, schedules, supporting documentation,
and additional reports as reasonably requested by the Administrative Agent.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any LIBO Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
market.
 
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“Business Plan” means the Borrowers’ business plan annexed hereto as Exhibit J
and any revision, amendment or update of such business plan to which the
Administrative Agent has approved.
 
“Capital Expenditures” means, with respect to any Person for any period, (a) all
expenditures made (whether made in the form of cash or other property) or costs
incurred for the acquisition or improvement of fixed or capital assets of such
Person (excluding normal replacements and maintenance which are properly charged
to current operations), in each case that are (or should be) set forth as
capital expenditures in a Consolidated statement of cash flows of such Person
for such period, in each case prepared in accordance with GAAP, and (b) Capital
Lease Obligations incurred by a Person during such period.
 
“Capital Leases” shall mean any and all lease obligations that, in accordance
with GAAP, are required to be capitalized on the books of a lessee.
 
“Capital Lease Obligations” means, with respect to any Person for any period,
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as liabilities on a balance sheet of such Person under GAAP and
the amount of which obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
 
“Cash Collateral Account” means a non-interest bearing account established by
one or more of the Loan Parties with Wells Fargo Bank, and in the name of, the
Collateral Agent (as the Collateral Agent shall otherwise direct) and under the
sole and exclusive dominion and control of the Collateral Agent, in which
deposits are required to be made in accordance with Section 2.03(g).
 
“Cash Collateralize” has the meaning specified in Section 2.03(g).
 
“Cash Management Reserves” means such reserves as the Administrative Agent, from
time to time, determines in its discretion as being appropriate to reflect the
reasonably anticipated liabilities and obligations of the Loan Parties with
respect to Cash Management Services then provided or outstanding.
 
“Cash Management Services” means any one or more of the following types or
services or facilities provided to any Loan Party by the Administrative Agent or
any of its Affiliates: (a) ACH transactions, (b) cash management services,
including, without limitation, controlled disbursement services, treasury,
depository, overdraft, and electronic funds transfer services, (c) foreign
exchange facilities, (d) credit or debit cards, and (e) merchant services not
constituting a Bank Product.
 
“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.
 
“CERCLIS” means the Comprehensive Environmental Response, Compensation, and
Liability Information System maintained by the United States Environmental
Protection Agency.
 
“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.
 
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any Law, rule, regulation
or treaty, (b) any change in any Law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
 
“Change of Control” means (a) Salvatore Perisano (unless replaced by an
individual or individuals reasonably satisfactory to the Administrative Agent)
fails to remain as Chief Executive Officer of the Parent; (b) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d) and 14(d) of the Exchange Act), other than the existing shareholders of
the Parent or a “person” or “group” “controlled” by one or more of such existing
shareholders, of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than 30% of the Equity Interests of the Parent having the
right to vote for the election of members of the board of directors of the
Parent on a fully diluted basis, (c) any “change in control” or “sale” or
“disposition” or similar event as defined in any Organizational Document of any
Loan Party, or any other document governing Material Indebtedness of any Loan
Party; or (d) the Parent fails at any time to own, directly or indirectly 100%
of the Equity Interests of the Lead Borrower or any of its Subsidiaries.
 
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“Closing Date” means the first date all the conditions precedent in Section4.01
are satisfied or waived in accordance with Section 10.01.
 
“Closing Fee” has the meaning set forth in Section 2.09(d).
 
“Code” means the Internal Revenue Code of 1986, and the regulations promulgated
thereunder, as amended and in effect.
 
“Collateral” means any and all “Collateral” as defined in any Security Document
and all other property that is or is intended under the terms of the Security
Documents to be subject to Liens in favor of the Collateral Agent.
 
“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Collateral Agent executed by (a) a bailee or other Person
in possession of Collateral, and (b) a landlord of Real Estate leased by any
Loan Party, pursuant to which such Person (i) acknowledges the Collateral
Agent’s Lien on the Collateral, (ii) releases or subordinates such Person’s
Liens in the Collateral held by such Person or located on such Real Estate,
(iii) as to any landlord, provides the Collateral Agent with access to the
Collateral located in or on such Real Estate and a reasonable time to sell and
dispose of the Collateral from such Real Estate, and (iv) makes such other
agreements with the Collateral Agent as the Collateral Agent may reasonably
require.
 
“Collateral Agent” means Wells Fargo Retail Finance, LLC, acting in such
capacity for its own benefit and the ratable benefit of the other Credit
Parties, or any successor collateral agent.
 
“Collateral Monitoring Fee” has the meaning set forth in Section 2.09(c).
 
“Commercial Letter of Credit” means any Letter of Credit issued for the purpose
of providing the primary payment mechanism in connection with the purchase of
any materials, goods or services by a Borrower in the ordinary course of
business of such Borrower.
 
“Commitment” means, as to each Lender, its obligation to (a) make Committed
Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in
L/C Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.
 
“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans of the same Type and, in the case of LIBO Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Section 2.01.
 
“Committed Loan” has the meaning specified in Section 2.01.
 
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“Committed Loan Note” means (a) the Second Amended and Restated Master Note,
dated as of the Closing Date and (b) any other promissory note made by the
Borrowers in favor of a Lender evidencing Committed Loans made by such Lender,
substantially in the form of Exhibit C.
 
“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of LIBO Rate Loans, pursuant to Section 2.02, which, if in writing, shall be
substantially in the form of Exhibit A.
 
“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.
 
“Concentration Account” has the meaning provided in Section 6.13(c).
 
“Consent” means actual consent given by a Lender from whom such consent is
sought; or the passage of seven (7) Business Days from receipt of written notice
to a Lender from the Administrative Agent of a proposed course of action to be
followed by the Administrative Agent without such Lender’s giving the
Administrative Agent written notice of that Lender’s objection to such course of
action.
 
“Consolidated” means, when used to modify a financial term, test, statement, or
report of a Person, the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of such Person and its
Subsidiaries.
 
“Contractual Obligation” means, as to any Person, any provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or
otherwise.  Included among such powers, with respect to a corporation, are power
to cause any of the following:  (a) the election of a majority of its board of
directors; (b) the authorization of the issuance of additional shares of its
common stock; (c) the authorization of the issuance and designation of rights
and shares of its preferred stock (if any); (d) the distribution and timing of
dividends; (e) the award of performance bonuses to its executive officers; (f)
the termination or severance of its executive officers; and (g) all or any
similar matters.  “Controlling” and “Controlled” have meanings correlative
thereto.
 
“Cost” means the lower of cost or market value of Inventory, based upon, and in
accordance with, the Borrowers’ historical accounting practices, known to the
Administrative Agent, which practices are in effect on the Closing Date as such
calculated cost is determined from invoices received by the Borrowers, the
Borrowers’ purchase journals or the Borrowers’ stock ledger.  “Cost” does not
include inventory capitalization costs or other non-purchase price charges (such
as freight and warehouse markups) used in the Borrowers’ calculation of cost of
goods sold.
 
“Credit Card Advance Rate” means 85%.
 
“Credit Card Notifications” has the meaning provided in Section 6.13(a)(ii).
 
“Credit Card Receivables” means each “Account” (as defined in the UCC) together
with all income, payments and proceeds thereof, owed by a major credit or debit
card issuer (including, but not limited to, Visa, Mastercard, Discover and
American Express and such other issuers approved by the Administrative Agent) to
a Loan Party resulting from charges by a customer of a Loan Party on credit or
debit cards issued by such issuer in connection with the sale of goods by a Loan
Party, or services performed by a Loan Party, in each case in the ordinary
course of its business.
 
“Credit Extensions” mean each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.
 
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“Credit Party” or “Credit Parties” means (a) individually, (i) each Lender and
its Affiliates, (ii) each Agent, (iii) each L/C Issuer, (iv) each beneficiary of
each indemnification obligation undertaken by any Loan Party under any Loan
Document, (v) any other Person to whom Obligations under this Agreement and
other Loan Documents are owing, and (vi) the successors and assigns of each of
the foregoing, and (b) collectively, all of the foregoing.
 
“Credit Party Expenses” means, without limitation, (a) all reasonable
out-of-pocket expenses incurred by the Agents and their respective Affiliates,
in connection with this Agreement and the other Loan Documents, including
without limitation (i) the reasonable fees, charges and disbursements of (A)
counsel for the Agents, (B) outside consultants for the Agents, (C) appraisers,
(D) commercial finance examiners, and (E) all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of the
Obligations, (ii) in connection with (A) the syndication of the credit
facilities provided for herein, (B) the preparation, negotiation,
administration, management, execution and delivery of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (C) the enforcement or protection of their rights
in connection with this Agreement or the Loan Documents or efforts to preserve,
protect, collect, or enforce the Collateral or in connection with any proceeding
under any Debtor Relief Laws, or (D) any workout, restructuring or negotiations
in respect of any Obligations, (b) with respect to the L/C Issuer, and its
Affiliates, all reasonable out-of-pocket expenses incurred in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder, and (c) all reasonable out-of-pocket expenses
incurred by the Credit Parties who are not the Agents, the L/C Issuer or any
Affiliate of any of them, after the occurrence and during the continuance of an
Event of Default.
 
“Customer Credit Liabilities” means at any time, the aggregate remaining value
at such time of (a) outstanding Gift Cards, (b) outstanding Customer Deposits
and (c) frequent shopper programs of the Borrowers.
 
“Customer Deposits” means all customer deposits, including, without limitation,
all framing deposits.
 
“Customs Broker Agreement” means an agreement, in form and substance reasonably
satisfactory to the Collateral Agent, among a Borrower, a customs broker,
freight forward or other carrier, and the Collateral Agent, in which the customs
broker, freight forward or other carrier acknowledges that it has control over
and holds the documents evidencing ownership of the subject Inventory for the
benefit of the Collateral Agent and agrees, upon notice from the Collateral
Agent, to hold and dispose of the subject Inventory solely as directed by the
Collateral Agent.
 
“DDA” means each checking, savings or other demand deposit account maintained by
any of the Loan Parties.  All funds in each DDA shall be conclusively presumed
to be Collateral and proceeds of Collateral and the Agents and the Lenders shall
have no duty to inquire as to the source of the amounts on deposit in any DDA.
 
“DDA Notification” has the meaning provided therefor in Section 6.13(a)(i).
 
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
 
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“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.
 
“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Margin, if any, applicable to Base Rate Loans, plus (iii) 2% per
annum; provided, however, that with respect to a LIBO Rate Loan, the Default
Rate shall be an interest rate equal to the interest rate (including any
Applicable Margin) otherwise applicable to such LIBO Rate Loan plus 2% per
annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate for Standby Letters of Credit or Commercial Letters of
Credit, as applicable, plus 2% per annum.
 
“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Committed Loans, participations in L/C Obligations or participations in
Swing Line Loans required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder, (b) has otherwise failed to
pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute, or (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency proceeding.
 
“Deteriorating Lender” means any Defaulting Lender or any Lender as to which (a)
the Administrative Agent or L/C Issuer believes in good faith that such Lender
has defaulted in fulfilling its obligations under one or more other syndicated
credit facilities, or (b) a Person that Controls such Lender has been deemed
insolvent by the Administrative Agent or become the subject of any proceeding
under any Debtor Relief Law.
 
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including, without limitation, any sale-leaseback transaction and
any sale, transfer, license or other disposition of (whether in one transaction
or in a series of transactions) of any property (including, without limitation,
any Equity Interests) by any Person (or the granting of any option or other
right to do any of the foregoing), including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith.
 
“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is ninety one (91)
days after the date on which the Loans mature; provided, however, that (i) only
the portion of such Equity Interests which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date shall be deemed to be Disqualified
Stock and (ii) with respect to any Equity Interests issued to any employee or to
any plan for the benefit of employees of the Parent, Lead Borrower or their
Subsidiaries or by any such plan to such employees, such Equity Interest shall
not constitute Disqualified Stock solely because it may be required to be
repurchased by Parent, the Lead Borrower or one of their Subsidiaries in order
to satisfy applicable statutory or regulatory obligations or as a result of such
employee’s termination, resignation, death or disability and if any class of
Equity Interest of such Person that by its terms authorizes such Person to
satisfy its obligations thereunder by delivery of an Equity Interest that is not
Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified
Stock. Notwithstanding the preceding sentence, any Equity Interest that would
constitute Disqualified Stock solely because the holders thereof have the right
to require a Loan Party to repurchase such Equity Interest upon the occurrence
of a change of control or an asset sale shall not constitute Disqualified
Stock.  The amount of Disqualified Stock deemed to be outstanding at any time
for purposes of this Agreement will be the maximum amount that the Lead Borrower
and its Subsidiaries may become obligated to pay upon maturity of, or pursuant
to any mandatory redemption provisions of, such Disqualified Stock or portion
thereof, plus accrued dividends.
 
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“Dollars” and “$” mean lawful money of the United States.
 
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.
 
“Early Termination Fee” has the meaning set forth in Section 2.09(b).
 
“Eligible Assignee” means (a) a Credit Party or any of its Affiliates; (b) a
bank, insurance company, or company engaged in the business of making commercial
loans, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $250,000,000; (c) an Approved Fund; (d) any Person to whom
a Credit Party assigns its rights and obligations under this Agreement as part
of an assignment and transfer of such Credit Party’s rights in and to a material
portion of such Credit Party’s portfolio of asset based credit facilities, and
(e) any other Person (other than a natural person) approved by (i) the
Administrative Agent and the L/C Issuer and the Swing Line Lender, and (ii)
unless an Event of Default has occurred and is continuing, the Lead Borrower
(each such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include a Loan
Party or any of the Loan Parties’ Affiliates or Subsidiaries, and unless an
Event of Default has occurred and is continuing, the Administrative Agent shall
consult with the Lead Borrower prior to assigning its rights and obligations to
any direct competitor or supplier of a Loan Party as an “Eligible Assignee”
hereunder.
 
“Eligible Credit Card Receivables” means at the time of any determination
thereof, each Credit Card Receivable that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such
determination: such Credit Card Receivable (i) has been earned by performance
and represents the bona fide amounts due to a Borrower from a credit card
payment processor and/or credit card issuer, and in each case originated in the
ordinary course of business of such Borrower, and (ii) in each case is
reasonably acceptable to the Administrative Agent in its discretion, and is not
ineligible for inclusion in the calculation of the Borrowing Base pursuant to
any of clauses (a) through (l) below.  Without limiting the foregoing, to
qualify as an Eligible Credit Card Receivable, an Account shall indicate no
Person other than a Borrower as payee or remittance party.  In determining the
amount to be so included, the face amount of an Account shall be reduced by,
without duplication, to the extent not reflected in such face amount, (i) the
amount of all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that a Borrower may be obligated to rebate to a
customer, a credit card payment processor, or credit card issuer pursuant to the
terms of any agreement or understanding (written or oral)) and (ii) the
aggregate amount of all cash received in respect of such Account but not yet
applied by the Loan Parties to reduce the amount of such Credit Card
Receivable.  Any Credit Card Receivables meeting the foregoing criteria shall be
deemed Eligible Credit Card Receivables but only as long as such Credit Card
Receivable is not included within any of the following categories, in which case
such Credit Card Receivable shall not constitute an Eligible Credit Card
Receivable:
 
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(a)           Credit Card Receivable which do not constitute an “Account” (as
defined in the UCC);
 
(b)           Credit Card Receivables that have been outstanding for more than
four (4) Business Days from the date of sale;
 
(c)           Credit Card Receivables with respect to which a Loan Party does
not have good, valid and marketable title, free and clear of any Lien (other
than Liens granted to the Collateral Agent);
 
(d)           Credit Card Receivables that are not subject to a first priority
security interest in favor of the Collateral Agent (it being the intent that
chargebacks in the ordinary course by the credit card processors shall not be
deemed violative of this clause);
 
(e)           Credit Card Receivables which are disputed, are with recourse, or
with respect to which a claim, counterclaim, offset or chargeback has been
asserted (to the extent of such claim, counterclaim, offset or chargeback);
 
(f)           Credit Card Receivables as to which the credit card processor has
the right under certain circumstances to require a Loan Party to repurchase the
Accounts from such credit card processor;
 
(g)           Credit Card Receivables due from an issuer or payment processor of
the applicable credit card which is the subject of any bankruptcy or insolvency
proceedings;
 
(h)           Credit Card Receivables which are not a valid, legally enforceable
obligation of the applicable issuer with respect thereto;
 
(i)    Credit Card Receivables which do not conform to all representations,
warranties or other provisions in the Loan Documents relating to Credit Card
Receivables;
 
(j)    Credit Card Receivables which are evidenced by “chattel paper” or an
“instrument” of any kind unless such “chattel paper” or “instrument” is in the
possession of the Collateral Agent, and to the extent necessary or appropriate,
endorsed to the Collateral Agent; or
 
(k)           Credit Card Receivables which the Administrative Agent determines
in its discretion to be uncertain of collection or to exceed any credit limit
established by the Administrative Agent.
 
(l)    Credit Card Receivables which are payable in any currency other than
Dollars.
 
“Eligible Inventory” means, as of the date of determination thereof, without
duplication, items of Inventory of a Borrower that are finished goods,
merchantable and readily saleable to the public in the ordinary course and
deemed by the Administrative Agent in its discretion to be eligible for
inclusion in the calculation of the Borrowing Base, in each case that, except as
otherwise agreed by the Administrative Agent, complies with each of the
representations and warranties respecting Inventory made by the Borrowers in the
Loan Documents, and that is not excluded as ineligible by virtue of one or more
of the criteria set forth below.  Except as otherwise agreed by the
Administrative Agent, without duplication to any Inventory Reserves, the
following items of Inventory shall not be included in Eligible Inventory:
 
(a)           Inventory that is not solely owned by a Borrower or a Borrower
does not have good and valid title thereto;
 
(b)           Inventory that is leased by or is on consignment to a Borrower or
which is consigned by a Borrower to a Person which is not a Loan Party;
 
(c)           Inventory that is not located in the United States of America
(excluding territories or possessions of the United States) at a location that
is owned or leased by a Borrower, except to the extent that the Borrowers have
furnished the Administrative Agent with (i) any UCC financing statements or
other documents that the Administrative Agent may determine to be necessary to
perfect its security interest in such Inventory at such location, and (ii) a
Collateral Access Agreement executed by the Person owning any such location on
terms reasonably acceptable to the Administrative Agent;
 
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(d)           Except as otherwise incorporated in any applicable appraisal, as
provided in form and substance reasonably satisfactory to the Administrative
Agent, Inventory that is comprised of goods which (i) are damaged, defective,
“seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor,
(iii) are obsolete or slow moving, or are special order or custom items,
work-in-process, raw materials, or that constitute spare parts, promotional,
marketing, packaging and shipping materials or supplies used or consumed in a
Borrower’s business, (iv) are seasonal in nature and which have been packed away
for sale in the subsequent season, (v) not in compliance with all standards
imposed by any Governmental Authority having regulatory authority over such
Inventory, its use or sale, or (vi) are bill and hold goods;
 
(e)           Inventory that is not subject to a perfected first-priority
security interest in favor of the Collateral Agent;
 
(f)           Inventory that consists of samples, labels, bags, packaging, and
other similar non-merchandise categories;
 
(g)           Inventory that is not insured in compliance with the provisions of
Section 5.10 hereof;
 
(h)           Inventory that has been sold but not yet delivered or as to which
a Borrower has accepted a deposit; or
 
(j)           Inventory that is subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third party from which any
Borrower or any of its Subsidiaries has received notice of a dispute in respect
of any such agreement.
 
“Environmental Laws” means (a) any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems and (b) the common law relating to damage to Persons or property from
Hazardous Materials.
 
“Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent
or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment, disposal or presence of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
 
“Equipment” has the meaning provided in the UCC.
 
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on the date of determination.
 
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
and in effect.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Lead Borrower within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
 
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Lead Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Lead Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Lead
Borrower or any ERISA Affiliate.
 
“Event of Default” has the meaning specified in Section 8.01.  An Event of
Default shall be deemed to be continuing unless and until that Event of Default
has been duly waived as provided in Section 10.03 hereof.
 
“Excess Availability” means, as of any date of determination thereof by the
Administrative Agent, the result, if a positive number, of (i) the Borrowing
Base at such time, minus (ii) the aggregate Outstanding Amount of all Credit
Extensions to, or for the account of, the Borrowers.
 
“Exchange Act” means, the Securities Exchange Act of 1934, as amended.
 
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the L/C Issuer or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) taxes imposed on or measured
by its overall net income (however denominated), and franchise taxes imposed on
it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable Lending Office is located, (b) any branch profits taxes imposed
by the United States or any similar tax imposed by any other jurisdiction in
which any Borrower is located and (c) in the case of a Foreign Lender (other
than an assignee pursuant to a request by the Lead Borrower under Section
10.13), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party hereto (or designates a
new Lending Office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply with Section
3.01(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrowers with respect to
such withholding tax pursuant to Section 3.01(a).
 
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“Executive Order” has the meaning set forth in Section 10.18.
 
“Existing Credit Agreement” means that certain Amended and Restated Loan and
Security Agreement, dated as of December 21, 2006, between the Borrowers and
Wells Fargo Retail Finance, LLC (as successor in interest to Wells Fargo Retail
Finance II, LLC), as Lender, as amended from time to time.
 
“Existing Letters of Credit” means, collectively, each of the letters of credit
issued under the Existing Credit Agreement and outstanding on the Closing Date,
as listed on Schedule 2.03.
 
“Existing Loan Documents” means the “Loan Documents”, as defined in the Existing
Credit Agreement.
 
“Extraordinary Receipt” means any cash received by or paid to or for the account
of any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and any purchase price adjustments.
 
“Facility Guaranty” means the Guaranty made by the Guarantors in favor of the
Agents and the Lenders, in form and substance reasonably satisfactory to the
Administrative Agent.
 
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo
Bank on such day on such transactions as determined by the Administrative Agent.
 
“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally end on the last day of each calendar month in accordance with the
fiscal accounting calendar of the Loan Parties, except with respect to a Fiscal
Month that is the last month of a Fiscal Quarter or Fiscal Year.
 
“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally be thirteen weeks and end on the last Saturday of each March,
June, September and December of such Fiscal Year in accordance with the fiscal
accounting calendar of the Loan Parties.
 
“Fiscal Year” means the fiscal year of the Lead Borrower and its Subsidiaries
ending on the Saturday closest to each December 31st of any calendar year.
 
“Foreign Asset Control Regulations” has the meaning set forth in Section 10.18.
 
“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Lead Borrower is resident for tax
purposes.  For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
 
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
 
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
 
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“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
 
“Gift Cards” means all merchandise credits, gift certificates and gift cards of
the Borrowers entitling the holder thereof to use all or a portion of the
credit, certificate or gift card to pay all or a portion of the purchase price
for any Inventory.
 
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).
 
“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation or to purchase (or advance or supply funds
for the purchase of) any security for the payment of such Indebtedness or
obligation, (ii) to purchase or lease property, securities or services for the
purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), (b) any Lien on any assets of such Person
securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien), or (c) as an account party in respect of any letter of credit or
letter of credit guaranty issued to support such Indebtedness or
obligation.  The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith.  The term “Guarantee” as a
verb has a corresponding meaning.
 
“Guarantor” means, collectively, the Persons listed on Schedule 1.01(b) hereto,
and each other Person who shall from time to time execute and deliver a Joinder
Agreement as a Guarantor or such other document as the Administrative Agent
deems appropriate in accordance with Section 6.12.
 
“Hazardous Materials” means (a) all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature which (as to any of the
foregoing) are defined as a hazardous material in or regulated pursuant to any
Environmental Law and (b) oil in any physical state.
 
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“Highbridge Note” means that certain Senior Subordinated Note dated September
15, 2006 in the face amount of $2,500,000 executed by iParty Corp. in favor of
Highbridge International LLC.
 
“Honor Date” has the meaning specified in Section 2.03(c)(i).
 
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
 
(a)    all obligations of such Person for borrowed money (including any
indebtedness which is nonrecourse to the credit of such Person, but which is
secured by any Lien on any asset of such Person) and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;
 
(b)    the maximum amount of all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;
 
(c)    all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than thirty (30) days after
the date on which such trade account payable was due);
 
(d)    indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
 
(e)    all Attributable Indebtedness of such Person;
 
(f)    all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, or any warrant, right or option to acquire such Equity
Interest, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and
 
(g)    all Guarantees of such Person in respect of any of the foregoing or any
other obligation of any third party.
 
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Indemnitees” has the meaning specified in Section 10.04(b).
 
“Information” has the meaning specified in Section 10.07.
 
“Intellectual Property” means all present and future:  trade secrets, know-how
and other proprietary information; trademarks, trademark applications, internet
domain names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and combinations
of the foregoing) indicia and other source and/or business identifiers, and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and
intangible property embodying the copyrights, unpatented inventions (whether or
not patentable); patents and patent applications; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.
 
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“Intellectual Property Security Agreement” means the Intellectual Property
Security Agreement dated as of the Closing Date among the Loan Parties and the
Collateral Agent, granting a Lien in the Intellectual Property and certain other
assets of the Loan Parties, as amended and in effect from time to time.
 
“Interest Expense” shall mean, for any period, the sum, for the Loan Parties
(determined on a Consolidated basis without duplication in accordance with
GAAP), of the following all interest, fees, charges and related expenses payable
during such period to any Person in connection with Indebtedness or the deferred
purchase price of assets that is treated as interest in accordance with GAAP.
 
“Interest Payment Date” means (a) as to each Base Rate Loan (including a Swing
Line Loan), the first calendar day of each month and the Maturity Date, and (b)
as to each LIBO Rate Loan, the last day of each Interest Period applicable to
such LIBO Rate Loan, and if such LIBO Rate Loan has an Interest Period of
greater than ninety (90) days, on the last day of the third month of such
Interest Period, and the Maturity Date.
 
“Interest Period” means, as to each LIBO Rate Loan, the period commencing on the
date such LIBO Rate Loan is disbursed or converted to or continued as a LIBO
Rate Loan and ending on the date one, two or three months thereafter, as
selected by the Lead Borrower in its Committed Loan Notice; provided that:
 
(i)    any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
 
(ii)   any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
 
(iii)   no Interest Period shall extend beyond the Maturity Date; and
 
(iv)   notwithstanding the provisions of clause (iii) no Interest Period shall
have a duration of less than one (1) month, and if any Interest Period
applicable to a LIBO Borrowing would be for a shorter period, such Interest
Period shall not be available hereunder.
 
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
 
“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Borrowers’
and/or their Subsidiaries’ internal controls over financial and/or collateral
reporting, in each case as described in the Securities Laws.
 
“Inventory” has the meaning given that term in the UCC, and shall also include,
without limitation, all: (a) goods which (i) are leased by a Person as lessor,
(ii) are held by a Person for sale or lease or to be furnished under a contract
of service, (iii) are furnished by a Person under a contract of service, or (iv)
consist of raw materials, work in process, or materials used or consumed in a
business; (b) goods of said description in transit; (c) goods of said
description which are returned, repossessed or rejected; and (d) packaging,
advertising, and shipping materials related to any of the foregoing.
 
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“Inventory Reserves” means such reserves as may be established from time to time
by the Administrative Agent in the Administrative Agent’s discretion with
respect to the determination of the saleability, at retail, of the Eligible
Inventory or which reflect such other factors as affect the market  value of the
Eligible Inventory. Without limiting the generality of the foregoing, Inventory
Reserves may, in the Administrative Agent’s discretion, include (but are not
limited to) reserves based on:
 
(a)           obsolescence;
 
(b)           seasonality;
 
(c)           Shrink;
 
(d)           imbalance;
 
(e)           change in Inventory character;
 
(f)           change in Inventory composition;
 
(g)           change in Inventory mix;
 
(h)           out-of-date and/or expired Inventory; and
 
(i)           damaged, defective or returned to vendor Inventory.
 
“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) any
Acquisition, or (d) any other investment of money or capital in order to obtain
a profitable return.  For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
 
“IRS” means the United States Internal Revenue Service.
 
“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).
 
“Issuer Documents” means with respect to any Letter of Credit, the Letter Credit
Application, and any other document, agreement and instrument entered into by
the L/C Issuer and any Borrower (or any Subsidiary thereof) or in favor of the
L/C Issuer and relating to any such Letter of Credit.
 
“Joinder Agreement” means an agreement, in the form attached hereto as Exhibit I
pursuant to which, among other things, a Person becomes a party to, and bound by
the terms of, this Agreement and/or the other Loan Documents in the same
capacity and to the same extent as either a Borrower or a Guarantor, as the
Administrative Agent may determine.
 
“Landlord Lien State” means such state(s) in which a landlord’s claim for rent
may have priority over the lien of the Collateral Agent in any of the
Collateral.
 
“Laws” means each international, foreign, Federal, state and local statute,
treaty, rule, guideline, regulation, ordinance, code and administrative or
judicial precedent or authority, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and each applicable administrative
order, directed duty, request, license, authorization and permit of, and
agreement with, any Governmental Authority, in each case whether or not having
the force of law.
 
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“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
 
“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Committed Borrowing.
 
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.
 
“L/C Issuer” means (a) Wells Fargo Bank in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit (including
Existing Letters of Credit) hereunder (which successor may only be a Lender
selected by the Administrative Agent in its discretion), and (b) any other
Lender selected by the Administrative Agent in its discretion that is reasonably
satisfactory to Lead Borrower.  The L/C Issuer may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the L/C Issuer,
in which case the term “L/C Issuer” shall include any such Affiliate with
respect to Letters of Credit issued by such Affiliate.
 
“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount available to be drawn under all outstanding Letters of Credit plus the
aggregate of all Unreimbursed Amounts, including all L/C Borrowings.  For
purposes of computing the amounts available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.
 
“Lease” means any agreement, whether written or oral, no matter how styled or
structured, pursuant to which a Loan Party is entitled to the use or occupancy
of any real property for any period of time.
 
“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the Swing Line Lender, and collectively means all
of them.
 
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Lead Borrower and
the Administrative Agent.
 
“Letter of Credit” means each Standby Letter of Credit and each Commercial
Letter of Credit issued in accordance herewith and shall include the Existing
Letters of Credit. Without limiting the foregoing, all Existing Letters of
Credit shall be deemed to have been issued hereunder and shall for all purposes
be deemed to be “Letters of Credit” hereunder.
 
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.
 
“Letter of Credit Expiration Date” means the day that is thirty (30) days prior
to the Maturity Date then in effect (or, if such day is not a Business Day, the
next preceding Business Day).
 
“Letter of Credit Fee” has the meaning specified in Section 2.03(i).
 
“Letter of Credit Sublimit” means an amount equal to $2,000,000.  The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.  A permanent reduction of the Aggregate Commitments shall require a
corresponding pro rata reduction in the Letter of Credit Sublimit to an amount
equal to (or, at Lead Borrower’s option, less than) the Aggregate Commitments.
 
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“LIBO Borrowing” means a Borrowing comprised of LIBO Rate Loans.
 
“LIBO Rate” means for any Interest Period with respect to a LIBO Rate Loan, the
rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two (2) Business Days
prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period.  If such rate is not available at such time for any
reason, then the “LIBO Rate” for such Interest Period shall be the rate per
annum determined by the Administrative Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the LIBO Rate Loan being made, continued or
converted by Wells Fargo Bank and with a term equivalent to such Interest Period
would be offered to Wells Fargo Bank by major banks in the London interbank
eurodollar market in which Wells Fargo Bank participates at their request at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
commencement of such Interest Period.
 
“LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on
the Adjusted LIBO Rate.
 
“Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale, Capital Lease Obligation or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same economic effect
as any of the foregoing) and (b) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
 
“Liquidation” means the exercise by the Administrative Agent or Collateral Agent
of those rights and remedies accorded to such Agents under the Loan Documents
and applicable Law as a creditor of the Loan Parties with respect to the
realization on the Collateral, including (after the occurrence and continuation
of an Event of Default) the conduct by the Loan Parties acting with the consent
of the Administrative Agent, of any public, private or “going-out-of-business”,
“store closing” or other similar sale or any other disposition of the Collateral
for the purpose of liquidating the Collateral.  Derivations of the word
“Liquidation” (such as “Liquidate”) are used with like meaning in this
Agreement.
 
“Loan” means an extension of credit by a Lender to any Borrower under Article II
in the form of a Committed Loan or a Swing Line Loan.
 
“Loan Account” has the meaning assigned to such term in Section 2.11(a).
 
“Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate
Commitments at such time, or (b) the Borrowing Base at such time.
 
“Loan Documents” means this Agreement, each Note, each Issuer Document, all
Borrowing Base Certificates, the Security Documents, the Ratification and
Reaffirmation Agreement and any other instrument or agreement now or hereafter
executed and delivered in connection herewith, or in connection with any
transaction arising out of any Cash Management Services and Bank Products
provided by the Administrative Agent or any of its Affiliates, each as amended
and in effect from time to time.
 
“Loan Parties” means, collectively, the Borrowers and any Guarantors.
 
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“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of the Loan
Parties and their Subsidiaries taken as a whole; (b) a material impairment of
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party; (c) a material impairment of the rights and remedies of,
or benefit to, the Agent or the Lenders under any Loan Document or a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party; (d) a
material adverse change in, or a material adverse effect upon, the value of the
Collateral; or (e) a material impairment of the priority of the Collateral
Agent’s Lien with respect to a material amount of the Collateral.  In
determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event in and of itself does not have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
 
“Material Contract” means, with respect to any Person, each agreement to which
such Person is a party involving aggregate consideration payable to or by such
Person of $150,000 or more in any Fiscal Year or otherwise material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person, other than purchase orders entered into
in the ordinary course of business.
 
“Material Indebtedness” means Indebtedness (other than the Obligations) of the
Loan Parties in an aggregate principal amount exceeding $50,000.
 
“Maturity Date” means July 2, 2012.
 
“Maximum Rate” has the meaning provided therefor in Section 10.09.
 
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
 
“Minimum Availability Block” has the meaning provided therefor in Section 7.17.
 
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
 
“Net Income” shall mean with respect to any fiscal period, the net income of the
Loan Parties determined in accordance with GAAP, consistently applied.
 
“Net Proceeds” means (a) with respect to any Disposition by any Loan Party or
any of its Subsidiaries, or any Extraordinary Receipt received or paid to the
account of any Loan Party or any of its Subsidiaries, the excess, if any, of (i)
the sum of cash and cash equivalents received in connection with such
transaction (including any cash or cash equivalents received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) over (ii) the sum of (A) the principal amount of
any Indebtedness that is secured by the applicable asset by a Lien permitted
hereunder which is senior to the Collateral Agent’s Lien on such asset and that
is required to be repaid (or to establish an escrow for the future repayment
thereof) in connection with such transaction (other than Indebtedness under the
Loan Documents), (B) the reasonable and customary out-of-pocket expenses
incurred by such Loan Party or such Subsidiary in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan
Party to third parties (other than Affiliates); and
 
(b)           with respect to the sale or issuance of any Equity Interest by any
Loan Party or any of its Subsidiaries, or the incurrence or issuance of any
Indebtedness by any Loan Party or any of its Subsidiaries, the excess of (i) the
sum of the cash and cash equivalents received in connection with such
transaction over (ii) the underwriting discounts and commissions, and other
reasonable and customary out-of-pocket expenses, incurred by such Loan Party or
such Subsidiary in connection therewith.
 
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“Net Retail Liquidation Value” means with respect to the Borrowers’ Eligible
Inventory, the appraised orderly liquidation value, net of costs and expenses to
be incurred in connection with any such liquidation, which value is expressed as
a percentage of Cost of the Borrowers’ Eligible Inventory as set forth in the
Borrowers’ inventory stock ledger, which value shall be determined from time to
time by the most recent appraisal undertaken by an independent appraiser engaged
by the Administrative Agent.
 
“Non-Consenting Lender” has the meaning provided therefor in Section 10.01.
 
“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).
 
“Note” means each (i) Committed Loan Note, and (ii) Swing Line Loan Note, as
each may be amended, supplemented or modified from time to time.
 
“NPL” means the National Priorities List under CERCLA.
 
“Obligations” means (a) all advances to, and debts (including principal,
interest, fees, costs, and expenses), liabilities, obligations, covenants,
indemnities, and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit (including payments in
respect of reimbursement of disbursements, interest thereon and obligations to
provide cash collateral therefor), whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees and expenses that
accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding, and (b) any Other Liabilities.
 
“Operating Leases” shall mean any lease of property (whether real, personal or
mixed) for a period of longer than one year by a Person under which such Person
is lessee, other than a Capital Lease.
 
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and (d) in each case, all shareholder or other
equity holder agreements, voting trusts and similar arrangements to which such
Person is a party or which is applicable to its Equity Interests and all other
arrangements relating to the Control or management of such Person.
 
“Other Liabilities” means any obligation on account of (a) any Cash Management
Services furnished to any of the Loan Parties or any of their Subsidiaries
and/or (b) any transaction with any Agent, any Lender or any of their respective
Affiliates, which arises out of any Bank Products entered into with any Loan
Party and any such Person, as each may be amended from time to time
 
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“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
 
“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Committed Loans
and Swing Line Loans occurring on such date; and (ii) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrowers of Unreimbursed
Amounts.
 
“Overadvance” means a Credit Extension to the extent that, immediately after its
having been made, Availability is less than zero.
 
“Parent” means iParty Corp., a Delaware corporation.
 
“Participant” has the meaning specified in Section 10.06(d).
 
“PBGC” means the Pension Benefit Guaranty Corporation.
 
“PCAOB” means the Public Company Accounting Oversight Board.
 
“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Borrower or
any ERISA Affiliate or to which any Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.
 
“Permitted Disposition” means any of the following:
 
(a)           Dispositions of Inventory in the ordinary course of business;
 
(b)           Dispositions of the Inventory of a Loan Party not in the ordinary
course of business in connection with Store closings, at arm’s length, provided,
that such Store closures and related Inventory Dispositions shall not exceed the
number of the Loan Parties’ Stores closures and related Inventory Dispositions
as provided in the Business Plan, provided, further, that all sales of Inventory
in connection with Store closings shall be in accordance with liquidation
agreements and with professional liquidators reasonably acceptable to the
Agents; provided, further, that as long as any Default or Event of Default shall
have occurred and be continuing, all Net Proceeds received in connection
therewith are applied to the Obligations in accordance with Section 2.05 hereof;
 
(c)           non-exclusive licenses of Intellectual Property of a Loan Party or
any of its Subsidiaries in the ordinary course of business;
 
(d)           licenses for the conduct of licensed departments within the Loan
Parties’ Stores in the ordinary course of business; provided that, if requested
by the Agents, the Agents shall have entered into an intercreditor agreement
with the Person operating such licensed department on terms and conditions
reasonably satisfactory to the Agents;
 
(e)           Dispositions of Equipment in the ordinary course of business that
is substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no
longer useful or necessary in its business or that of any Subsidiary and is not
replaced with similar property having at least equivalent value;
 
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(f)           sales, transfers and Dispositions among the Loan Parties or by any
Subsidiary to a Loan Party; and
 
(g)           sales, transfers and Dispositions of or by any Subsidiary which is
not a Loan Party to another Subsidiary that is not a Loan Party.
 
“Permitted Encumbrances” means:
 
(a)           Liens imposed by law for Taxes that are not yet due or are being
contested in compliance with Section 6.04;
 
(b)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
and other like Liens imposed by applicable Law, arising in the ordinary course
of business and securing obligations that are not overdue by more than thirty
(30) days or are being contested in compliance with Section 6.04;
 
(c)           pledges and deposits made (i) in the ordinary course of business
in compliance with workers’ compensation, unemployment insurance and other
social security laws or regulations, other than any Lien imposed by ERISA and
(ii) in connection with a Permitted Disposition otherwise permitted hereunder,
whether as an earnest money deposit or an escrow arrangement;
 
(d)           deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
 
(e)           Liens in respect of judgments that would not constitute an Event
of Default hereunder;
 
(f)           easements, covenants, conditions, restrictions, building code
laws, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value
of the affected property or materially interfere with the ordinary conduct of
business of a Loan Party and such other minor title defects or survey matters
that, in each case, do not materially interfere with the current use of the real
property;
 
(g)           Liens existing on the date hereof and listed on Schedule 7.01 and
any renewals or extensions thereof, provided that (i) the property covered
thereby is not changed, (ii) except as permitted pursuant to clause (a) of the
definition of Permitted Indebtedness the amount secured or benefited thereby is
not increased, (iii) the direct or any contingent obligor with respect thereto
is not changed, and (iv) any renewal or extension of the obligations secured or
benefited thereby is otherwise permitted hereunder);
 
(h)           Liens on fixed or capital assets acquired by any Loan Party which
are permitted under clause (c) of the definition of Permitted Indebtedness so
long as (i) such Liens and the Indebtedness secured thereby are incurred prior
to or within ninety (90) days after such acquisition, (ii) the Indebtedness
secured thereby does not exceed the cost of acquisition of such fixed or capital
assets, (iii) such Liens shall not extend to any other property or assets of the
Loan Parties, and (iv) such Liens and the Indebtedness secured thereby are less
than $150,000;
 
(i)           Liens in favor the Collateral Agent;
 
(j)           Landlords’ and lessors’ Liens in respect of rent not in default;
and
 
(k)           Liens arising solely by virtue of any statutory or common law
provisions relating to banker’s liens, liens in favor of securities
intermediaries, rights of setoff or similar rights and remedies as to deposit
accounts or securities accounts or other funds maintained with depository
institutions or securities intermediaries;
 
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provided, however,  that, except as provided in any one or more of clauses (a)
through (k) above, the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
 
“Permitted Indebtedness” means each of the following as long as no Default or
Event of Default has occurred and is continuing or would arise from the
incurrence thereof:
 
(a)           Indebtedness outstanding on the date hereof and listed on Schedule
7.03 and any refinancings, refundings, renewals or extensions thereof; provided
that (i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder, and the direct or contingent
obligor with respect thereto is not changed as a result of or in connection with
such refinancing, refunding, renewal or extension, (ii) the result of such
extension, renewal or replacement shall not be an earlier maturity date or
decreased weighted average life of such Indebtedness, and (iii) the terms
relating to principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Indebtedness being
refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not
exceed the then applicable market interest rate;
 
(b)           Indebtedness of any Borrower to any other Borrower; provided that
such Indebtedness shall (i) be evidenced by such documentation as the
Administrative Agent may reasonably require, (ii) constitute “Collateral” under
this Agreement and the Security Documents, (iii) be on terms (including
subordination terms) reasonably acceptable to the Administrative Agent, and (iv)
be otherwise permitted pursuant to Section 7.03;
 
(c)           purchase money Indebtedness of any Loan Party to finance the
acquisition of any fixed or capital assets, including Capital Lease Obligations,
and any Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition thereof,
and extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof provided that the terms
relating to principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Indebtedness being
refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not
exceed the then applicable market interest rate, provided, however, that the
aggregate principal amount of Indebtedness permitted by this clause (c) shall
not exceed $150,000 at any time outstanding per Fiscal Year, and provided,
further, that, if requested by the Collateral Agent, the Loan Parties shall
cause the holders of any such Indebtedness to enter into a Collateral Access
Agreement on terms reasonably satisfactory to the Collateral Agent;
 
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(d)           contingent liabilities under surety bonds or similar instruments
incurred in the ordinary course of business in connection with the construction
or improvement of Stores;
 
(e)           the Obligations;
 
(f)           Subordinated Indebtedness;
 
(g)           Guarantees of any Loan Party or other Subsidiary in respect of
obligations of another Loan Party that are otherwise permitted to be incurred
under this Agreement and the other Loan Documents; and
 
(h)           All Indebtedness referred to in clause (g) of the definition of
Indebtedness, other than any such Indebtedness which constitutes Disqualified
Stock.
 
“Permitted Investments” means each of the following as long as no Default or
Event of Default exists or would arise from the making of such Investment:
 
(a)           Investments existing on the Closing Date, and set forth on
Schedule 7.02, but not any increase in the amount thereof or any other
modification of the terms thereof;
 
(b)           Guarantees constituting Permitted Indebtedness;
 
(c)           Capital contributions made by any Borrower to another Borrower;
and
 
(d)           Purchase of fractional shares of the capital stock of iParty Corp.
pursuant to the Reverse Stock Split.
 
provided, however, that notwithstanding the foregoing, after the occurrence and
during the continuance of a Default or an Event of Default, no such Investments
specified in clauses (a) through (c) shall be permitted unless (i) either (A) no
Loans are then outstanding, or (B) the Investment is a temporary Investment
pending expiration of an Interest Period for a LIBO Rate Loan, the proceeds of
which Investment will be applied to the Obligations after the expiration of such
Interest Period, and (ii) such Investments are pledged to the Collateral Agent
as additional Collateral for the Obligations pursuant to such agreements as may
be reasonably required by the Collateral Agent.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, limited partnership,
Governmental Authority or other entity.
 
“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by a Borrower or, with respect to any such plan that
is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
 
“Pledge Agreement” means that certain Stock Pledge Agreement, dated as of
December 21, 2006, by and between iParty Corp. and the Collateral Agent (as
successor in interest to Wells Fargo Retail Finance II, LLC), as amended and in
effect from time to time.
 
“Prepayment Event” means:
 
(a)           any Disposition (including, without limitation, pursuant to any
sale-leaseback transaction) of any property or asset of a Loan Party;
 
(b)           any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property or
asset of a Loan Party, unless (i) the proceeds therefrom are required to be paid
to the holder of a Lien on such property or asset having priority over the Lien
of the Collateral Agent or (ii) prior to the occurrence of a Default or an Event
of Default, the proceeds therefrom are utilized for purposes of replacing or
repairing the assets in respect of which such proceeds, awards or payments were
received within one hundred eighty (180) days of the occurrence of the damage to
or loss of the assets being repaired or replaced;
 
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(c)           the issuance by a Loan Party of any Equity Interests, other than
any such issuance of Equity Interests (i) to a Loan Party, or (ii) as a
compensatory issuance to any employee, director, or consultant (including under
any option plan or stock incentive plan);
 
(d)           the incurrence by a Loan Party of any Indebtedness for borrowed
money other than Permitted Indebtedness; or
 
(e)           the receipt by any Loan Party of any Extraordinary Receipts.
 
“Public Lender” has the meaning specified in Section 6.02.
 
“Ratification and Reaffirmation Agreement” means the Ratification and
Reaffirmation Agreement, dated as of the date even herewith, by the Borrowers
and in favor of the Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
 
“Real Estate” means all Leases and all land, together with the buildings,
structures, parking areas, and other improvements thereon, now or hereafter
owned by any Loan Party, including all easements, rights-of-way, and similar
rights relating thereto and all leases, tenancies, and occupancies thereof.
 
“Register” has the meaning specified in Section 10.06(c).
 
“Registered Public Accounting Firm” has the meaning specified by the Securities
Laws and shall be independent of the Parent and its Subsidiaries as prescribed
by the Securities Laws.
 
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, advisors, attorneys
and representatives of such Person and of such Person’s Affiliates.
 
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
 
“Reports” has the meaning provided in Section 9.11.
 
“Request for Credit Extension” means (a) with respect to a Committed Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with
respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with
respect to a Swing Line Loan, a Swing Line Loan Notice.
 
“Required Lenders” means, as of any date of determination, (a) the Agent and (b)
the Lenders holding more than 50% of the Aggregate Commitments or, if the
Commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02, the
Lenders holding in the aggregate more than 50% of the Total Outstandings (with
the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition); provided that the Commitment of,
and the portion of the Total Outstandings held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.
 
“Reserves” means all (if any) Inventory Reserves, Availability Reserves and
Receivables Reserves.
 
“Responsible Officer” means the chief executive officer, president, chief
financial officer of a Loan Party, any other Person who presents themselves to
the Administrative Agent as, and in the Administrative Agent’s reasonable
discretion is, a Responsible Officer of a Loan Party or any of the other
individuals designated in writing to the Administrative Agent by an existing
Responsible Officer of a Loan Party as an authorized signatory of any
certificate or other document to be delivered hereunder.  Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
 
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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.  Without limiting the foregoing, “Restricted Payments”
with respect to any Person shall also include all payments made by such Person
with any proceeds of a dissolution or liquidation of such Person.
 
“Reverse Stock Split” means that certain reverse stock split of the existing
shares of iParty Corp.’s common stock pursuant to that certain amendment to
iParty Corp.’s restated certificate of incorporation authorized by stockholders
at the 2009 annual meeting of stockholders held on May 27, 2009, pursuant to
such reverse stock split the existing shares of iParty Corp.’s common stock
shall be combined into new shares of iParty Corp. common stock at an exchange
ratio ranging between one-for-five and one-for-thirty.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.
 
“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.
 
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
 
“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB, each as amended and in effect.
 
“Security Agreement” means that certain Security Agreement, dated as of the date
hereof, by and between the Collateral Agent and the Borrowers, as further
amended and in effect.
 
“Security Documents” means the Security Agreement, the Pledge Agreement, the
Trademark Security Agreement, the Blocked Account Agreements, the DDA
Notifications, the Credit Card Notifications, and each other security agreement
or other instrument or document executed and delivered to the Collateral Agent
pursuant to this Agreement or any other Loan Document granting a Lien to secure
any of the Obligations.
 
“Seller Note” means that certain Senior Subordinated Note dated August 7, 2006
in the face amount of $600,000 executed by iParty Retail Stores Corp. in favor
of Party City Corporation.
 
“Settlement Date” has the meaning provided in Section 2.14(a).
 
“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Parent and its Subsidiaries as of that date
determined in accordance with GAAP.
 
“Shrink” means Inventory which has been lost, misplaced, stolen, or is otherwise
unaccounted for.
 
“Solvent” and “Solvency” means, with respect to any Person on a particular date,
that on such date (a) at fair valuation, all of the properties and assets of
such Person are greater than the sum of the debts, including contingent
liabilities, of such Person, (b) the present fair saleable value of the
properties and assets of such Person is not less than the amount that would be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person’s ability to pay as such debts mature, and (e)
such Person is not engaged in a business or a transaction, and is not about to
engage in a business or transaction, for which such Person’s properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged.  The amount of all guarantees at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time,
can reasonably be expected to become an actual or matured liability.
 
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 “Standby Letter of Credit” means any Letter of Credit that is not a Commercial
Letter of Credit and that (a) is used in lieu or in support of performance
guaranties or performance, surety or similar bonds (excluding appeal bonds)
arising in the ordinary course of business, (b) is used in lieu or in support of
stay or appeal bonds, (c) supports the payment of insurance premiums for
reasonably necessary casualty insurance carried by any of the Loan Parties, or
(d) supports payment or performance for identified purchases or exchanges of
products or services in the ordinary course of business.
 
“Stated Amount” means at any time the maximum amount for which a Letter of
Credit may be honored.
 
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the FRB to which Wells Fargo Bank is subject with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.  LIBO
Rate Loans shall be deemed to constitute eurocurrency funding and to be subject
to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
 
“Store” means any retail store (which may include any real property, fixtures,
Equipment, Inventory and other property related thereto) operated, or to be
operated, by any Loan Party.
 
“Swing Line” means the revolving credit facility made available by the Swing
Line Lender pursuant to Section 2.04.
 
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.04.
 
“Swing Line Lender” means Wells Fargo Retail Finance, LLC, its capacity as
provider of Swing Line Loans, or any successor swing line lender hereunder.
 
“Swing Line Loan” has the meaning specified in Section 2.04(a).
 
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of
Exhibit B.
 
“Swing Line Loan Note” means the promissory note of the Borrowers substantially
in the form of Exhibit C-2, payable to the order of the Swing Line Lender,
evidencing the Swing Line Loans made by the Swing Line Lender.
 
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“Swing Line Sublimit” means an amount equal to the lesser of (a) $10,000,000,
and (b) the Aggregate Commitments.  The Swing Line Sublimit is part of, and not
in addition to, the Aggregate Commitments.
 
“Subordinated Indebtedness” means Indebtedness which is expressly subordinated
in right of payment to the prior payment in full of the Obligations and which is
in form and on terms approved in writing by the Administrative Agent, including,
but not limited to the obligations of the Borrowers under the Seller Note, the
Highbridge Note or the Trade Note.
 
“Subordination Agreement” means a subordination agreement, in form and substance
acceptable to the Administrative Agent in its sole discretion, pursuant to which
a creditor of any Loan Party acknowledges and agrees that the obligations of
such Loan Party to such creditor are subordinate to the obligations of such Loan
Party to the Obligations owed to the Lender hereunder or under any other Loan
Document.
 
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
Equity Interests having ordinary voting power for the election of directors or
other governing body are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of a Loan Party.
 
“Supply Agreement” means that certain Supply Agreement, dated as of August 7,
2006, by and between Amscam, Inc and iParty Corp. pursuant to which iParty Corp.
has agreed to purchase party goods from Amscan, Inc. and will receive certain
favorable pricing terms and rebates (or any amendment, restatement, or
replacement thereof (by one or more agreements or on customary trade terms with
one or more supplier acceptable at all times to the Administrative Agent)
entered into by the Borrowers with the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld or
delayed).
 
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.
 
“Temporary Halloween Stores” means stores operated by the Borrowers on a
seasonal or temporary basis to sell Halloween costumes and other related items.
 
“Termination Date” means the earliest to occur of (i) the Maturity Date, (ii)
the date on which the maturity of the Obligations is accelerated (or deemed
accelerated) and the Commitments are irrevocably terminated (or deemed
terminated) in accordance with Article VIII.
 
“Total Funded Debt” shall mean all Indebtedness of the Loan Parties on a
Consolidated basis.
 
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.
 
“Trademark Security Agreement” means that certain Trademark and Trademark
Applications Security Agreement, dated as of December 21, 2006, by and among
iParty Corp. and the Collateral Agent (as successor in interest to Wells Fargo
Retail Finance II, LLC), granting a Lien in trademarks, trademark applications,
service marks, registered service marks and service mark applications together
with any goodwill connected with and symbolized by any such trademarks,
trademark applications, service marks, registered service marks, and service
mark applications and certain other assets of iParty Corp. in connection
therewith, as amended and in effect from time to time.
 
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“Trade Note” means that certain Senior Subordinated Note dated October 24, 2006
in the face amount of $1,819,373.11 executed by iParty Retail Stores Corp. in
favor of Amscan, Inc.
 
“Trading with the Enemy Act” has the meaning set forth in Section 10.18.
 
“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a LIBO Rate Loan.
 
“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in The Commonwealth of Massachusetts; provided,
however, that if a term is defined in Article 9 of the Uniform Commercial Code
differently than in another Article thereof, the term shall have the meaning set
forth in Article 9; provided further that, if by reason of mandatory provisions
of law, perfection, or the effect of perfection or non-perfection, of a security
interest in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Massachusetts, “Uniform Commercial Code” means the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or
availability of such remedy, as the case may be.
 
“UCP” means the Uniform Customs and Practice guidelines as in effect from time
to time which govern the issuance of documentary and standby letters of credit.
 
“UFCA ” has the meaning specified in Section 10.21(d).
 
“UFTA” has the meaning specified in Section 10.21(d).
 
“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
 
“United States” and “U.S.” mean the United States of America.
 
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
 
“Unused Line Fee” has the meaning provided in Section 2.09(a).
 
“Wells Fargo Bank” means Wells Fargo Bank, N.A., a national banking association.
 
1.02    Other Interpretive Provisions.  With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
 
(a)          The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined.  Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms.  The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.”  The word “will” shall be construed
to have the same meaning and effect as the word “shall.”  Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“herein,” “hereof” and “hereunder,” and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its entirety
and not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
 
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(b)          In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through” means “to and
including.”
 
(c)          Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
 
1.03    Accounting Terms
 
(a)          Generally.  All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.
 
(b)          Changes in GAAP.  If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either the Lead Borrower or the Required Lenders shall so request,
the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders in their reasonable discretion); provided that, until so amended, (i)
such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Lead Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
 
1.04    Rounding.  Any financial ratios required to be maintained by the
Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
 
1.05    Times of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).
 
1.06    Letter of Credit Amounts.  Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to be the
Stated Amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the
terms of any Issuer Documents related thereto, provides for one or more
automatic increases in the Stated Amount thereof, the amount of such Letter of
Credit shall be deemed to be the maximum Stated Amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum Stated
Amount is in effect at such time.
 
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1.07    Currency Equivalents Generally.  Any amount specified in this Agreement
(other than in Articles II, IX and X) or any of the other Loan Documents to be
in Dollars shall also include the equivalent of such amount in any currency
other than Dollars, such equivalent amount thereof in the applicable currency to
be determined by the Administrative Agent at such time on the basis of the Spot
Rate (as defined below) for the purchase of such currency with Dollars.  For
purposes of this Section 1.07, the “Spot Rate” for a currency means the rate
determined by the Administrative Agent to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of such
currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m. on the date two (2) Business Days prior to
the date of such determination; provided that the Administrative Agent may
obtain such spot rate from another financial institution designated by the
Administrative Agent if the Person acting in such capacity does not have as of
the date of determination a spot buying rate for any such currency.
 
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
 
2.01    Committed Loans; Reserves.  (a) Subject to the terms and conditions set
forth herein, each Lender severally agrees to make loans (each such loan, a
“Committed Loan”) to the Borrowers from time to time, on any Business Day during
the Availability Period, in an aggregate amount not to exceed at any time
outstanding the lesser of (x) the amount of such Lender’s Commitment, or (y)
such Lender’s Applicable Percentage of the Borrowing Base; subject in each case
to the following limitations:
 
(i)    after giving effect to any Committed Borrowing, the Total Outstandings
shall not exceed the Loan Cap;
 
(ii)           after giving effect to any Committed Borrowing, the aggregate
Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment;
 
(iii)          the Outstanding Amount of all L/C Obligations shall not at any
time exceed the Letter of Credit Sublimit; and
 
(iv)          after giving effect to all Credit Extensions, no Overadvance shall
exist.
 
Within the limits of each Lender’s Commitment, and subject to the other terms
and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay
under Section 2.05, and reborrow under this Section 2.01.  Committed Loans may
be Base Rate Loans or LIBO Rate Loans, as further provided herein.
 
(b)    The Lead Borrower may request, no later than one (1) year prior to the
Maturity Date, that the Aggregate Commitment (initially, $12,500,000) be
increased (and that each Lender’s Revolving Credit Commitment be increased
ratably) at any time on, or subsequent to, the date hereof (the “Commitment
Increase Date”), by up to $2,500,000, in multiples of $500,000 (each, a
“Commitment Increase”), to a maximum Aggregate Commitment of $15,000,000,
subject to the terms and conditions in this clause (b).  The Commitment Increase
shall become effective upon the Commitment Increase Date so long as (i) (A) the
representations and warranties contained in Article V hereof and in each other
Loan Document, certificate or other writing delivered to the Administrative
Agent, the Lenders or the L/C Issuer pursuant hereto or thereto on or prior to
the Commitment Increase Date that are subject to materiality or Material Adverse
Effect qualifications shall be true and correct in all respects and the
representations and warranties contained in Article V hereof and in each other
Loan Document, certificate or other writing delivered to the Administrative
Agent, the Lenders or the L/C Issuer pursuant hereto or thereto that are not
subject to materiality or Material Adverse Effect qualifications shall be true
and correct in all material respects, in each case, as of the Commitment
Increase Date as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date), (B) no
Default or Event of Default shall have occurred and be continuing on the
Commitment Increase Date or would result from the Commitment Increase under this
Agreement or the other Loan Documents and (C) no default or other violation
would result from the Commitment Increase under any Material Contract or any
financing agreement or other documents with respect to indebtedness for borrowed
money of any Borrower, and (ii) the Administrative Agent shall have received, no
more than ten (10) Business Days and no less than three (3) Business Days prior
to the Commitment Increase Date, the following: (A) a certificate of an
Responsible Officer of the Lead Borrower, certifying as to clauses (A), (B) and
(C) of subsection (i) above, and (B) any and all agreements, instruments and
other documents reasonably requested by the Administrative Agent in connection
with the Commitment Increase, each in form and substance reasonably satisfactory
to the Administrative Agent; (iii) the Commitment Increase has been approved by
the Administrative Agent, at the sole discretion of the Required Lenders and
(iv) on or prior to the Commitment Increase Date, the Borrowers shall have paid
the Administrative Agent, for the ratable benefit of the Lenders, a fee equal to
one half of one percent (0.50%) of the amount of such Commitment Increase.  The
Agent shall be authorized to charge the Loan Account with such fee on or at any
time after the Commitment Increase Date.
 
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(c)    The following are the Reserves which may be established as of the Closing
Date:
 
(i)           100% of Customer Credit Liabilities (an Availability Reserve);
 
(ii)           100% of Shrink (an Inventory Reserve);
 
(iii)           100% of damaged, defective or otherwise unsaleable Inventory (an
Inventory Reserve);
 
(iv)           100% of charitable donations (an Availability Reserve); and
 
(v)           100% of Florida sales tax (an Availability Reserve).
 
(d)    The Administrative Agent shall have the right, at any time and from time
to time on or after the Closing Date in its discretion to establish new, or
modify or eliminate any existing, eligibility criteria or Reserves.
 
2.02    Borrowings, Conversions and Continuations of Committed Loans.
 
(a)    Committed Loans (other than Swing Line Loans) shall be either Base Rate
Loans or LIBO Loans as the Lead Borrower may request subject to and in
accordance with this Section 2.02.  All Swing Line Loans shall be only Base Rate
Loans.  Subject to the other provisions of this Section 2.02, Committed
Borrowings of more than one Type may be incurred at the same time.
 
(b)    Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of LIBO Rate Loans shall be made upon
the Lead Borrower’s irrevocable notice to the Administrative Agent, which may be
given by telephone.  Each such notice must be received by the Administrative
Agent not later than (i) 11:00 a.m. three (3) Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of LIBO Rate
Loans or of any conversion of LIBO Rate Loans to Base Rate Loans, and (ii) 11:30
a.m. the requested date of any Borrowing of Base Rate Loans.  Each telephonic
notice by the Lead Borrower pursuant to this Section 2.02(b) must be confirmed
promptly by delivery to the Administrative Agent of a written Committed Loan
Notice, appropriately completed and signed by a Responsible Officer of the Lead
Borrower.  Each Borrowing of, conversion to or continuation of LIBO Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof.  Except as provided in Section 2.03(c), each Borrowing of or
conversion to Base Rate Loans shall be in a principal amount of $100,000 or a
whole multiple of $50,000 in excess thereof.  Each Committed Loan Notice
(whether telephonic or written) shall specify (i) whether the Lead Borrower is
requesting a Committed Borrowing, a conversion of Committed Loans from one Type
to the other, or a continuation of LIBO Rate Loans, (ii) the requested date of
the Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Committed Loans to be borrowed,
converted or continued, (iv) the Type of Committed Loans to be borrowed or to
which existing Committed Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto.  If the Lead Borrower
fails to specify a Type of Committed Loan in a Committed Loan Notice or if the
Lead Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made as, or converted
to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable LIBO Rate Loans.  If the Lead Borrower requests a Borrowing
of, conversion to, or continuation of LIBO Rate Loans in any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.  Notwithstanding anything to the
contrary herein, a Swing Line Loan may not be converted to a LIBO Rate Loan.
 
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(c)    Following receipt of a Committed Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Applicable Percentage of
the applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the Lead Borrower, the Administrative Agent shall
notify each Lender of the details of any automatic conversion to Base Rate Loans
described in Section 2.02(b).  In the case of a Committed Borrowing, each Lender
shall make the amount of its Committed Loan available to the Administrative
Agent in immediately available funds at the Administrative Agent’s Office not
later than 1:00 p.m. on the Business Day specified in the applicable Committed
Loan Notice.  Upon satisfaction of the applicable conditions set forth in
Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section
4.01), the Administrative Agent shall use reasonable efforts to make all funds
so received available to the Borrowers in like funds by no later than 4:00 p.m.
on the day of receipt by the Administrative Agent either by (i) crediting the
account of the Lead Borrower on the books of the Administrative Agent with the
amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Lead Borrower; provided, however, that if, on the
date the Committed Loan Notice with respect to such Borrowing is given by the
Lead Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Borrowing, first, shall be applied to the payment in full of any such L/C
Borrowings, and second, shall be made available to the Borrowers as provided
above.
 
(d)    The Administrative Agent, without the request of the Lead Borrower, may
advance any interest, fee, expenses, service charge, Credit Party Expenses, or
other payment to which any Credit Party is entitled from the Loan Parties
pursuant hereto or any other Loan Document, as and when due and payable, and may
charge the same to the Loan Account notwithstanding that an Overadvance may
result thereby.  The Administrative Agent shall advise the Lead Borrower of any
such advance or charge promptly after the making thereof.  Such action on the
part of the Administrative Agent shall not constitute a waiver of the
Administrative Agent’s rights and the Borrowers’ obligations under Section
2.05.  Any amount which is added to the principal balance of the Loan Account as
provided in this Section 2.02(d) shall bear interest at the interest rate then
and thereafter applicable to Base Rate Loans.
 
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(e)    Except as otherwise provided herein, a LIBO Rate Loan may be continued or
converted only on the last day of an Interest Period for such LIBO Rate
Loan.  Upon the occurrence and during the continuation of a Default, the
Administrative Agent may, and at the direction of the Required Lenders shall,
prohibit Loans from being requested as, converted to, or continued as, LIBO Rate
Loans.
 
(f)    The Administrative Agent shall promptly notify the Lead Borrower and the
Lenders of the interest rate applicable to any Interest Period for LIBO Rate
Loans upon determination of such interest rate.  At any time that Base Rate
Loans are outstanding, the Administrative Agent shall notify the Lead Borrower
and the Lenders of any change in Wells Fargo Bank’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.
 
(g)    After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than three (3) Interest Periods
in effect with respect to Committed Loans.
 
(h)    The Administrative Agent, the Lenders, the Swing Line Lender and the L/C
Issuer shall have no obligation to make any Loan, or to endeavor to cause the
issuance of or provide any Letter of Credit, if an Overadvance would
result.  The Administrative Agent shall have no liability for, and no Loan Party
or Credit Party shall have the right to, or shall, bring any claim of any kind
whatsoever against the Administrative Agent with respect to “inadvertent
Overadvances” (i.e. where an Overadvance results from changed circumstances
beyond the control of the Administrative Agent (such as a reduction in the
collateral value)) regardless of the amount of any such Overadvance(s).
 
2.03    Letters of Credit.
 
(a)    The Letter of Credit Commitment.
 
(i)           Subject to the terms and conditions set forth herein, (A) the
Administrative Agent, in reliance upon the agreements of the Lenders set forth
in this Section 2.03, shall endeavor to cause the L/C Issuer from time to time
on any Business Day during the period from the Closing Date until the Letter of
Credit Expiration Date, to issue Letters of Credit for the account of the
Borrowers, and to amend or extend Letters of Credit previously issued by the L/C
Issuer, in accordance with Section 2.03(b) below; and (B) the Lenders severally
agree to participate in Letters of Credit issued for the account of the
Borrowers and any drawings thereunder; provided that after giving effect to any
L/C Credit Extension with respect to any Letter of Credit, (x) the Total
Outstandings shall not exceed the Loan Cap, (y) the aggregate Outstanding Amount
of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage
of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations
shall not exceed the Letter of Credit Sublimit.  Each request by the Lead
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrowers that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence.  Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrowers may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.  Any L/C Issuer (other than Wells Fargo
Bank or any of its Affiliates) shall notify the Administrative Agent in writing
on each Business Day of all Letters of Credit issued on the prior Business Day
by such L/C Issuer.  All Existing Letters of Credit shall be deemed to have been
issued pursuant hereto, and from and after the Closing Date shall be subject to
and governed by the terms and conditions hereof.
 
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(ii)           No Letter of Credit shall be issued if:
 
(A)           subject to Section 2.03(b)(iii), the expiry date of such requested
Standby Letter of Credit would occur more than twelve months after the date of
issuance or last extension, unless the Required Lenders have approved such
expiry date; or
 
(B)           subject to Section 2.03(b)(iii), the expiry date of such requested
Commercial Letter of Credit would occur more than forty five (45) days after the
date of issuance or last extension, unless the Required Lenders have approved
such expiry date; or
 
(C)           the expiry date of such requested Letter of Credit would occur
after the Letter of Credit Expiration Date, unless either such Letter of Credit
is Cash Collateralized on or prior to the Letter of Credit Expiration Date or
all the Lenders have approved such expiry date.
 
(iii)           No Letter of Credit shall be issued, without the prior consent
of the Administrative Agent, if:
 
(A)           any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from
issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;
 
(B)           the issuance of such Letter of Credit would violate one or more
policies of the L/C Issuer applicable to letters of credit generally;
 
(C)           except as otherwise agreed by the Administrative Agent and the L/C
Issuer, such Letter of Credit is in an initial Stated Amount less than $10,000,
in the case of a Commercial Letter of Credit, or $20,000, in the case of a
Standby Letter of Credit;
 
(D)           such Letter of Credit is to be denominated in a currency other
than Dollars;
 
(E)           such Letter of Credit contains any provisions for automatic
reinstatement of the Stated Amount after any drawing thereunder; or
 
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(F)           a default of any Lender’s obligations to fund under Section
2.03(c) exists or any Lender is at such time a Defaulting Lender or
Deteriorating Lender hereunder, unless the Administrative Agent or the L/C
Issuer has entered into satisfactory arrangements with the Borrowers or such
Lender to eliminate the L/C Issuer’s risk with respect to such Lender.
 
(iv)           The Borrowers shall not permit any Letter of Credit to be amended
if (A) the L/C Issuer would not be permitted at such time to issue such Letter
of Credit in its amended form under the terms hereof or (B) if the beneficiary
of such Letter of Credit does not accept the proposed amendment to such Letter
of Credit.
 
(v)           The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the L/C Issuer.
 
(b)    Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.
 
(i)           Each Letter of Credit shall be issued or amended, as the case may
be, upon the request of the Lead Borrower delivered to the Administrative Agent
in the form of a Letter of Credit Application, appropriately completed and
signed by a Responsible Officer of the Lead Borrower.  Any Letter of Credit
Application or other document delivered hereunder that is signed by a
Responsible Person shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action, and such Responsible
Officer shall be conclusively presumed to have acted on behalf of the
Borrowers.  Such Letter of Credit Application must be received by the
Administrative Agent not later than 11:00 a.m. at least two (2) Business Days
(or such other date and time as the Administrative Agent may agree in a
particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be.  Promptly after receipt of any Letter
of Credit Application, the Administrative Agent will provide the L/C Issuer
(other than Wells Fargo Bank or any of its Affiliates) with a copy of such
Letter of Credit Application.  In the case of a request for an initial issuance
of a Letter of Credit, such Letter of Credit Application shall specify in form
and detail satisfactory to the Administrative Agent: (A) the proposed issuance
date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the Administrative Agent may reasonably require.  In the case
of a request for an amendment of any outstanding Letter of Credit, such Letter
of Credit Application shall specify in form and detail satisfactory to the
Administrative Agent (A) the Letter of Credit to be amended; (B) the proposed
date of amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the Administrative Agent may
require.  Additionally, the Lead Borrower shall furnish to the Administrative
Agent such other documents and information pertaining to such requested Letter
of Credit issuance or amendment, including any Issuer Documents, as the
Administrative Agent may require.
 
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(ii)           Unless the L/C Issuer has received written notice from any
Lender, the Administrative Agent or any Loan Party, at least one Business Day
prior to the requested date of issuance or amendment of the applicable Letter of
Credit, that one or more applicable conditions contained in Article IV shall not
then be satisfied, then, subject to the terms and conditions hereof, the L/C
Issuer shall, on the requested date, issue a Letter of Credit for the account of
the applicable Borrower or enter into the applicable amendment, as the case may
be, in each case in accordance with the L/C Issuer's usual and customary
business practices.  Immediately upon the issuance or amendment of each Letter
of Credit, each Lender shall be deemed to (without any further action), and
hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer,
without recourse or warranty, a risk participation in such Letter of Credit in
an amount equal to the product of such Lender’s Applicable Percentage times the
amount of such Letter of Credit.  Upon any change in the Commitments under this
Agreement, it is hereby agreed that with respect to all L/C Obligations, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Applicable Percentages of the assigning and assignee Lenders.
 
(iii)           If the Lead Borrower so requests in any applicable Letter of
Credit Application, the Administrative Agent may, in its sole and absolute
discretion, endeavor to cause the L/C Issuer to issue a Standby Letter of Credit
that has automatic extension provisions (each, an “Auto-Extension Letter of
Credit”); provided that any such Auto-Extension Letter of Credit must permit the
L/C Issuer to prevent any such extension at least once in each twelve-month
period (commencing with the date of issuance of such Standby Letter of Credit)
by giving prior notice to the beneficiary thereof not later than a day (the
“Non-Extension Notice Date”) in each such twelve-month period to be agreed upon
at the time such Standby Letter of Credit is issued.  Unless otherwise directed
by the Administrative Agent or the L/C Issuer, the Lead Borrower shall not be
required to make a specific request to the Administrative Agent or the L/C
Issuer for any such extension.  Once an Auto-Extension Letter of Credit has been
issued, the Lenders shall be deemed to have authorized (but may not require) the
L/C Issuer to permit the extension of such Standby Letter of Credit at any time
to an expiry date not later than the Letter of Credit Expiration Date; provided,
however, that the Administrative Agent shall instruct the L/C Issuer not to
permit any such extension if (A) the Administrative Agent has determined that it
would not be permitted, or would have no obligation, at such time to endeavor to
cause or have the L/C Issuer issue such Standby Letter of Credit in its revised
form (as extended) under the terms hereof (by reason of the provisions of clause
(ii) or (iii) of Section 2.03(a) or otherwise), or (B) the L/C Issuer has
received notice (which may be by telephone or in writing) on or before the day
that is no less than five (5) Business Days before the Non-Extension Notice Date
(1) from the Administrative Agent that the Required Lenders have elected not to
permit such extension or (2) from the Administrative Agent, any Lender or the
Lead Borrower that one or more of the applicable conditions specified in Section
4.02 is not then satisfied, and in each such case directing the L/C Issuer not
to permit such extension.
 
(iv)           Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, the L/C Issuer will also deliver to the Lead Borrower
and the Administrative Agent a true and complete copy of such Letter of Credit
or amendment.
 
(c)    Drawings and Reimbursements; Funding of Participations.
 
(i)           Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the Administrative Agent shall
notify the Lead Borrower thereof; provided, however, that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the L/C Issuer and the Lenders with respect to any such
payment.  Not later than 11:00 a.m. on the date of any payment by the L/C Issuer
under a Letter of Credit (each such date, an “Honor Date”), the Borrowers shall
reimburse the L/C Issuer through the Administrative Agent on the same day in an
amount equal to the amount of such drawing. If the Borrowers fail to so
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s Applicable
Percentage thereof.  In such event, the Borrowers shall be deemed to have
requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor
Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.02 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of the Aggregate
Commitments and the conditions set forth in Section 4.02 (other than the
delivery of a Committed Loan Notice).  Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.03(c)(i) may be given by
telephone or electronic means.
 
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(ii)           Each Lender shall upon any notice pursuant to Section 2.03(c)(i)
make funds available to the Administrative Agent for the account of the L/C
Issuer at the Administrative Agent’s Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrowers in such
amount.  The Administrative Agent shall remit the funds so received to the L/C
Issuer.
 
(iii)           With respect to any Unreimbursed Amount that is not fully
refinanced by a Committed Borrowing of Base Rate Loans because the conditions
set forth in Section 4.02 cannot be satisfied or for any other reason, the
Borrowers shall be deemed to have incurred from the L/C Issuer an L/C Borrowing
in the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate.  In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in satisfaction
of its participation obligation under this Section 2.03.
 
(iv)           Until each Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s
Applicable Percentage of such amount shall be solely for the account of the L/C
Issuer.
 
(v)           Each Lender’s obligation to make Committed Loans or L/C Advances
to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, any Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.03(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the Lead Borrower of a Committed Loan
Notice).  No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrowers to reimburse the L/C Issuer for the amount of any
payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.
 
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(vi)           If any Lender fails to make available to the Administrative Agent
for the account of the L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by the time
specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover
from such Lender (acting through the Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a
rate determined by the L/C Issuer in accordance with banking industry rules on
interbank compensation plus any administrative, processing or similar fees
customarily charged by the L/C Issuer in connection with the foregoing.  If such
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Lender’s Committed Loan included in the relevant
Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as
the case may be.  A certificate of the L/C Issuer submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.
 
(d)    Repayment of Participations.
 
(i)           At any time after the L/C Issuer has made a payment under any
Letter of Credit and has received from any Lender such Lender’s L/C Advance in
respect of such payment in accordance with Section 2.03(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Borrowers or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Applicable Percentage thereof (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender’s L/C Advance was outstanding) in the same funds as those received by the
Administrative Agent.
 
(ii)           If any payment received by the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be
returned under any of the circumstances described in Section 10.05 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each Lender shall pay to the Administrative Agent for the account of the L/C
Issuer its Applicable Percentage thereof on demand of the Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is
returned by such Lender, at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  The obligations of the Lenders under this clause
shall survive the payment in full of the Obligations and the termination of this
Agreement.
(e)    Obligations Absolute.  The obligation of the Borrowers to reimburse the
L/C Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:
 
(i)           any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other Loan Document;
 
(ii)          the existence of any claim, counterclaim, setoff, defense or other
right that the Borrowers or any Subsidiary may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;
 
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(iii)          any draft, demand, certificate or other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under such Letter of Credit;
 
(iv)          any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Laws;
 
(v)           any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrowers or
any of their Subsidiaries; or
 
(vi)          the fact that any Event of Default shall have occurred and be
continuing.
 
The Lead Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Lead Borrower’s instructions or other irregularity, the
Lead Borrower will immediately notify the Administrative Agent and the L/C
Issuer.  The Borrowers shall be conclusively deemed to have waived any such
claim against the L/C Issuer and its correspondents unless such notice is given
as aforesaid.
 
(f)    Role of L/C Issuer.  Each Lender and the Borrowers agree that, in paying
any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable; (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; (iii) any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit or any error in interpretation of technical
terms; or (iv) the due execution, effectiveness, validity or enforceability of
any document or instrument related to any Letter of Credit or Issuer
Document.  The Borrowers hereby assume all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Borrowers’ pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement.  None of the
L/C Issuer, the Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be liable
or responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrowers, to the extent, but only to
the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C
Issuer's willful misconduct or gross negligence or the L/C Issuer's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit.  In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary (or the L/C Issuer may
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit), and the L/C
Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
 
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(g)    Cash Collateral.  Upon the request of the Administrative Agent, (i) if
the L/C Issuer has honored any full or partial drawing request under any Letter
of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of
the Letter of Credit Expiration Date, any L/C Obligation for any reason remains
outstanding, the Borrowers shall, in each case, immediately Cash Collateralize
the then Outstanding Amount of all L/C Obligations.  Sections 2.05  and 8.02(c)
set forth certain additional requirements to deliver Cash Collateral
hereunder.  For purposes of this Section 2.03, Section 2.05 and Section 8.02(c)
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances in an
amount equal to 105% of the Outstanding Amount of all L/C Obligations, pursuant
to documentation in form and substance reasonably satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby Consented to
by the Lenders).  Derivatives of such term have corresponding meanings.  The
Borrowers hereby grant to the Collateral Agent a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing.  Cash Collateral shall be maintained in the Cash Collateral
Account.  If at any time the Administrative Agent determines that any funds held
as Cash Collateral are subject to any right or claim of any Person other than
the Administrative Agent or that the total amount of such funds is less than the
aggregate Outstanding Amount of all L/C Obligations, the Borrowers will,
forthwith upon demand by the Administrative Agent, pay to the Administrative
Agent, as additional funds to be deposited as Cash Collateral, an amount equal
to the excess of (x) such aggregate Outstanding Amount over (y) the total amount
of funds, if any, then held as Cash Collateral that the Administrative Agent
determines to be free and clear of any such right and claim.  Upon the drawing
of any Letter of Credit for which funds are on deposit as Cash Collateral, such
funds shall be applied, to the extent permitted under applicable Laws, to
reimburse the L/C Issuer and, to the extent not so applied, shall thereafter be
applied to satisfy other Obligations.
 
(h)    Applicability of ISP and UCP.  Unless otherwise expressly agreed by the
L/C Issuer and the Lead Borrower when a Letter of Credit is issued (including
any such agreement applicable to an Existing Letter of Credit), (i) the rules of
the ISP or UCP shall apply to each Standby Letter of Credit, and (ii) the rules
of the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance shall
apply to each Commercial Letter of Credit.
 
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(i)    Letter of Credit Fees.  The Borrowers shall pay to the Administrative
Agent, for the account of each Lender in accordance with its Applicable
Percentage, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter
of Credit equal to the Applicable Rate times the daily Stated Amount under each
such Letter of Credit (whether or not such maximum amount is then in effect
under such Letter of Credit.  For purposes of computing the daily Stated Amount
available to be drawn under any Letter of Credit, the Stated Amount of the
Letter of Credit shall be determined in accordance with Section 1.06.   Letter
of Credit Fees shall be (i) due and payable on the first calendar day of each
month, commencing with the first such date to occur after the issuance of such
Letter of Credit, on the Letter of Credit Expiration Date and thereafter on
demand, and (ii) computed on a monthly basis in arrears.  If there is any change
in the Applicable Rate during any month, the daily amount available to be drawn
under of each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such month that such
Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, while any Event of Default has occurred and is continuing, the
Administrative Agent may, and upon the request of the Required Lenders shall,
notify the Lead Borrower that all Letter of Credit Fees shall accrue at the
Default Rate and thereafter such Letter of Credit Fees shall accrue at the
Default Rate to the fullest extent permitted by applicable Laws.
 
(j)    [Reserved].
 
(k)   Consignment of Bill of Lading.  The Borrowers shall, upon the request of
the Administrative Agent, consign to the L/C Issuer any bill of lading for
Inventory which is supported by a Commercial Letter of Credit issued by the L/C
Issuer.
 
(l)    Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.
 
2.04    Swing Line Loans.
 
(a)    The Swing Line.  Subject to the terms and conditions set forth herein,
the Swing Line Lender agrees, in reliance upon the agreements of the other
Lenders set forth in this Section 2.04, to make loans (each such loan, a “Swing
Line Loan”) to the Borrowers from time to time on any Business Day during the
Availability Period in an aggregate amount not to exceed at any time outstanding
the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing
Line Loans, when aggregated with the Applicable Percentage of the Outstanding
Amount of Committed Loans and L/C Obligations of the Lender acting as Swing Line
Lender, may exceed the amount of such Lender’s Commitment; provided, however,
that after giving effect to any Swing Line Loan, (i) the Total Outstandings
shall not exceed the lesser of (A) the Aggregate Commitments, or (B) the
Borrowing Base, and (ii) the aggregate Outstanding Amount of the Committed Loans
of any Lender at such time, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations at such time, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such
time shall not exceed such Lender’s Commitment, and provided, further, that the
Borrowers shall not use the proceeds of any Swing Line Loan to refinance any
outstanding Swing Line Loan.  Within the foregoing limits, and subject to the
other terms and conditions hereof, the Borrowers may borrow under this Section
2.04, prepay under Section 2.05, and reborrow under this Section 2.04.  Each
Swing Line Loan shall bear interest only at a rate based on the Base
Rate.  Immediately upon the making of a Swing Line Loan, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Applicable Percentage times the amount of
such Swing Line Loan.
 
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(b)    Borrowing Procedures.  Each Swing Line Borrowing shall be made upon the
Lead Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to
be borrowed, which shall be a minimum of $100,000, and (ii) the requested
borrowing date, which shall be a Business Day.  Each such telephonic notice must
be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Lead Borrower.  Promptly
after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice,
the Swing Line Lender will confirm with the Administrative Agent (by telephone
or in writing) that the Administrative Agent has also received such Swing Line
Loan Notice and, if not, the Swing Line Lender will notify the Administrative
Agent (by telephone or in writing) of the contents thereof.  Unless the Swing
Line Lender has received notice (by telephone or in writing) from the
Administrative Agent at the request of the Required Lenders prior to 2:00 p.m.
on the date of the proposed Swing Line Borrowing (A) directing the Swing Line
Lender not to make such Swing Line Loan as a result of the limitations set forth
in the proviso to the first sentence of Section 2.04(a), or (B) that one or more
of the applicable conditions specified in Article IV is not then satisfied,
then, subject to the terms and conditions hereof, the Swing Line Lender may, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available to the Borrowers at its
office by crediting the account of the Lead Borrower on the books of the Swing
Line Lender in immediately available funds.
 
(c)    Refinancing of Swing Line Loans.
 
(i)           The Swing Line Lender at any time in its sole and absolute
discretion may request, on behalf of the Borrowers (which hereby irrevocably
authorize the Swing Line Lender to so request on their behalf), that each Lender
make a Base Rate Loan in an amount equal to such Lender's Applicable Percentage
of the amount of Swing Line Loans then outstanding.  Such request shall be made
in writing (which written request shall be deemed to be a Committed Loan Notice
for purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.02.  The Swing
Line Lender shall furnish the Lead Borrower with a copy of the applicable
Committed Loan Notice promptly after delivering such notice to the
Administrative Agent.  Each Lender shall make an amount equal to its Applicable
Percentage of the amount specified in such Committed Loan Notice available to
the Administrative Agent in immediately available funds for the account of the
Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m.
on the day specified in such Committed Loan Notice, whereupon, subject to
Section 2.04(c)(ii), each Lender that so makes funds available shall be deemed
to have made a Base Rate Loan to the Borrowers in such amount.  The
Administrative Agent shall remit the funds so received to the Swing Line Lender.
 
(ii)           If for any reason any Swing Line Loan cannot be refinanced by
such a Committed Borrowing in accordance with Section 2.04(c)(i), the request
for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall
be deemed to be a request by the Swing Line Lender that each of the Lenders fund
its risk participation in the relevant Swing Line Loan and each Lender’s payment
to the Administrative Agent for the account of the Swing Line Lender pursuant to
Section 2.04(c)(i) shall be deemed payment in respect of such participation.
 
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(iii)           If any Lender fails to make available to the Administrative
Agent for the account of the Swing Line Lender any amount required to be paid by
such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the
time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing
Line Lender at a rate per annum equal to the greater of the Federal Funds Rate
and a rate determined by the Swing Line Lender in accordance with banking
industry rules on interbank compensation plus any administrative, processing or
similar fees customarily charged by the Swing Line Lender in connection with the
foregoing.  If such Lender pays such amount (with interest and fees as
aforesaid), the principal amount so paid shall constitute such Lender’s
Committed Loan included in the relevant Committed Borrowing or funded
participation in the relevant Swing Line Loan, as the case may be.   A
certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii)
shall be conclusive absent manifest error.
 
(iv)           Each Lender’s obligation to make Committed Loans or to purchase
and fund risk participations in Swing Line Loans pursuant to this Section
2.04(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, the
Borrowers or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02.  No such funding of risk
participations shall relieve or otherwise impair the obligation of the Borrowers
to repay Swing Line Loans, together with interest as provided herein.
 
(d)    Repayment of Participations.
 
(i)           At any time after any Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Lender its Applicable Percentage of such payment
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s risk participation was funded) in the same
funds as those received by the Swing Line Lender.
 
(ii)           If any payment received by the Swing Line Lender in respect of
principal or interest on any Swing Line Loan is required to be returned by the
Swing Line Lender under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Lender shall pay to the Swing Line Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the Federal Funds Rate.  The Administrative Agent will make such
demand upon the request of the Swing Line Lender.  The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations
and the termination of this Agreement.
 
(e)    Interest for Account of Swing Line Lender.  The Swing Line Lender shall
be responsible for invoicing the Borrowers for interest on the Swing Line
Loans.  Until each Lender funds its Base Rate Loan or risk participation
pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage
of any Swing Line Loan, interest in respect of such Applicable Percentage shall
be solely for the account of the Swing Line Lender.
 
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(f)    Payments Directly to Swing Line Lender.  The Borrowers shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.
 
2.05        Prepayments.
 
(a)    The Borrowers may, upon irrevocable notice from the Lead Borrower to the
Administrative Agent, at any time or from time to time voluntarily prepay
Committed Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Administrative Agent not later than
11:00 a.m. (A) three (3) Business Days prior to any date of prepayment of LIBO
Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any
prepayment of LIBO Rate Loans shall be in a principal amount of $100,000 or a
whole multiple of $50,000 in excess thereof; and (iii) any prepayment of Base
Rate Loans shall be in a principal amount of $50,000 or a whole multiple of
$100,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding.  Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Committed Loans to be prepaid and,
if LIBO Rate Loans, the Interest Period(s) of such Committed Loans.  The
Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender’s Applicable Percentage of such
prepayment.  If such notice is given by the Lead Borrower, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein.  Any prepayment of a LIBO Rate
Loan shall be accompanied by all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.05.  Each
such prepayment shall be applied to the Committed Loans of the Lenders in
accordance with their respective Applicable Percentages.
 
(b)    The Borrowers may, upon irrevocable notice from the Lead Borrower to the
Swing Line Lender (with a copy to the Administrative Agent), at any time or from
time to time, voluntarily prepay Swing Line Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the Swing
Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of
the prepayment, and (ii) any such prepayment shall be in a minimum principal
amount of $100,000.  Each such notice shall specify the date and amount of such
prepayment.  If such notice is given by the Lead Borrower, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein.
 
(c)    If for any reason the Total Outstandings at any time exceed the Loan Cap,
as then in effect, the Borrowers shall immediately prepay Committed Loans and
L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than L/C
Borrowings) in an aggregate amount equal to such excess; provided, however, that
the Borrowers shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.05(c) unless after the prepayment in full of the
Loans the Total Outstandings exceed the Loan Cap.
 
(d)    Notwithstanding the provisions of Section 2.05(a) or 2.05(b), so long as
the cash management procedures set forth in Section 6.13 are in effect, any
proceeds deposited to the Concentration Account in accordance with the
provisions of Section 6.13, including, without limitation, any Net Proceeds
received by a Loan Party upon the occurrence of a Prepayment Event and upon the
direction of the Lead Borrower shall, (i) if deposited in the Concentration
Account not later than 2:00 p.m. in immediately available funds, be utilized to
prepay the Loans on the date such funds were deposited into the Concentration
Account, or (ii) if deposited in the Concentration Account after 2:00 p.m. in
immediately available funds, be utilized to prepay the Loans on the next
Business Day following the date such funds were deposited into the in the
Concentration Account, in either case in the order of priority set forth in
Section 2.05(e).  The application of all such proceeds to the Loans shall not
reduce the Commitments.  If all Obligations then due pursuant to Section 2.05(e)
are paid in full, then any proceeds deposited to the Concentration Account shall
be remitted without any deduction other than customary fees to the operating
account of the Borrowers designated by the Lead Borrower on (i) if received in
the Concentration Account not later than 2:00 p.m. in immediately available
funds, the date such funds were deposited into the in the Concentration Account,
or (ii) if received in the Concentration Account after 2:00 p.m. in immediately
available funds, the next Business Day following the date such funds were
deposited into the in the Concentration Account.
 
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(e)    Prepayments made pursuant to this Section 2.05, first, shall be applied
ratably to the L/C Borrowings and the Swing Line Loans, second, shall be applied
ratably to the outstanding Committed Loans that are Base Rate Loans, third,
shall be applied ratably to the outstanding Committed Loans that are LIBO Rate
Loans, fourth, shall be used to Cash Collateralize the remaining L/C Obligations
in accordance with Section 2.03(g) (after and during the continuation of an
Event of Default); and, fifth, the amount remaining, if any, may be retained by
and shall be released to the Borrowers for use in the ordinary course of
their  business; provided however, that so long as no Event of Default has
occurred and is continuing,  in the event of any payments pursuant to Section
2.05(d), at the Lead Borrower’s election, in lieu of prepaying, any then
outstanding LIBO Rate Loans such funds may be retained by the Agent in an
interest bearing account for the benefit of the Borrowers in an amount
sufficient to Cash Collateralize any such LIBO Rate Loans until same may be paid
without any prepayment or other charges.  Upon the drawing of any Letter of
Credit that has been Cash Collateralized, the funds held as Cash Collateral
shall be applied (without any further action by or notice to or from the
Borrowers or any other Loan Party) to reimburse the L/C Issuer or the Lenders,
as applicable.
 
2.06        Termination or Reduction of Commitments.
 
(a)           The Borrowers may, upon irrevocable notice from the Lead Borrower
to the Administrative Agent, terminate the Aggregate Commitments, the Letter of
Credit Sublimit or from time to time permanently reduce the Aggregate
Commitments, or the Letter of Credit Sublimit; provided that (i) any such notice
shall be received by the Administrative Agent not later than 11:00 a.m. three
Business Days prior to the date of any such termination or reduction, (ii) any
such partial reduction shall be in an aggregate amount of $500,000 or any whole
multiple of $100,000 in excess thereof, (iii) the Borrowers shall not terminate
or reduce (A) the Aggregate Commitments if, after giving effect thereto and to
any concurrent prepayments hereunder, the Total Outstanding would exceed the
Aggregate Commitments,  and (B) the Letter of Credit Sublimit if, after giving
effect thereto, the Outstanding Amount of L/C Obligations not fully Cash
Collateralized hereunder would exceed the Letter of Credit Sublimit.
 
(b)           If, after giving effect to any reduction of the Aggregate
Commitments, the Letter of Credit Sublimit exceeds the amount of the Aggregate
Commitments, such Letter of Credit Sublimit shall be automatically reduced by
the amount of such excess.
(c)           The Administrative Agent will promptly notify the Lenders of any
termination or reduction of the Letter of Credit Sublimit or the Aggregate
Commitments under this Section 2.06.  Upon any reduction of the Aggregate
Commitments, the Commitment of each Lender shall be reduced by such Lender’s
Applicable Percentage of such reduction amount.  All fees (including, without
limitation, Commitment Fees, Early Termination Fees, and Letter of Credit Fees)
and interest in respect of the Aggregate Commitments accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.
 
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2.07        Repayment of Loans. The Borrowers shall repay to the Lenders on the
Termination Date the aggregate principal amount of Committed Loans outstanding
on such date. 
 
2.08        Interest.
 
(a)    Subject to the provisions of Section 2.08(a)(i) below, (i) each LIBO Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such
Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Margin.
 
(i)           If any Event of Default has occurred and is continuing, then all
outstanding Obligations shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate and thereafter, until
termination of the Aggregate Commitments and repayment of all other Obligations
hereunder.
 
(ii)           Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.
 
(b)    Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein.  Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Laws.
 
2.09        Fees.  In addition to certain fees described in subsections (i) and
(j) of Section 2.03:
 
(a)    Unused Line Fee.  The Borrowers shall pay to the Administrative Agent,
for the account of each Lender, in accordance with its Applicable Percentage, an
unused line fee (the “Unused Line Fee”) equal to one half of one percent (0.50%)
times the average daily amount by which the Aggregate Commitments exceed the sum
of (i) the Outstanding Amount of Loans and (ii) the Outstanding Amount of L/C
Obligations.  The Unused Line Fee shall accrue at all times during the
Availability Period, including at any time during which one or more of the
conditions in Article IV is not met, and shall be due and payable monthly in
arrears on the first calendar day of each month, commencing with the first such
date to occur after the Closing Date, and on the last day of the Availability
Period.  The Unused Line Fee shall be calculated monthly in arrears, and if
there is any change in the Applicable Margin during any month, the average daily
amount shall be computed and multiplied by the Applicable Margin separately for
each period during such month that such Applicable Margin was in effect.
 
(b)    Early Termination Fee.  In the event that (i) the Termination Date
occurs, for any reason, or (ii) the Lead Borrower elects to permanently reduce
in full or in part the Commitments pursuant to Section 2.06 hereof, then in each
case the Borrowers shall pay to the Administrative Agent, for the ratable
benefit of the Lenders, a fee (the “Early Termination Fee”) in respect of
amounts which are or become payable by reason thereof equal to (x) one and
one-half percent (1.50%) if such event shall occur on or before July 1, 2010,
(y) one percent (1.00%) if such event shall occur after July 1, 2010, but on or
before July 1, 2011 or (z) one half of one percent (0.50%) if such event shall
occur after July 1, 2011, as the case may be, of the Aggregate Commitments then
in effect.  Notwithstanding anything to the contrary contained herein, no Early
Termination Fee shall be due if the Commitments are irrevocably terminated and
the Obligations repaid in full in cash at any time as a result of the loan
arrangement evidenced by this Agreement and the other Loan Documents being
refinanced in its entirety by an Affiliate (under clause (i) of the definition
thereof) of the Administrative Agent.  All parties to this Agreement agree and
acknowledge that the Lenders will have suffered damages on account of the early
termination of this Agreement and that, in view of the difficulty in
ascertaining the amount of such damages, the Early Termination Fee constitutes
reasonable compensation and liquidated damages to compensate the Lenders on
account thereof.
 
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(c)    Collateral Monitoring Fee.  On the Closing Date, and on the first day of
each month thereafter during the term hereof, the Borrowers shall pay to the
Collateral Agent a collateral monitoring fee (the “Collateral Monitoring Fee”)
in the amount of $2,000.  Such Collateral Monitoring Fee shall be fully earned
when paid and shall not be refundable for any reason whatsoever.
 
(d)    Closing Fee.  On the Closing Date, the Borrowers shall pay to the
Administrative Agent a closing fee (the “Closing Fee”) in the amount of
$125,000.  Such Closing Fee shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
 
(e)    Other Fees.  The Borrowers shall pay to the Administrative Agent, for its
own account, fees in such amounts and at such times as mutually agreed upon by
the parties in writing.  Such fees shall be fully earned when paid and shall not
be refundable for any reason whatsoever.
 
2.10        Computation of Interest and Fees.  All computations of interest and
fees shall be made on the basis of a 360-day year and actual days
elapsed.  Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12, bear interest
for one day.  Each determination by the Administrative Agent of an interest rate
or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
 
2.11        Evidence of Debt.
 
(a)    The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by the Administrative Agent (the “Loan
Account”) in the ordinary course of business.  In addition, each Lender may
record in such Lender’s internal records, an appropriate notation evidencing the
date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, and each payment of interest, fees and other amounts
due in connection with the Obligations due to such Lender.  The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrowers and the interest and payments thereon.  Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Obligations.  In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, the Borrowers shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.  Upon receipt of an affidavit of a Lender as to the loss,
theft, destruction or mutilation of such Lender’s Note and upon cancellation of
such Note, the Borrowers will issue, in lieu thereof, a replacement Note in
favor of such Lender, in the same principal amount thereof and otherwise of like
tenor.
 
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(b)    In addition to the accounts and records referred to in Section 2.11(a),
each Lender and the Administrative Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit and Swing Line Loans.  In the
event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error.
 
2.12        Payments Generally; Administrative Agent’s Clawback.
 
(a)    General.  All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or
setoff.  Except as otherwise expressly provided herein, all payments by the
Borrowers hereunder shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00
p.m. on the date specified herein.  The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.  If any payment
to be made by the Borrowers shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected in computing interest or fees, as the case may be.  From
and after the Closing Date, the Administrative Agent shall be entitled to charge
the Borrowers for one (1) Business Day of ‘clearance’ at the rate then
applicable under Section 2.08 to any Borrowings on all payments of Borrowers and
their Subsidiaries.  This across-the-board one (1) Business Day clearance charge
on all payments of Borrowers and their Subsidiaries is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance charge being the
equivalent of charging interest on such payments through the completion of a
period ending one (1) Business Day after the receipt thereof.  The parties
acknowledge and agree that the economic benefit of the foregoing provisions of
this Section 2.12 shall be for the exclusive benefit of the Administrative
Agent.
 
(b)    (i)    Funding by Lenders; Presumption by Administrative Agent.  Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of LIBO Rate Loans (or in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing)
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with Section
2.02 (or in the case of a Borrowing of Base Rate Loans, that such Lender has
made such share available in accordance with and at the time required by Section
2.02) and may, in reliance upon such assumption, make available to the Borrowers
a corresponding amount.  In such event, if a Lender has not in fact made its
share of the applicable Committed Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (A) in the case of
a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation plus any administrative processing or similar
fees customarily charged by the Administrative Agent in connection with the
foregoing, and (B) in the case of a payment to be made by the Borrowers, the
interest rate applicable to Base Rate Loans.  If the Borrowers and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such period.  If
such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the principal amount so paid shall constitute such
Lender’s Committed Loan included in such Committed Borrowing.  Any payment by
the Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the
Administrative Agent.
 
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(ii)           Payments by Borrowers; Presumptions by Administrative
Agent.  Unless the Administrative Agent shall have received notice from the Lead
Borrower prior to the time at which any payment is due to the Administrative
Agent for the account of the Lenders or the L/C Issuer hereunder that the
Borrowers will not make such payment, the Administrative Agent may assume that
the Borrowers have made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the L/C
Issuer, as the case may be, the amount due.  In such event, if the Borrowers
have not in fact made such payment, then each of the Lenders or the L/C Issuer,
as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or the L/C Issuer,
in immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation. A notice of the Administrative Agent
to any Lender or the Lead Borrower with respect to any amount owing under this
subsection (b) shall be conclusive, absent manifest error.
 
(c)    Failure to Satisfy Conditions Precedent.  If any Lender makes available
to the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrowers by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof (subject to the
provisions of the last paragraph of Section 4.02 hereof), the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.
 
(d)    Obligations of Lenders Several.  The obligations of the Lenders hereunder
to make Committed Loans, to fund participations in Letters of Credit and Swing
Line Loans and to make payments pursuant to Section 10.04(c) are several and not
joint.  The failure of any Lender to make any Committed Loan, to fund any such
participation or to make any payment under Section 10.04(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Committed Loan, to purchase its participation or to
make its payment under Section 10.04(c).
 
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(e)    Funding Source.  Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
 
2.13        Sharing of Payments by Lenders.  If any Credit Party shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of, interest on, or other amounts with respect to, any
of the Obligations resulting in such Lender’s receiving payment of a proportion
of the aggregate amount of such Obligations greater than its pro rata share
thereof as provided herein (including as in contravention of the priorities of
payment set forth in Section 8.03), then the Credit Party receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Obligations of the other
Credit Parties, or make such other adjustments as shall be equitable, so that
the benefit of all such payments shall be shared by the Credit Parties ratably
and in the priorities set forth in Section 8.03, provided that:
 
(i)           if any such participations or subparticipations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations or subparticipations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest; and
 
(ii)           the provisions of this Section shall not be construed to apply to
(x) any payment made by the Loan Parties pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to
any assignee or participant, other than to the Borrowers or any Subsidiary
thereof (as to which the provisions of this Section shall apply).
 
Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.
 
2.14    Settlement Amongst Lenders.
 
(a)          The amount of each Lender’s Applicable Percentage of outstanding
Loans (including outstanding Swing Line Loans) shall be computed weekly (or more
frequently in the Administrative Agent’s discretion) and shall be adjusted
upward or downward based on all Loans (including Swing Line Loans) and
repayments of Loans (including Swing Line Loans) received by the Administrative
Agent as of 3:00 p.m. on the first Business Day (such date, the “Settlement
Date”) following the end of the period specified by the Administrative Agent.
 
(b)          The Administrative Agent shall deliver to each of the Lenders
promptly after a Settlement Date a summary statement of the amount of
outstanding Committed Loans for the period and the amount of repayments received
for the period.  As reflected on the summary statement, (i) the Administrative
Agent shall transfer to each Lender its Applicable Percentage of repayments, and
(ii) each Lender shall transfer to the Administrative Agent (as provided below)
or the Administrative Agent shall transfer to each Lender, such amounts as are
necessary to insure that, after giving effect to all such transfers, the amount
of Committed Loans made by each Lender shall be equal to such Lender’s
Applicable Percentage of all Committed Loans outstanding as of such Settlement
Date.  If the summary statement requires transfers to be made to the
Administrative Agent by the Lenders and is received prior to 1:00 p.m. on a
Business Day, such transfers shall be made in immediately available funds no
later than 3:00 p.m. that day; and, if received after 1:00 p.m., then no later
than 3:00 p.m. on the next Business Day. The obligation of each Lender to
transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Administrative Agent.  If and to the extent any Lender shall not
have so made its transfer to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent, equal to the greater of the Federal Funds Rate and
a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation plus any administrative, processing, or
similar fees customarily charged by the Administrative Agent in connection with
the foregoing.
 
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ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER
 
3.01        Taxes.
 
(a)    Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if the Borrowers shall be required by
applicable Laws to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
L/C Issuer, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrowers shall make
such deductions and (iii) the Borrowers shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
Laws.
 
(b)    Payment of Other Taxes by the Borrowers.  Without limiting the provisions
of subsection (a) above, the Borrowers shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Laws.
 
(c)    Indemnification by the Loan Parties.  The Loan Parties shall indemnify
the Administrative Agent, each Lender and the L/C Issuer, within ten (10) days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the L/C Issuer, as the case may be, and any penalties,
interest, fees, and reasonable costs and expenses, arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to the Lead Borrower by a Lender or the L/C Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.
 
(d)    Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority,
the Lead Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
 
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(e)    Status of Lenders.  Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
any Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Lead Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Lead Borrower or the Administrative Agent, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if requested by the Lead Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Lead Borrower or the
Administrative Agent as will enable the Lead Borrower or the Administrative
Agent to determine whether or not such Lender is subject to backup withholding
or information reporting requirements.
 
Without limiting the generality of the foregoing, in the event that any Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to the Lead Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Lead Borrower or the Administrative Agent,
but only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
 
(i)           duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party,
 
(ii)          duly completed copies of Internal Revenue Service Form W-8ECI,
 
(iii)         in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (C)
a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) duly completed copies of  Internal Revenue Service Form W-8BEN, or
 
(iv)         any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Lead Borrower to determine the withholding or
deduction required to be made.
 
(f)    Treatment of Certain Refunds.  If the Administrative Agent, any Lender or
the L/C Issuer determines, in its sole discretion, that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers
or with respect to which the Borrowers have paid additional amounts pursuant to
this Section, it shall pay to the Borrowers an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrowers under this Section with respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent, such Lender or the L/C Issuer, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that the Borrowers, upon the request of the
Administrative Agent, such Lender or the L/C Issuer, agree to repay the amount
paid over to the Borrowers (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent,
such Lender or the L/C Issuer in the event the Administrative Agent, such Lender
or the L/C Issuer is required to repay such refund to such Governmental
Authority.  This subsection shall not be construed to require the Administrative
Agent, any Lender or the L/C Issuer to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrowers or any other Person.
 
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3.02        Illegality.  If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBO
Rate Loans, or to determine or charge interest rates based upon the LIBO Rate,
or any Governmental Authority has imposed material restrictions on the authority
of such Lender to purchase or sell, or to take deposits of, Dollars in the
London interbank market, then, on notice thereof by such Lender to the Lead
Borrower through the Administrative Agent, any obligation of such Lender to make
or continue LIBO Rate Loans or to convert Base Rate Loans to LIBO Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Lead Borrower that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice, the Borrowers shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all LIBO Rate Loans of such Lender to Base Rate Loans, either on the
last day of the Interest Period therefor, if such Lender may lawfully continue
to maintain such LIBO Rate Loans to such day, or immediately, if such Lender may
not lawfully continue to maintain such LIBO Rate Loans.  Upon any such
prepayment or conversion, the Borrowers shall also pay accrued interest on the
amount so prepaid or converted.
 
3.03        Inability to Determine Rates.  If the Required Lenders determine
that for any reason in connection with any request for a LIBO Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank market for the applicable amount and
Interest Period of such LIBO Rate Loan, (b) adequate and reasonable means do not
exist for determining the LIBO Rate for any requested Interest Period with
respect to a proposed LIBO Rate Loan , or (c) the LIBO Rate for any requested
Interest Period with respect to a proposed LIBO Rate Loan does not adequately
and fairly reflect the cost to such Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Lead Borrower and each
Lender.  Thereafter, the obligation of the Lenders to make or maintain LIBO Rate
Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice.  Upon receipt of such notice, the
Lead Borrower may revoke any pending request for a Borrowing of, conversion to
or continuation of LIBO Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Committed Borrowing of Base Rate
Loans in the amount specified therein.
 
3.04        Increased Costs; Reserves on LIBO Rate Loans.
 
(a)    Increased Costs Generally.  If any Change in Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the LIBO Rate) or the
L/C Issuer;
 
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(ii)           subject any Lender or the L/C Issuer to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBO Rate Loan made by it, or change
the basis of taxation of payments to such Lender or the L/C Issuer in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and
the imposition of, or any change in the rate of, any Excluded Tax payable by
such Lender or the L/C Issuer); or
 
(iii)           impose on any Lender or the L/C Issuer or the London interbank
market any other condition, cost or expense affecting this Agreement or LIBO
Rate Loans made by such Lender or any Letter of Credit or participation therein;
 
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or the
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C Issuer, the Borrowers will
pay to such Lender or the L/C Issuer, as the case may be, such additional amount
or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.
 
(b)    Capital Requirements.  If any Lender or the L/C Issuer determines that
any Change in Law affecting such Lender or the L/C Issuer or any Lending Office
of such Lender or such Lender’s or the L/C Issuer’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the L/C Issuer’s capital or on the capital of such
Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the L/C Issuer, to a level below that which such Lender or the
L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer or
such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.
 
(c)    Certificates for Reimbursement.  A certificate of a Lender or the L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender
or the L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Lead Borrower shall
be conclusive absent manifest error.  The Borrowers shall pay such Lender or the
L/C Issuer, as the case may be, the amount shown as due on any such certificate
within ten (10) days after receipt thereof.
 
(d)    Delay in Requests.  Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right
to demand such compensation, provided that the Borrowers shall not be required
to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more than
nine months prior to the date that such Lender or the L/C Issuer, as the case
may be, notifies the Lead Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the L/C Issuer’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).
 
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(e)    Reserves on LIBO Rate Loans.  The Borrowers shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as "Eurocurrency liabilities"), additional interest on the
unpaid principal amount of each LIBO Rate Loan equal to the actual costs of such
reserves allocated to such Loan by such Lender (as determined by such Lender in
good faith, which determination shall be conclusive), which shall be due and
payable on each date on which interest is payable on such Loan, provided the
Lead Borrower shall have received at least ten (10) days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such
Lender.  If a Lender fails to give notice ten (10) days prior to the relevant
Interest Payment Date, such additional interest shall be due and payable ten
(10) days from receipt of such notice.
 
3.05        Compensation for Losses.  Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrowers shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:
 
(a)          any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);
 
(b)          any failure by the Borrowers (for a reason other than the failure
of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the Lead
Borrower; or
 
(c)          any assignment of a LIBO Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the Lead Borrower
pursuant to Section 10.13; including any loss of anticipated profits and any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained.  The Borrowers shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.
 
For purposes of calculating amounts payable by the Borrowers to the Lenders
under this Section 3.05, each Lender shall be deemed to have funded each LIBO
Rate Loan made by it at the LIBO Rate for such Loan by a matching deposit or
other borrowing in the London interbank market for a comparable amount and for a
comparable period, whether or not such LIBO Rate Loan was in fact so funded.
 
3.06        Mitigation Obligations; Replacement of Lenders.
 
(a)    Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or the Borrowers are required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
 
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(b)    Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if the Borrowers are required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 3.01, the Borrowers may replace such Lender in accordance with
Section 10.13.
 
3.07        Survival.  All of the Borrowers’ obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.
 
3.08        Designation of Lead Borrower as Borrowers’ Agent.
 
(a)    Each Borrower hereby irrevocably designates and appoints the
Lead  Borrower as such Borrower’s agent to obtain Credit Extensions, the
proceeds of which shall be available to each Borrower for such uses as are
permitted under this Agreement.  As the disclosed principal for its agent, each
Borrower shall be obligated to each Credit Party on account of Credit Extensions
so made as if made directly by the applicable Credit Party to such Borrower,
notwithstanding the manner by which such Credit Extensions are recorded on the
books and records of the Lead Borrower and of any other Borrower.  In addition,
each Loan Party other than the Borrowers hereby irrevocably designates and
appoints the Lead  Borrower as such Loan Party’s agent to represent such Loan
Party in all respects under this Agreement and the other Loan Documents.
 
(b)    Each Borrower recognizes that credit available to it hereunder is in
excess of and on better terms than it otherwise could obtain on and for its own
account and that one of the reasons therefor is its joining in the credit
facility contemplated herein with all other Borrowers.  Consequently, each
Borrower hereby assumes and agrees to discharge all Obligations of each of the
other Borrowers.
 
(c)    The Lead  Borrower shall act as a conduit for each Borrower (including
itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a
Credit Extension.  Neither the Administrative Agent nor any other Credit Party
shall have any obligation to see to the application of such proceeds therefrom.
 
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
 
4.01        Conditions of Initial Credit Extension.  The obligation of the L/C
Issuer and each Lender to make its initial Credit Extension hereunder is subject
to satisfaction (or waiver in accordance with Section 10.01) of the following
conditions precedent:
 
(a)          The Administrative Agent’s receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date) and each in
form and substance satisfactory to the Administrative Agent:
 
(i)           executed counterparts of this Agreement sufficient in number for
distribution to the Administrative Agent, each Lender and the Lead Borrower;
 
(ii)          (A) a Committed Loan Note executed by the Borrowers in favor of
each Lender requesting a Committed Loan Note, and (B) a Swing Line Loan Note
executed by the Borrowers in favor of Wells Fargo Retail Finance, LLC;
 
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(iii)          such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Administrative Agent may require evidencing (A) the authority of
each Loan Party to enter into this Agreement and the other Loan Documents to
which such Loan Party is a party or is to be a party and (B) the identity,
authority and capacity of each Responsible Officer thereof authorized to act as
a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party or is to be a party;
 
(iv)          copies of each Loan Party’s Organization Documents and such other
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each Loan
Party is validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, and in each jurisdiction
where its ownership, lease or operation of properties or the conduct of its
business requires such qualification, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect;
 
(v)           a favorable opinion of Posternak Blankstein & Lund LLP, counsel to
the Loan Parties, addressed to the Administrative Agent and each Lender, as to
such matters concerning the Loan Parties and the Loan Documents as the
Administrative Agent may reasonably request;
 
(vi)          a certificate signed by a Responsible Officer of the Lead Borrower
certifying (A) that the conditions specified in Sections 4.01 and 4.02 have been
satisfied, (B) that there has been no event or circumstance since the date of
the Audited Financial Statements that has had or could be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect, (C)
either that (1) no consents, licenses or approvals are required in connection
with the execution, delivery and performance by such Loan Party and the validity
against such Loan Party of the Loan Documents to which it is a party, or (2)
that all such consents, licenses and approvals have been obtained and are in
full force and effect, and (D) to the Solvency of the Loan Parties on a
Consolidated basis as of the Closing Date after giving effect to the
transactions contemplated hereby;
 
(vii)         a duly completed Compliance Certificate as of the last day of the
Fiscal Month of the Parent and its Subsidiaries most recently ended prior to the
Closing Date, signed by a Responsible Officer of the Lead Borrower;
 
(viii)        evidence that all insurance required to be maintained pursuant to
the Loan Documents and all endorsements in favor of the Agents required under
the Loan Documents have been obtained and are in effect;
 
(ix)          certain Security Documents and certificates evidencing any stock
being pledge thereunder, together with undated stock powers executed in blank,
each duly executed by the applicable Loan Parties;
 
(x)           all other Loan Documents, each duly executed by the applicable
Loan Parties;
 
(xi)          (A) appraisals (based on net liquidation value) by a third party
appraiser acceptable to the Collateral Agent of all Inventory of the Borrowers,
the results of which are satisfactory to the Collateral Agent and (B) a written
report regarding the results of a commercial finance examination of the Loan
Parties, which shall be satisfactory to the Collateral Agent;
 
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(xii)         results of searches or other evidence reasonably satisfactory to
the Collateral Agent (in each case dated as of a date reasonably satisfactory to
the Collateral Agent) indicating the absence of Liens on the assets of the Loan
Parties, except for Permitted Encumbrances and Liens for which termination
statements and releases, satisfactions and discharges of any mortgages, and
releases  or subordination agreements satisfactory to the Collateral Agent are
being tendered concurrently with such extension of credit or other arrangements
satisfactory to the Collateral Agent for the delivery of such termination
statements and releases, satisfactions and discharges have been made;
 
(xiii)        (A)           all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Collateral Agent to be filed, registered or recorded to create or perfect
the first priority Liens intended to be created under the Loan Documents and all
such documents and instruments shall have been so filed, registered or recorded
to the satisfaction of the Collateral Agent, (B) the DDA Notifications, Credit
Card Notifications, and Blocked Account Agreements required pursuant to Section
6.13 hereof, and (C) control agreements with respect to the Loan Parties’
securities and investment accounts;
 
(xiv)        Collateral Access Agreement, as required by the Collateral Agent;
 
(xv)         Freight forwarder agreements, as required by, and in form and
substance satisfactory to, the Collateral Agent; and
 
(xvi)        such other assurances, certificates, documents, consents or
opinions as the Agents reasonably may require.
 
(b)          The Administrative Agent shall have received a Borrowing Base
Certificate dated the Closing Date for the then most recently ended fiscal week,
and executed by a Responsible Officer of the Lead Borrower.
 
(c)          The Administrative Agent shall be reasonably satisfied that any
financial statements delivered to it fairly present the business and financial
condition of the Loan Parties and that there has been no Material Adverse Effect
since the date of the most recent financial information delivered to the
Administrative Agent.
 
(d)          The Administrative Agent shall have received and be satisfied with
(i) a detailed Business Plan and forecast for the period commencing on the
Closing Date and ending with the end of such Fiscal Year, which shall include an
Availability model, Consolidated income statement, balance sheet, and statement
of cash flow, by month, each prepared in conformity with GAAP and consistent
with the Loan Parties’ then current practices and (b) such other information
(financial or otherwise) reasonably requested by the Administrative Agent.
 
(e)          There shall not be pending any litigation or other proceeding, the
result of which, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
 
(f)          There shall not have occurred any default of any Material Contract
or adverse change in the business, assets, operations, trade support, condition
(financial or otherwise) or prospects of any Loan Party, which would reasonably
be expected to have a Material Adverse Effect.
 
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(g)          The consummation of the transactions contemplated hereby shall not
violate any applicable Law or any Organization Document.
 
(h)          All fees and expenses required to be paid to the Agents pursuant to
Sections 2.03, 2.09 and 10.04 and on or before the Closing Date shall have been
paid in full, and all fees required to be paid to the Lenders on or before the
Closing Date shall have been paid in full.
 
(i)          The Borrowers shall have paid all fees, charges and disbursements
of counsel to the Administrative Agent, plus such additional amounts of such
fees, charges and disbursements as shall constitute its reasonable estimate of
such fees, charges and disbursements incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between the Borrowers and the
Administrative Agent).
 
(j)          No material changes in governmental regulations or policies
affecting any Loan Party or any Credit Party shall have occurred prior to the
Closing Date.
 
(k)         There shall not have occurred any disruption or material adverse
change in the United States financial or capital markets in general that has
had, in the reasonable opinion of the Administrative Agent, a material adverse
effect on the market for loan syndications or adversely affecting the
syndication of the Loans.
 
(l)          Each Lender shall have received final credit approval to enter into
the Agreement and the other Loan Documents (to which it is a party) and for its
applicable Commitment, and to perform its obligations thereunder.
 
(m)        The Agents shall have completed, and be satisfied with, its corporate
and legal due-diligence of each Loan Party (including, but not limited to
solvency), its examination of the Collateral, the Stores and distribution
centers of the Loan Parties, and the capital structure of the Loan Parties.
 
Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have Consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be Consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.
 
4.02        Conditions to all Credit Extensions.  The obligation of each Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type, or a
continuation of LIBO Rate Loans) is subject to the following conditions
precedent:
 
(a)          The representations and warranties of each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith,
shall be true and correct in material respects (except to the extent such
representation or warranty is already qualified by materiality or subject to a
“Material Adverse Effect” qualifier) on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this Section
4.02, the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (c), respectively, of Section 6.01.
 
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(b)          No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.
 
(c)          The Administrative Agent and, if applicable, the L/C Issuer or the
Swing Line Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.
 
(d)          The Administrative Agent shall have received an updated Borrowing
Base Certificate reflecting the outstanding Credit Extensions after giving
effect to such request (it being agreed that except for Borrowing Base
Certificates furnished pursuant to Section 6.01(c), the values for eligible
assets will not be required to be updated).
 
(e)          No injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, any Agent, any Lender or any of their Affiliate.
 
(f)           The aggregate amount of all requested Loans and/or Letters of
Credit shall not exceed Availability at such time.
 
(g)          No event or circumstance which could reasonably be expected to
result in a Material Adverse Effect shall have occurred.
 
(h)          No Loan Party has entered into any transaction, or made any
payment, of the type specified in Section 7.06, within three (3) Fiscal Months
of the date of the proposed Credit Extension, provided, however, this condition
shall not apply in connection with the issuance of any Letter of Credit, any L/C
Borrowing, or any other Loan for which 100% of the proceeds shall be used to
repay any outstanding fees, cost or expense (including, without limitation, the
Unused Line Fees, Early Termination Fees, and Letter of Credit Fees), owed to
any Credit Party under, or in connection with, this Agreement or any other Loan
Document.
 
Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Committed Loans to the other Type or a continuation of LIBO
Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.02
have been satisfied on and as of the date of the applicable Credit
Extension.  The conditions set forth in this Section 4.02 are for the sole
benefit of the Credit Parties but until the Required Lenders otherwise direct
the Administrative Agent to cease making Committed Loans, the Lenders will fund
their Applicable Percentage of all Committed Loans and L/C Advances and
participate in all Swing Line Loans and Letters of Credit whenever made or
issued, which are requested by the Lead Borrower and which, notwithstanding the
failure of the Loan Parties  to comply with the provisions of this Article IV,
are agreed to by the Administrative Agent, provided, however, the making of any
such Loans or the issuance of any Letters of Credit shall not be deemed a
modification or waiver by any Credit Party of the provisions of this Article IV
on any future occasion or a waiver of any rights or the Credit Parties as a
result of any such failure to comply.
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES
 
To induce the Credit Parties to enter into this Agreement and to make Loans and
to issue Letters of Credit hereunder, each Loan Party represents and warrants to
the Administrative Agent and the other Credit Parties that:
 
5.01    Existence, Qualification and Power.  Each Loan Party and each Subsidiary
thereof (a) is a corporation, limited liability company, partnership or limited
partnership, duly organized or formed, validly existing and, where applicable,
in good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, permits, authorizations, consents and approvals to (i)
own or lease its assets and carry on its business as currently conducted, and
(ii) execute, deliver and perform its obligations under the Loan Documents to
which it is a party, and (c) is duly qualified and is licensed and, where
applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect.  Schedule 5.01 annexed hereto
sets forth, as of the Closing Date, each Loan Party’s name as it appears in
official filings in its state of incorporation or organization and the name
under which each Loan Party currently conducts its business (if different), its
state of incorporation or organization, organization type, organization number,
if any, issued by its state of incorporation or organization, its federal
employer identification number, and the address of its chief executive office
and principal place of business.
 
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5.02    Authorization; No Contravention.  The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is or
is to be a party, has been duly authorized by all necessary corporate or other
organizational action, and does not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach, termination, or contravention of, or constitute a default under, or
require any payment to be made under (i) any Material Contract or any Material
Indebtedness to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; except, in each case referred to in this
clause (b), to the extent that any such conflict, breach, termination,
contravention or default would not reasonably be expected to have a Material
Adverse Effect  or (iii) any governmental licenses, permits, authorizations,
consents and approvals; (c) result in or require the creation of any Lien upon
any asset of any Loan Party (other than Liens in favor of the Collateral Agent
under the Security Documents); or (d) violate any Law.
 
5.03    Governmental Authorization; Other Consents.  No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, except for
(a) the perfection or maintenance of the Liens created under the Security
Documents (including the first priority nature thereof), (b) such as have been
obtained or made and are in full force and effect, or (c) filings with the SEC
in connection with the entry into a material agreement.
 
5.04    Binding Effect.  This Agreement has been, and each other Loan Document,
when delivered, will have been, duly executed and delivered by each Loan Party
that is party thereto.  This Agreement constitutes, and each other Loan Document
when so delivered will constitute, a legal, valid and binding obligation of such
Loan Party, enforceable against each Loan Party that is party thereto in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
 
5.05    Financial Statements; No Material Adverse Effect.
 
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(a)    The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present in all material respects
the financial condition of the Parent and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) show all Material
Indebtedness and other liabilities, direct or contingent, of the Parent and its
Subsidiaries on a Consolidated basis as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness.
 
(b)    The unaudited Consolidated balance sheet of the Parent and its
Subsidiaries dated March 28, 2009, and the related Consolidated and
consolidating statements of income or operations, Shareholders’ Equity and cash
flows for the Fiscal Quarter ended on that date (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present in all material
respects the financial condition of the Parent and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby,
subject, in the case of clauses (i) and (ii), to the absence of footnotes and to
normal year-end audit adjustments.  Schedule 5.05 sets forth all Material
Indebtedness and other liabilities, direct or contingent, of the Loan Parties
and their Subsidiaries as of the date of such financial statements, including
liabilities for taxes, material commitments and Material Indebtedness.
 
(c)    Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
would reasonably be expected to have a Material Adverse Effect.
 
(d)    No Internal Control Event exists or has occurred that has resulted in or
would reasonably be expected to result in a misstatement in any material
respect, in any financial information delivered or to be delivered to the
Administrative Agent or the Lenders, of (i) covenant compliance calculations
provided hereunder or (ii) the assets, liabilities, financial condition or
results of operations of the Parent and its Subsidiaries on a Consolidated
basis.
 
(e)    The Consolidated forecasted balance sheet and statements of income and
cash flows of the Parent and its Subsidiaries delivered pursuant to Section
6.01(e) were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were fair in light of the conditions existing at the
time of delivery of such forecasts, and represented, at the time of delivery,
the Loan Parties’ best estimate of its future financial performance.
 
5.06        Litigation.  There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Loan Parties, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Loan Party or any of its Subsidiaries or against
any of its properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed on Schedule 5.06, either
individually or in the aggregate, if determined adversely, would reasonably be
expected to have a Material Adverse Effect, and there has been no adverse change
in the status, or financial effect on any Loan Party or Subsidiary thereof, of
the matters described on Schedule 5.06.
 
5.07        No Default.  No Loan Party or any Subsidiary is in default under or
with respect to any Material Indebtedness.  No Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.
 
5.08        Ownership of Property; Liens.
 
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(a)    Each of the Loan Parties and each Subsidiary thereof has good record and
marketable title in fee simple to or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, in each case
free and clear of all Liens, other than Permitted Encumbrances, except for such
defects in title and leasehold interest as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Each of
the Loan Parties and each Subsidiary has good and marketable title to, valid
leasehold interests in, or valid licenses to use all personal property
(including Intellectual Property) and assets material to the ordinary conduct of
its business as currently conducted, free and clear of all Liens, other than
Permitted Encumbrances.
 
(b)    The Loan Parties own no Real Estate.  Schedule 5.08(b) sets forth the
address (including street address, county and state) of all Leases and Capital
Leases of the Loan Parties, together with a list of the lessor and its contact
information with respect to each such Lease as of the Closing Date.  Each of
such Leases is in full force and effect and the Loan Parties are not in default
of the terms thereof.
 
(c)    Schedule 7.01 sets forth a complete and accurate list of all Liens on the
property or assets of each Loan Party and each of its Subsidiaries, showing as
of the date hereof the lienholder thereof, the principal amount of the
obligations secured thereby and the property or assets of such Loan Party or
such Subsidiary subject thereto.  The property of each Loan Party and each of
its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule
7.01, and Permitted Encumbrances.
 
(d)    Schedule 7.02 sets forth a complete and accurate list of all Investments
held by any Loan Party or any Subsidiary of a Loan Party on the date hereof,
showing as of the date hereof the amount, obligor or issuer and maturity, if
any, thereof.
 
(e)    Schedule 7.03 sets forth a complete and accurate list of all Indebtedness
of each Loan Party and any Subsidiary of each Loan Party as of the Closing Date,
showing as of the Closing Date the amount, obligor or issuer and maturity
thereof.
 
5.09        Environmental Compliance.
 
       (a)          Except as specifically disclosed in Schedule 5.09, no Loan
Party or any Subsidiary thereof (i) has failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any Environmental
Liability, except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
       (b)          Except as otherwise set forth in Schedule 5.09, none of the
properties currently or formerly owned or operated by any Loan Party or any
Subsidiary thereof is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property; there are no and never have been any underground or above-ground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by any Loan Party or any Subsidiary
thereof or, to the best of the knowledge of the Loan Parties, on any property
formerly owned or operated by any Loan Party or Subsidiary thereof; except as
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, there is no asbestos or asbestos-containing material on
any property currently owned or operated by any Loan Party or Subsidiary
thereof; and except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, Hazardous Materials have not been
released, discharged or disposed of on any property currently or formerly owned
or operated by any Loan Party or any Subsidiary thereof.
 
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(c)          Except as otherwise set forth in Schedule 5.09, no Loan Party or
any Subsidiary thereof is undertaking, and no Loan Party or any Subsidiary
thereof has completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response
action relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used, treated, handled
or stored at, or transported to or from, any property currently or formerly
owned or operated by any Loan Party or any Subsidiary thereof have been disposed
of in a manner not reasonably expected to result in material liability to any
Loan Party or any Subsidiary thereof.
 
5.10    Insurance.  The properties of the Loan Parties and their Subsidiaries
are insured with financially sound and reputable insurance companies which are
not Affiliates of the Loan Parties, in such amounts, with such deductibles and
covering such risks (including, without limitation, workmen’s compensation,
public liability, business interruption and property damage insurance) as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Loan Parties or the applicable
Subsidiary operates.  Schedule 5.10 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties as of the Closing Date. Each
insurance policy listed on Schedule 5.10 is in full force and effect and all
premiums in respect thereof that are due and payable have been paid.
 
5.11    Taxes.  The Loan Parties and their Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings being diligently conducted, for which adequate
reserves have been provided in accordance with GAAP, as to which Taxes no Lien
has been filed and which contest effectively suspends the collection of the
contested obligation and the enforcement of any Lien securing such
obligation.  There is no proposed tax assessment against any Loan Party or any
Subsidiary that would, if made, have a Material Adverse Effect.  No Loan Party
or any Subsidiary thereof is a party to any tax sharing agreement.
 
5.12    ERISA Compliance.
 
(a)    Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Lead Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification.  The Loan Parties and each ERISA
Affiliate have made all required contributions to each Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.  No Lien imposed under the Code or ERISA exists or is
likely to arise on account of any Plan.
 
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(b)    There are no pending or, to the best knowledge of the Lead Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that would reasonably be expected to have a Material
Adverse Effect.  There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
would reasonably be expected to result in a Material Adverse Effect.
 
(c)    (i)    Except as would not reasonably be expected to have a Material
Adverse Effect, (i) no ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Sections 4069 or 4212(c) of ERISA.
 
5.13    Subsidiaries; Equity Interests.  The Loan Parties have no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.13, which
Schedule sets forth the legal name, jurisdiction of incorporation or formation
and authorized Equity Interests of each such Subsidiary, listed by class, and
setting forth the number and percentage of the outstanding Equity Interests of
each such class owned directly or indirectly by the applicable Loan Party.  All
of the outstanding Equity Interests of such Subsidiaries have been validly
issued, are fully paid and non-assessable and are owned by a Loan Party (or a
Subsidiary of a Loan Party) in the amounts specified on Part (a) of Schedule
5.13, free and clear of all Liens except for those created under the Security
Documents.  Except as specifically disclosed in Schedule 5.13, no Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party’s Subsidiaries’ Equity Interests or any security convertible into or
exchangeable for any such Equity Interests.  The Loan Parties have no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13.  Part (c) of Schedule 5.13 is a complete
and accurate description of the authorized Equity Interests of each Loan Party,
by class, and a description of the number of shares of each such class that are
issued and outstanding.  Except as set forth on Part (c) of Schedule 5.13, all
of the outstanding Equity Interests in the Loan Parties have been validly
issued, and are fully paid and non-assessable and, other than with respect to
the Parent, are owned in the amounts specified on Part (c) of Schedule 5.13,
free and clear of all Liens except for those created under the Security
Documents.  Except as set forth in Schedule 5.13, there are no subscriptions,
options, warrants, or calls relating to any shares of any Loan Party’s Equity
Interests, including any right of conversion or exchange under any outstanding
security or other instrument.  The copies of the Organization Documents of each
Loan Party and each amendment thereto provided pursuant to Section 4.01 are true
and correct copies of each such document, each of which is valid and in full
force and effect.
 
5.14    Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.
 
(a)    No Loan Party is engaged or will be engaged, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.  None of the proceeds of the
Credit Extensions shall be used directly or indirectly for the purpose of
purchasing or carrying any margin stock, for the purpose of reducing or retiring
any Indebtedness that was originally incurred to purchase or carry any margin
stock or for any other purpose that might cause any of the Credit Extensions to
be considered a “purpose credit” within the meaning of Regulations T, U, or X
issued by the FRB.
 
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(b)    None of the Loan Parties, any Person Controlling any Loan Party, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.  None of the Loan Parties, any Person
Controlling any Loan Party, or any Subsidiary is a “holding company” or an
“affiliate” of a “holding company” or a “subsidiary company” of a “holding
company”, as each term is defined and used in the Public Utility Holding Company
Act of 2005
 
5.15    Disclosure.  Each Loan Party has disclosed to the Administrative Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any of its Subsidiaries is subject, and all other matters known
to it, that, individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect.  No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder or under any other Loan Document (in each case,
as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not materially misleading; provided that, with respect to projected
financial information, the Loan Parties represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
 
5.16    Compliance with Laws.  Each of the Loan Parties and each Subsidiary is
in compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
 
5.17    Intellectual Property; Licenses, Etc. Each Loan Party owns, or holds
licenses in, all Intellectual Property, trade names, patent rights and other
authorizations that are necessary to the conduct of its business as currently
conducted and as proposed to be conducted, and attached hereto as Schedule 5.17
is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which a Loan Party is the owner or is an exclusive
licensee.  There is no action, proceeding, claim or complaint pending or,
threatened in writing to be brought against any Loan Party which might
jeopardize any of such Person’s interest in any of the foregoing licenses,
patents, copyrights, trademarks, trade names, designs or applications, except
those which, either individually or in the aggregate, would reasonably be
expected not to have a Material Adverse Effect, and no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by any Loan Party or any
Subsidiary infringes upon any rights held by any other Person.  
 
5.18    Labor Matters.
 
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There are no strikes, lockouts, slowdowns or other material labor disputes
against any Loan Party or any Subsidiary thereof pending or, to the knowledge of
any Loan Party, threatened. The hours worked by and payments made to employees
of the Loan Parties comply with the Fair Labor Standards Act and any other
applicable federal, state, local or foreign Law dealing with such matters,
except where the failure to comply would not reasonably be expected to have a
Material Adverse Effect. No Loan Party or any of its Subsidiaries has incurred
any liability or obligation under the Worker Adjustment and Retraining Act or
similar state Law.  All payments due from any Loan Party and its Subsidiaries,
or for which any claim may be made against any Loan Party, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
properly accrued in accordance with GAAP as a liability on the books of such
Loan Party, except as would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 5.18 no Loan Party or any
Subsidiary is a party to or bound by any collective bargaining agreement,
management agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement. There are no representation proceedings pending or, to any Loan
Party’s knowledge, threatened to be filed with the National Labor Relations
Board, and no labor organization or group of employees of any Loan Party or any
Subsidiary has made a pending demand for recognition. There are no complaints,
unfair labor practice charges, grievances, arbitrations, unfair employment
practices charges or any other claims or complaints against any Loan Party or
any Subsidiary pending or, to the knowledge of any Loan Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any employee of any Loan Party or any of its Subsidiaries. The
consummation of the transactions contemplated by the Loan Documents will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which any Loan Party or
any of its Subsidiaries is bound.  Each Loan Party and its Subsidiaries are in
material compliance with all requirements pursuant to employment standards,
labor relations, health and safety, workers compensation, immigration laws and
other applicable employment legislation, except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse
Effect.  To the knowledge of the Loan Parties, no officer or director of any
Loan Party who is party to an employment agreement with such Loan Party is in
violation of any term of any employment contract or proprietary information
agreement with such Loan Party which would reasonably be expected to have a
Material Adverse Effect; and to the knowledge of the Loan Parties, the execution
of the employment agreements and the continued employment by the Loan Parties of
the such persons, will not result in any such violation, which would reasonably
be expected to have a Material Adverse Effect.
 
5.19    Security Documents.
 
(a)          The Pledge Agreement creates in favor of the Collateral Agent, for
the benefit of the Secured Parties referred to therein, a legal, valid,
continuing and enforceable security interest in the Collateral (as defined in
the Pledge Agreement), the enforceability of which is subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law, and the
Pledged Securities (as defined in the Pledge Agreement) have been delivered to
the Collateral Agent (together with stock powers or other appropriate
instruments of transfer executed in blank form).  The Collateral Agent has a
fully perfected first priority Lien on, and security interest in, to and under
all right, title and interest of each pledgor thereunder in such Collateral, and
such security interest is in each case prior and superior in right and interest
to any other Person.
 
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(b)          The Security Agreement creates in favor of the Collateral Agent,
for the benefit of the Secured Parties referred to therein, a legal, valid,
continuing and enforceable security interest in the Collateral (as defined in
the Security Agreement), the enforceability of which is subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.  The
financing statements, releases and other filings are in appropriate form and
have been or will be filed in the office of the Secretary of State of
Delaware.  The Collateral Agent has a perfected Lien on, and security interest
in, to and under all right, title and interest of the grantors thereunder in all
Collateral that may be perfected by filing, recording or registering a financing
statement or analogous document (including without limitation the proceeds of
such Collateral subject to the limitations relating to such proceeds in the UCC)
or by obtaining control, under the UCC (in effect on the date this
representation is made) in each case prior and superior in right to any other
Person, subject only to Permitted Encumbrances.
 
(c)          When the Intellectual Property Security Agreement is filed in the
United States Patent and Trademark Office and the United States Copyright Office
and when financing statements, releases and other filings referenced in 5.19(c)
in appropriate form are filed with such offices, the Intellectual Property
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the applicable Loan Parties in the
Intellectual Property (as defined in the Intellectual Property Security
Agreement) in which a security interest may be perfected by filing, recording or
registering a security agreement, financing statement or analogous document in
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to any other
Person, subject only to Permitted Encumbrances (it being understood that
subsequent recordings in the United States Patent and Trademark Office and the
United States Copyright Office may be necessary to perfect a Lien on registered
trademarks, trademark applications and copyrights acquired by the Loan Parties
after the date hereof).
 
5.20    Solvency.
 
After giving effect to the transactions contemplated by this Agreement, and
before and after giving effect to each Credit Extension, the Loan Parties, on a
Consolidated basis, are Solvent. No transfer of property has been or will be
made by any Loan Party and no obligation has been or will be incurred by any
Loan Party in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of any Loan Party.
 
5.21    Deposit Accounts; Credit Card Arrangements.
 
(a)    Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by
the Loan Parties as of the Closing Date, which Schedule includes, with respect
to each DDA (i) the name and address of the depository; (ii) the account
number(s) maintained with such depository; (iii) a contact person at such
depository, and (iv) the identification of each Blocked Account Bank.
 
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(b)    Annexed hereto as Schedule 5.21(b) is a list describing all arrangements
as of the Closing Date to which any Loan Party is a party with respect to the
processing and/or payment to such Loan Party of the proceeds of any credit card
charges and debit card charges for sales made by such Loan Party.
 
5.22    Brokers.  No broker or finder brought about the obtaining, making or
closing of the Loans or transactions contemplated by the Loan Documents, and no
Loan  Party or Affiliate thereof has any obligation to any Person in respect of
any finder’s or brokerage fees in connection therewith.  Each Loan Party hereby
jointly and severally indemnifies each Credit Party against, and agrees that
such Person will hold each such Credit Party harmless from, any claim, demand or
liability, including reasonable attorneys’ fees, for any broker’s, finder’s or
placement fee or commission incurred by such indemnifying party or the Lead
Borrower or its Affiliates or a representative of such Person.
 
5.23    Customer and Trade Relations.  Except for matters which, either
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, there exists no actual or, to the knowledge of any
Loan Party, threatened, termination or cancellation of, or any material adverse
modification or change in the business relationship of any Loan Party with any
supplier material to its operations.
 
5.24    Material Contracts.  Schedule 5.24 sets forth all Material Contracts to
which any Loan Party is a party or is bound as of the Closing Date.  The Loan
Parties have delivered true, correct and complete copies of such Material
Contracts to the Administrative Agent on or before the date hereof.  The Loan
Parties are in compliance with the obligations specified in Section 6.19 in
respect of their Material Contracts and have not received any notice of the
intention of any other party thereto to terminate any Material Contract.
 
5.25    Casualty.  Neither the businesses nor the properties of any Loan Party
or any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
 
5.26    Anti-Terrorism Laws.
 
(a)    General.  To the knowledge of the Loan Parties, after reasonable inquiry,
none of the Loan Parties nor any direct or indirect investor in any Loan Party
(other than the Lenders or any direct or indirect investors in the Lenders), is
in violation of any Anti-Terrorism Law or engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
 
(b)    Executive Order No. 13224.  To the knowledge of the Loan Parties, after
reasonable inquiry, none of the Loan Parties nor any direct or indirect investor
in any Loan Party (other than the Lenders or any direct or indirect investors in
the Lenders), or their respective agents acting or benefiting in any capacity in
connection with the transactions hereunder, is any of the following (each a
“Blocked Person”):
 
(i)     a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
 
(ii)    a Person owned or controlled  by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order No. 13224;
 
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(iii)   a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
 
(iv)   a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order No. 13224;
 
(v)    a Person or entity that is named as a “specially designated national” on
the most current list published by the U.S. Treasury Department Office of
Foreign Asset Control at its official website or any replacement website or
other replacement official publication of such list; or
 
(vi)   a Person or entity who is affiliated or associated with a person or
entity listed above.
 
(c)    To the best knowledge of the Loan Parties, after reasonable inquiry, none
of the Loan Parties nor, to the knowledge of the Loan Parties, any of its or
their agents acting in any capacity in connection with the transactions
hereunder (A) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, or (B) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order
No. 13224.
 
ARTICLE VI
AFFIRMATIVE COVENANTS
 
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Loan Parties shall, and shall (except in the case
of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each
Subsidiary to:
 
6.01    Financial Statements.  Deliver to the Administrative Agent, in form and
detail reasonably satisfactory to the Administrative Agent:
 
(a)          as soon as available, but in any event within ninety (90) days
after the end of each Fiscal Year of the Borrowers (commencing with the Fiscal
Year ended on or about December 27, 2008), a Consolidated  balance sheet of the
Borrowers and their Subsidiaries as at the end of such Fiscal Year, and the
related Consolidated statement of income or operations, Shareholders’ Equity and
cash flows for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all in reasonable detail and prepared
in accordance with GAAP, such Consolidated statements to be audited and
accompanied by (i) a report and unqualified opinion of a Registered Public
Accounting Firm of nationally recognized standing reasonably acceptable to the
Administrative Agent, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit, (ii) if requested or required by the
Securities Exchange Commission, an opinion of such Registered Public Accounting
Firm independently assessing the Loan Parties’ internal controls over financial
reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing
Standard No. 5, and Section 404 of Sarbanes-Oxley expressing a conclusion that
contains no statement that there is a material weakness in such internal
controls, except for such material weaknesses as to which the Required Lenders
do not object, and (iii) interim draft (subject to year end audit and similar
adjustments) annual financial statements (inclusive of subsequent periods, until
year end statements are delivered) within forty five (45) days of each Fiscal
Year end;
 
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(b)          as soon as available, but in any event within thirty (30) days
after the end of each of the Fiscal Months of each fiscal year of the Parent
(commencing with the Fiscal Month ended on or about June 30, 2009), a
Consolidated balance sheet of the Parent and its Subsidiaries as at the end of
such Fiscal Month, and the related Consolidated statement of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Month, and for
the portion of the Parent’s Fiscal Year then ended, setting forth in each case
in comparative form the figures for (A) such period set forth in the projections
delivered pursuant to Section 6.01(d) hereof, (B) the corresponding Fiscal Month
of the previous Fiscal Year and (C) the corresponding portion of the previous
fiscal year, all in reasonable detail, such Consolidated statements to be
certified by a Responsible Officer of the Lead Borrower as fairly presenting in
all material respects the financial condition, results of operations,
Shareholders’ Equity and cash flows of the Parent and its Subsidiaries as of the
end of such Fiscal Month in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes;
 
(c)          daily, a Borrowing Base Certificate; such Certificate may be sent
to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission at its request.  No adjustments to the Borrowing Base Certificate
may be made without support documentation and such other documentation as may be
reasonably requested by the Administrative Agent or the Lenders from time to
time;
 
(d)          if requested by the Administrative Agent, weekly, no later than
Wednesday for the immediately preceding fiscal week, cash flow reports in form
and content reasonably satisfactory to the Administrative Agent;
 
(e)          as soon as available, but in any event at least (i) thirty (30)
days before the end of each Fiscal Year of the Parent, a Business Plan in draft
form (including projected new Store openings) prepared by management of the Lead
Borrower, and (ii) fifteen (15) days before the end of each Fiscal Year of the
Parent, a Business Plan (including projected new Store openings) prepared by
management of the Lead Borrower, each in form satisfactory to the Administrative
Agent, of Consolidated balance sheets and statements of income or operations and
cash flows of the Parent and its Subsidiaries on a monthly basis for the
immediately following Fiscal Year (including the fiscal year in which the
Maturity Date occurs), and as soon as available, but in any event no more than
thirty (30) days after any significant revisions to or reforecastings of such
Business Plan with respect to such Fiscal Year.
 
6.02    Certificates; Other Information.  Deliver to the Administrative Agent,
in form and detail reasonably satisfactory to the Administrative Agent and the
Required Lenders:
 
(a)           [reserved];
 
(b)          concurrently with the delivery of the financial statements referred
to in Sections 6.01(a) and (b) (commencing with the delivery of the financial
statements for the Fiscal Month ended on or around June 30, 2009), (i) a duly
completed Compliance Certificate signed by a Responsible Officer of the Lead
Borrower, which shall include (A) a certification as to the amount, if any, of
rent under any Leases, and any obligations and liabilities with respect to
Taxes, that have not been timely paid, (B) a certification as to the receipt of
notice, if any, as to any obligations or liabilities with respect to utilities
and/or insurance premiums that have not been timely paid, and (C) a
certification as to the acquisition, if any, of any additional Intellectual
Property acquired since the date of the last similar certification, and (ii) in
the case of annual financial statements, a copy of management’s discussion and
analysis with respect to such financial statements.  In the event of any change
in generally accepted accounting principles used in the preparation of such
financial statements, the Lead Borrower shall also provide a statement of
reconciliation conforming such financial statements to GAAP;
 
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(c)          upon the request of the Administrative Agent or its auditors,
appraisers, accountants, consultants or other representatives, copies of each
Loan Party’s most recent federal income tax returns, and any amendments thereto;
 
(d)          promptly following the submission to the board of directors or the
audit committee thereof, copies of any detailed audit reports, management
letters or recommendations submitted to the board of directors (or the audit
committee of the board of directors) of any Loan Party by its Registered Public
Accounting Firm in connection with the accounts or books of the Loan Parties or
any Subsidiary, or any audit of any of them, including, without limitation,
specifying any Internal Control Event;
 
(e)          promptly after the same are available, copies of each annual
report, proxy or financial statement or other documents, report or communication
sent to the stockholders of the Loan Parties, and copies of all annual, regular,
periodic and special reports and registration statements which any Loan Party
may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or with any national securities exchange, and in
any case not otherwise required to be delivered to the Administrative Agent
pursuant hereto;
 
(f)          the financial and collateral reports described on Schedule 6.02
hereto, at the times set forth in such Schedule;
 
(g)          promptly after the furnishing thereof, copies of any notice,
statement, report or other communication furnished to any holder of debt
securities of any Loan Party or any Subsidiary thereof pursuant to the terms of
any indenture, loan or credit or similar agreement, in each case not otherwise
required to be furnished to the Lenders pursuant to Section 6.01 or any other
clause of this Section 6.02;
 
(h)          as soon as available, but in any event within thirty (30) days
after the end of each Fiscal Year of any Loan Party (or upon the request of the
Administrative Agent or its auditors, appraisers, accountants, consultants or
other representatives), (i) a certificate executed by an authorized officer of
the Lead Borrower certifying the existence and adequacy of the property and
casualty insurance program carried by the Loan Parties and their Subsidiaries,
and (ii) a written summary of said program identifying the name of each insurer,
the number of each policy and expiration date of each policy, the amounts and
types of each coverage, and a list of exclusions and deductibles for each
policy, and containing such additional information as the Administrative Agent,
or any Lender through the Administrative Agent, may reasonably specify
 
(i)          promptly, and in any event within five (5) Business Days after
receipt thereof by any Loan Party or any Subsidiary thereof, copies of each
notice or other correspondence received from any Governmental Authority
(including, without limitation, the SEC (or comparable agency in any applicable
non-U.S. jurisdiction)) concerning any proceeding with, or investigation or
possible investigation or other inquiry by such Governmental Authority regarding
financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which, if adversely determined, could reasonably
expected to have a Material Adverse Effect; and
 
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(j)          at their discretion, from time to time hereafter, with updated
Business Plans; provided in all events, the Borrowers, not later than thirty
(30) days prior to the end of each of each Borrowers’ Fiscal Year, shall furnish
the Administrative Agent with an updated and extended Business Plan which shall
go out at least through the end of the then next Fiscal Year; provided further,
in each event, such updated and extended Business Plans shall be prepared
pursuant to a methodology and shall include such assumptions as are satisfactory
to the Administrative Agent and routinely throughout the year, the
Administrative Agent, following the receipt of any of such revised forecast
which reflects material adverse business performance, may, but shall not be
under any obligation to, revise the financial performance covenants included in
Sections 7.17 and 7.18;
 
(k)          promptly, such additional information regarding the business
affairs, financial condition or operations of any Loan Party or any Subsidiary,
or compliance with the terms of the Loan Documents, as the Administrative Agent
or any Lender may from time to time reasonably request, including, without
limitation, the income level for each individual Store.
 
Financial statements and other documents required to be delivered pursuant to
Sections 6.01 and Section 6.02 shall be delivered in accordance with Section
10.02(a).  The Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Loan Parties
with any such request for delivery, and each Lender shall be solely responsible
for requesting delivery to it or maintaining its copies of such documents.
 
The Loan Parties hereby acknowledge that the Administrative Agent will make
available to the Lenders and the L/C Issuer materials and/or information
provided by or on behalf of the Loan Parties hereunder.
 
6.03    Notices.  Promptly notify the Administrative Agent:
 
(a)          of the occurrence of any Default or Event of Default;
 
(b)          of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
any default under, or termination of, a Material Contract or with respect to
Material Indebtedness of any Loan Party or any Subsidiary thereof; (ii) any
dispute, litigation, investigation, proceeding or suspension between any Loan
Party or any Subsidiary thereof and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or any
administrative or arbitration proceeding affecting any Loan Party or any
Subsidiary thereof, including pursuant to any applicable Environmental Laws;
 
(c)          of any undischarged or unpaid judgments or decrees;
 
(d)          of the occurrence of any ERISA Event;
 
(e)          of any material change in accounting policies or financial
reporting practices by any Loan Party or any Subsidiary thereof;
 
(f)          of any change in any Loan Party’s chief executive officer, chief
financial officer, or chairman of the board of directors;
 
(g)          of the discharge by any Loan Party of its present Registered Public
Accounting Firm or any withdrawal or resignation by such Registered Public
Accounting Firm;
 
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(h)          of any collective bargaining agreement or other labor contract to
which a Loan Party becomes a party, or the application for the certification of
a collective bargaining agent, or any strike, lockout, slowdown or other
material labor dispute against any Loan Party or any Subsidiary pending or, to
the knowledge of any Loan Party, threatened;
 
(i)          of the filing of any Lien for unpaid Taxes against any Loan Party;
 
(j)          of any casualty or other insured damage to any material portion of
the Collateral or the commencement of any action or proceeding for the taking of
any interest in a material portion of the Collateral under power of eminent
domain or by condemnation or similar proceeding or if any material portion of
the Collateral is damaged or destroyed;
 
(k)          of any new Store openings and closings of any Store;
 
(l)          of any failure by any Loan Party to pay rent at (i) any one or more
of such Loan Party’s locations or (ii) any of such Loan Party’s locations if
such failure continues for more than three (3) days following the day on which
such rent first came due;
 
(m)          of the formation or acquisition of any Subsidiary;
 
(n)          within five (5) days of the completion of any physical count of the
Borrowers’ Inventory (together with a copy of the certified or such other
results as may then be available thereof);
 
(o)           of the failure by Borrowers to pay trade liabilities or other
expense liabilities in accordance with their past business practices;
 
(p)          within five (5) days of the Borrowers becoming aware of any
litigation which, if determined adversely to the Borrowers, might have a
Material Adverse Effect on the financial condition of the Borrowers;
 
(q)          within five (5) days of the reduction by any of the Borrowers’
material vendors in the amount of trade credit or terms provided by such vendor
to the Borrowers on the Closing Date;
 
(r)          of the engagement or employment by the Borrowers of any bankruptcy,
restructuring or “turn-around” professionals;
 
(s)          if any goods are at any time in the possession of a bailee;
 
(t)          if the Borrowers are at any time a beneficiary under a letter of
credit now or hereafter issued in favor of the Borrowers; and
 
(u)          if Borrowers shall at any time hold or acquire a commercial tort
claim (together with brief details thereof).
 
Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Lead Borrower setting forth details of the
occurrence referred to therein and stating what action the Lead Borrower has
taken and proposes to take with respect thereto.  Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.
 
6.04    Payment of Obligations.  Pay and discharge in full as the same shall
become due and payable (subject to any applicable grace period, and ordinary and
customary trade terms), all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, (b) all lawful claims (including, without limitation,
claims for labor, materials, supplies and claims of landlords, warehousemen,
customs brokers, and carriers) which, if unpaid, would by law become a Lien upon
its property; and (c) all Indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, except, in each case, where (i) the validity or
amount thereof (other than payroll taxes or taxes that are the subject of a
United States federal tax lien) is being contested in good faith by appropriate
proceedings diligently conducted, (ii) such Loan Party has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (iii) such
contest effectively suspends collection of the contested obligation and
enforcement of any Lien securing such obligation, and (iv) no Lien has been
filed with respect thereto (other than any Lien being contested in good faith
with respect to labor, materials or supplies associated with any Real Estate of
the Loan Parties), and (v) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect.  The
Lead Borrower will, upon request, furnish the Collateral Agent with proof
satisfactory to the Collateral Agent indicating that the Loan Parties and their
Subsidiaries have made the payments described in clause (a) above.  Each Loan
Party shall, and shall cause each of its Subsidiaries to, pay in full as the
same shall become due and payable (subject to any applicable grace period, and
ordinary and customary trade terms) all accounts payable incident to the
operations of such Person not referred to in this Section 6.04, above.  Nothing
contained herein shall be deemed to limit the rights of the Agents with respect
to determining Reserves pursuant to this Agreement.
 
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6.05    Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization or formation except in a transaction permitted
by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so would
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its Intellectual Property, except to the extent such
Intellectual Property is no longer used or useful in the conduct of the business
of the Loan Parties.
 
6.06    Maintenance of Properties.  
 
(a)    Keep its properties (including, but not limited to the Collateral) in
such repair, working order and condition, and shall from time to time make such
repairs, replacements, additions and improvements thereto, as are reasonably
necessary for the efficient operation of its business and shall comply at all
times in all material respects with all material franchises, licenses and leases
to which it is party so as to prevent any loss or forfeiture thereof or
thereunder, except where (i) compliance is at the time being contested in good
faith by appropriate proceedings and (ii) failure to comply with the provisions
being contested has not resulted, and which, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
 
(b)    Take all reasonable actions to possess and maintain all Intellectual
Property material to the conduct of their respective businesses and own all
right, title and interest in and to, or have a valid license for, all such
Intellectual Property.  No Loan Party nor any of its Subsidiaries shall take any
action, or fail to take any action, that could reasonably be expected to (i)
result in the invalidity, abandonment, misuse, lapse, or unenforceability of
Intellectual Property which is material to the conduct of the business of the
Loan Parties or (ii) knowingly infringe upon or misappropriate any rights of
other Persons.  Except (i) upon not less than twenty-one (21) days prior written
notice given to the Administrative Agent, and (ii) in compliance with all other
provisions of this Agreement, the Borrowers will not undertake or commit to
undertake any action such that the results of that action, if undertaken prior
to the date of this Agreement, would have been reflected on Schedule 5.17.
 
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(c)    Do all things reasonably necessary in order to comply with all
Environmental Laws at any Real Property or otherwise in connection with their
operations noncompliance with which would reasonably be expected to cause a
Material Adverse Effect, and obtain all permits and other governmental
authorizations for their operations under applicable Environmental Laws other
than such permits and other authorizations the failure of which to obtain would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
6.07    Maintenance of Insurance.  
 
(a)    Maintain with financially sound and reputable insurance companies
reasonably acceptable to the Administrative Agent and not Affiliates of the Loan
Parties, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business and operating in the same or similar locations or as is
required by applicable Law, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons and as are reasonably
acceptable to the Administrative Agent.
 
(b)    Fire and extended coverage policies maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a
non-contributing mortgage clause (regarding improvements to real property) and
lenders’ loss payable clause (regarding personal property), in form and
substance reasonably satisfactory to the Collateral Agent, which endorsements or
amendments shall provide that the insurer shall pay all proceeds otherwise
payable to the Loan Parties under the policies directly to the Collateral Agent,
(ii) a provision to the effect that none of the Loan Parties, Credit Parties or
any other Person shall be a co-insurer and (iii) such other provisions as the
Collateral Agent may reasonably require from time to time to protect the
interests of the Credit Parties. Commercial general liability policies shall be
endorsed to name the Collateral Agent as an additional insured. Business
interruption policies shall name the Collateral Agent as a loss payee and shall
be endorsed or amended to include (i) a provision that, from and after the
Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan
Parties under the policies directly to the Collateral Agent, (ii) a provision to
the effect that none of the Loan Parties, the Administrative Agent, the
Collateral Agent or any other party shall be a co-insurer and (iii) such other
provisions as the Collateral Agent may reasonably require from time to time to
protect the interests of the Credit Parties. Each such policy referred to in
this Section 6.07(b) shall also provide that it shall not be canceled, modified
or not renewed (i) by reason of nonpayment of premium except upon not less than
twenty (20) days’ prior written notice thereof by the insurer to the Collateral
Agent (giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than twenty (20)
days’ prior written notice thereof by the insurer to the Collateral Agent. The
Lead Borrower shall deliver to the Collateral Agent, prior to the cancellation,
modification or non-renewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent, including an insurance binder) together with
evidence satisfactory to the Collateral Agent of payment of the premium
therefor.
 
(c)    None of the Credit Parties, or their agents or employees shall be liable
for any loss or damage insured by the insurance policies required to be
maintained under this Section 6.07.  Each Loan Party shall look solely to its
insurance companies or any other parties other than the Credit Parties for the
recovery of such loss or damage and such insurance companies shall have no
rights of subrogation against any Credit Party or its agents or employees.  If,
however, the insurance policies do not provide waiver of subrogation rights
against such parties, as required above, then the Loan Parties hereby agree, to
the extent permitted by law, to waive their right of recovery, if any, against
the Credit Parties and their agents and employees.  The designation of any form,
type or amount of insurance coverage by the any Credit Party under this Section
6.07 shall in no event be deemed a representation, warranty or advice by such
Credit Party that such insurance is adequate for the purposes of the business of
the Loan Parties or the protection of their properties.
 
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(d)    The Lead Borrower shall deliver to the Collateral Agent, notice of each
claim in excess of $50,000 made by the Borrowers under any policy of insurance
which covers the Collateral and will permit the Administrative Agent following
the occurrence and during the continuance of any Default or Event of Default, at
the Administrative Agent’s option in each instance (but not its obligation), to
the exclusion of the Borrowers, to conduct the adjustment of each such
claim.  The Borrowers hereby appoint the Collateral Agent as the Borrowers’
attorney in fact to obtain, adjust, settle and cancel any insurance described in
this section and to endorse in favor of the Credit Parties any and all drafts
and other instruments with respect to such insurance.  This appointment, being
coupled with an interest, is irrevocable until this Agreement is terminated by a
written instrument executed by a duly authorized Officer of each Credit
Party.  The Credit Parties shall not be liable on account of any exercise
pursuant to said power except for any exercise in gross negligence or willful
misconduct.  The Credit Parties may apply any proceeds of such insurance against
the Obligations, otherwise such proceeds shall be applied in the same manner as
specified in Section 2.05(e).
 
(e)    Maintain for themselves and their Subsidiaries, a Directors and Officers
insurance policy, and a “Blanket Crime” policy including employee dishonesty,
forgery or alteration, theft, disappearance and destruction, robbery and safe
burglary, property, and computer fraud coverage with responsible companies in
such amounts as are customarily carried by business entities engaged in similar
businesses similarly situated, and will upon request by the Administrative Agent
furnish the Administrative Agent certificates evidencing renewal of each such
policy.
 
(f)    Permit any representatives that are designated by the Collateral Agent to
inspect the insurance policies maintained by or on behalf of the Loan Parties
and to inspect books and records related thereto and any properties covered
thereby.  The Loan Parties shall pay the reasonable fees and expenses of any
representatives retained by the Collateral Agent to conduct any such inspection.
 
6.08    Compliance with Laws.  Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been set aside and maintained by the
Loan Parties in accordance with GAAP; (b) such contest effectively suspends
enforcement of the contested Laws, and (c) the failure to comply therewith could
not reasonably be expected to have a Material Adverse Effect.
 
6.09    Books and Records; Accountants.  
 
(a)           Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving the assets and business of
the Loan Parties or such Subsidiary, as the case may be; and (ii) maintain such
books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Loan Parties or such Subsidiary, as the case may be.
 
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(b)           At all times retain a Registered Public Accounting Firm which is
reasonably satisfactory to the Administrative Agent and shall instruct such
Registered Public Accounting Firm to cooperate with, and be available to, the
Administrative Agent or its representatives to discuss the Loan Parties’
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such Registered Public
Accounting Firm, as may be raised by the Administrative Agent.  The Lead
Borrower hereby irrevocably authorizes and directs all auditors, accountants, or
other third parties to deliver to the Administrative Agent, at the Borrowers’
expense, copies of the Borrowers’ financial statements, papers related thereto,
and other accounting records of any nature in their possession, and to disclose
to the Administrative Agent any information they may have regarding the
Collateral or the financial condition of the Borrowers.
 
6.10    Inspection Rights.
 
(a)           Permit representatives and independent contractors of the
Administrative Agent to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and Registered Public Accounting Firm, all at the expense of the Loan
Parties as often as may be reasonably desired, upon reasonable advance notice to
the Lead Borrower and in a manner which does not unreasonably interfere with the
use and conduct of the Borrowers’ business; provided, however, that when an
Event of Default has occurred and is continuing the Administrative Agent (or any
of its representatives or independent contractors) may do any of the foregoing
at the expense of the Loan Parties at any time and without advance notice.
 
(b)           Upon the request of the Administrative Agent after reasonable
prior notice, permit the Administrative Agent or professionals (including
investment bankers, consultants, accountants, lawyers and appraisers) retained
by the Administrative Agent to conduct appraisals, commercial finance
examinations and other evaluations, including, without limitation, of (i) the
Lead Borrower’s practices in the computation of the Borrowing Base and (ii) the
assets included in the Borrowing Base and related financial information such as,
but not limited to, sales, gross margins, payables, accruals and
reserves.  Subject to the following sentences, the Loan Parties shall pay the
fees and expenses of the Administrative Agent or such professionals with respect
to such evaluations and appraisals.  Without limiting the foregoing, the Loan
Parties acknowledge that the Administrative Agent may, in its discretion,
undertake inventory appraisals or commercial finance examinations at the Loan
Parties’ expense, as provided in Sections 6.15(c) and (d).  Notwithstanding
anything to the contrary contained herein or in Section 6.15(c) or (d), the
Administrative Agent may cause additional inventory appraisals and commercial
finance examinations to be undertaken (x) as it in its discretion deems
necessary or appropriate, at its own expense, or (y) at the expense of the Loan
Parties upon the occurrence and during the continuance of an Event of Default,
and (z) at any time required by applicable Law.
 
6.11    Use of Proceeds.  Use the proceeds of the Credit Extensions shall be
used solely in accordance with the Business Plan, including, (a) to finance the
working capital needs of the Borrowers, including the purchase of Inventory, in
the ordinary course of business, (b) to finance Letters of Credit needs of the
Borrowers in the ordinary course of business, (c) to finance Capital
Expenditures of the Borrowers, and (d) for general corporate purposes of the
Loan Parties, in each case to the extent expressly permitted under applicable
Law and the Loan Documents.
 
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6.12    Additional Loan Parties.  Notify the Administrative Agent at least ten
(10) Business Days prior to the time that any Person becomes a Subsidiary, and
promptly on the date of formation, cause any such Person (a) which is not a CFC,
to (i) become a Loan Party by executing and delivering to the Administrative
Agent a Joinder Agreement or such other document as the Administrative Agent
shall deem appropriate for such purpose, (ii) grant a Lien to the Collateral
Agent on such Person’s assets to secure the Obligations, and (iii) deliver to
the Administrative Agent documents of the types referred to in clauses (iii) and
(iv) of Section 4.01(a) and, if requested by the Administrative Agent, favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of
such Person are owned by or on behalf of any Loan Party, to pledge such Equity
Interests and promissory notes evidencing such Indebtedness (except that, if
such Subsidiary is a CFC, the Equity Interests of such Subsidiary to be pledged
may be limited to 65% of the outstanding voting Equity Interests of such
Subsidiary and 100% of the non-voting Equity Interests of such Subsidiary and
such time period may be extended based on local law or practice), in each case
in form, content and scope reasonably satisfactory to the Administrative
Agent.  In no event shall compliance with this Section 6.12 waive or be deemed a
waiver or Consent to any transaction giving rise to the need to comply with this
Section 6.12 if such transaction was not otherwise expressly permitted by this
Agreement or constitute or be deemed to constitute, with respect to any
Subsidiary, an approval of such Person as a Borrower or permit the inclusion of
any acquired assets in the computation of the Borrowing Base.
 
6.13    Cash Management.
 
(a)    On or prior to the Closing Date:
 
(i)           deliver to the Administrative Agent copies of notifications (each,
a “DDA Notification”) substantially in the form attached hereto as Exhibit H
which have been executed on behalf of such Loan Party and delivered to each
depository institution listed on Schedule 5.21(a);
 
(ii)           deliver to the Administrative Agent copies of notifications
(each, a “Credit Card Notification”), substantially in the form attached hereto
as Exhibit G which have been executed on behalf of such Loan Party and delivered
to such Loan Party’s credit card clearinghouses and processors listed on
Schedule 5.21(b); and
 
(iii)           enter into a Blocked Account Agreement satisfactory in form and
substance to the Agents with each Blocked Account Bank (collectively, the
“Blocked Accounts”).
 
(b)    (i)     Each Credit Card Notification and DDA Notification shall require
the ACH or wire transfer no less frequently than daily (and whether or not there
are then any outstanding Obligations) to a Blocked Account of all payments due
from credit card processors, and (ii) the Borrowers shall cause each depository
institution listed on Schedule 5.21(a) to cause the ACH or wire transfer no less
frequently than daily (and whether or not there are then any outstanding
Obligations) to a Blocked Account of all amounts on deposit in each DDA in
excess of the minimum balance permitted in accordance with Section 6.13(c).
 
(c)    Each Blocked Account Agreement shall require the ACH or wire transfer no
less frequently than daily (and whether or not there are then any outstanding
Obligations) to the concentration account maintained by the Collateral Agent at
Wells Fargo Bank (the “Concentration Account”), of all cash receipts and
collections, including, without limitation, the following:
 
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(i)    all available cash receipts from the sale of Inventory and other assets;
 
(ii)           all proceeds of collections of Accounts;
 
(iii)          all Net Proceeds, and all other cash payments received by a Loan
Party from any Person or from any source or on account of any sale or other
transaction or event, including, without limitation, any Prepayment Event;
 
(iv)          the then contents of each DDA (net of any minimum balance, not to
exceed $1,500.00, as may be required to be kept in the subject DDA by the
depository institution at which such DDA is maintained);
 
(v)           the then entire ledger balance of each Blocked Account (net of any
minimum balance, not to exceed $1,500.00, as may be required to be kept in the
subject Blocked Account by the Blocked Account Bank); and
 
(vi)          the proceeds of all credit card charges.
 
(d)    The Loan Parties shall provide the Collateral Agent (i) with written
notice of any Restricted Payment, in each case as otherwise permitted pursuant
to Section 7.06 of this Agreement, no less than five (5) days prior to the
receipt thereof and (ii) with written confirmation (which shall include a fed
reference number, if applicable) on the date of the receipt of any such
Restricted Payment.
 
(e)    The Concentration Account shall at all times be under the sole dominion
and control of the Collateral Agent.  The Loan Parties hereby acknowledge and
agree that (i) without limiting the provisions of Section 2.05(d), the Loan
Parties have no right of withdrawal from the Concentration Account, (ii) the
funds on deposit in the Concentration Account shall at all times be collateral
security for all of the Obligations and (iii) the funds on deposit in the
Concentration Account shall be applied as provided in this Agreement.  In the
event that, notwithstanding the provisions of this Section 6.13, any Loan Party
receives or otherwise has dominion and control of any such proceeds or
collections, such proceeds and collections shall be held in trust by such Loan
Party for the Collateral Agent, shall not be commingled with any of such Loan
Party’s other funds or deposited in any account of such Loan Party and shall,
not later than the Business Day after receipt thereof, be deposited into the
Concentration Account or dealt with in such other fashion as such Loan Party may
be instructed by the Collateral Agent.
 
(f)    Upon the request of the Administrative Agent, the Loan Parties shall
cause bank statements and/or other reports to be delivered to the Administrative
Agent not less often than monthly, accurately setting forth all amounts
deposited in each Blocked Account to ensure the proper transfer of funds as set
forth above.
 
6.14    Information Regarding the Collateral.
 
(a)    Furnish to the Administrative Agent at least thirty (30) days prior
written notice of any change in: (i) any Loan Party’s name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
properties; (ii) the location of any Loan Party’s chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility); (iii) any Loan Party’s organizational structure or jurisdiction of
incorporation or formation; or (iv) any Loan Party’s Federal Taxpayer
Identification Number or organizational identification number assigned to it by
its state of organization. The Loan Parties agree not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the UCC or otherwise that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected first priority security interest in all the Collateral for its own
benefit and the benefit of the other Credit Parties.
 
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(b)     Should any of the information on any of the Schedules hereto become
inaccurate or misleading in any material respect as a result of changes after
the Closing Date, the Lead Borrower shall advise the Administrative Agent in
writing of such revisions or updates as may be necessary or appropriate to
update or correct the same.  From time to time as may be reasonably requested by
the Administrative Agent, and not less than one time per Fiscal Year, the Lead
Borrower shall supplement each Schedule hereto, or any representation herein or
in any other Loan Document, with respect to any matter arising after the Closing
Date that, if existing or occurring on the Closing Date, would have been
required to be set forth or described in such Schedule or as an exception to
such representation or that is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and, in
the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show the changes made therein).  Notwithstanding the
foregoing, no supplement or revision to any Schedule or representation shall be
deemed the Credit Parties’ consent to the matters reflected in such updated
Schedules or revised representations nor permit the Loan Parties to undertake
any actions otherwise prohibited hereunder or fail to undertake any action
required hereunder from the restrictions and requirements in existence prior to
the delivery of such updated Schedules or such revision of a representation; nor
shall any such supplement or revision to any Schedule or representation be
deemed the Credit Parties’ waiver of any Default resulting from the matters
disclosed therein.
 
6.15    Physical Inventories.
 
(a)    Cause not less than one (1) physical inventory of the Stores and the
distribution centers, each to be undertaken, at the expense of the Loan Parties,
in each twelve (12) month period and periodic cycle counts, in each case
consistent with past practices, conducted by such inventory takers as are
satisfactory to the Collateral Agent and following such methodology as is
consistent with the methodology used in the immediately preceding inventory or
as otherwise may be satisfactory to the Collateral Agent. The Collateral Agent,
at the expense of the Loan Parties, may participate in and/or observe each
scheduled physical count of Inventory which is undertaken on behalf of any Loan
Party.   The Lead Borrower, within fifteen (15) days following the completion of
each such inventory, shall provide the Collateral Agent with a reconciliation of
the results of such inventory (as well as of any other physical inventory or
cycle counts undertaken by a Loan Party) and shall post such results to the Loan
Parties’ stock ledgers and general ledgers, as applicable.
 
(b)    The Collateral Agent, in its discretion, if any Default or Event of
Default shall have occurred and be continuing, may cause additional such
inventories to be taken as the Collateral Agent determines (each, at the expense
of the Loan Parties).
 
(c)    Upon the Administrative Agent’s request from time to time, the Borrowers
shall permit the Administrative Agent to obtain appraisals (in all events, at
the Borrowers’ expense) conducted by such appraisers up to three (3) times per
Fiscal Year.  In its discretion, the Lender may obtain additional appraisals at
the Borrowers’ expense, as provided in Section 6.10 (b).
 
(d)    The Administrative Agent contemplates conducting commercial finance
audits (in each event, at the Borrowers’ expense) of the Borrowers’ books and
records up to three (3) times per Fiscal Year.  In its discretion the Lender may
undertake additional audits at the Borrowers’ expense,  as provided in Section
6.10 (b).
 
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(e)    In the event that the Borrowers do not undertake “mystery shopping”
(so-called) and share the results of the same with the Administrative Agent, the
Administrative Agent from time to time (in all events, at the Borrowers’
expense) may undertake “mystery shopping” (so-called) visits to all or any of
the Borrowers’ business premises. The Administrative Agent shall provide the
Borrowers with a copy of any non-company confidential results of such mystery
shopping upon Borrowers’ written request.
 
6.16    Environmental Laws.
 
(a)    Except as would not reasonably be expected to have a Material Adverse
Effect, (a) conduct its operations and keep and maintain its Real Estate in
material compliance with all Environmental Laws; (b) obtain and renew all
environmental permits appropriate or necessary for its operations and
properties; and (c) implement any and all investigation, remediation, removal
and response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or release of any Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Estate, provided, however, that neither a Loan
Party nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and adequate
reserves have been set aside and are being maintained by the Loan Parties with
respect to such circumstances in accordance with GAAP or handled by its lessors.
 
6.17    Further Assurances.
 
(a)    Execute any and all further documents, financing statements, agreements
and instruments, and take all such further actions (including the filing and
recording of financing statements and other documents), that may be required
under any applicable Law, or which any Agent may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created or intended to be created by the
Security Documents or the validity or priority of any such Lien, all at the
expense of the Loan Parties. The Loan Parties also agree to provide to the
Agents, from time to time upon request, evidence satisfactory to the Agents as
to the perfection and priority of the Liens created or intended to be created by
the Security Documents.
 
(b)    If any material assets are acquired by any Loan Party after the Closing
Date (other than assets constituting Collateral under the Security Documents
that become subject to the Lien of the Security Documents upon acquisition
thereof), notify the Agents thereof, and the Loan Parties will cause such assets
to be subjected to a Lien securing the Obligations and will take such actions as
shall be necessary or shall be reasonably requested by any Agent to grant and
perfect such Liens, including actions described in paragraph (a) of this Section
6.17, all at the expense of the Loan Parties. In no event shall compliance with
this Section 6.17(b) waive or be deemed a waiver or consent to any transaction
giving rise to the need to comply with this Section 6.17(b) if such transaction
was not otherwise expressly permitted by this Agreement or constitute or be
deemed to constitute consent to the inclusion of any acquired assets in the
computation of the Borrowing Base.
 
(c)    Use, and cause each of the Subsidiaries to use, their commercially
reasonable efforts to obtain lease terms in any lease entered into by any Loan
Party after the date hereof not expressly prohibiting the recording in the
relevant real estate filing office of an appropriate memorandum of lease and the
encumbrancing of the leasehold interest of such Loan Party in the property that
is the subject of such lease.
 
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(d)    Upon the request of the Collateral Agent, cause each of its customs
brokers, freight forwarders and other carriers to deliver an agreement
(including, without limitation, a Customs Broker Agreement) to the Collateral
Agent covering such matters and in such form as the Collateral Agent may
reasonably require.
 
(e)    Upon the request of the Collateral Agent, use commercially reasonable
efforts to cause any of its landlords to deliver a Collateral Access Agreement
to the Collateral Agent in such form as the Collateral Agent may reasonably
require.
 
6.18    Compliance with Terms of Leaseholds.
 
Except as otherwise expressly permitted hereunder (including, without
limitation, in connection with Store closings permitted pursuant to clause (b)
of the definition of Permitted Dispositions), make all payments and otherwise
perform all obligations in respect of all Leases of real property to which any
Loan Party or any of its Subsidiaries is a party, keep such Leases in full force
and effect and not allow such Leases to lapse or be terminated or any rights to
renew such Leases to be forfeited or cancelled, notify the Administrative Agent
of any default by any party with respect to such Leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of
its Subsidiaries to do so, except, in any case, where the failure to do so,
either individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Effect.  In the event that the Borrowers become delinquent in
their rent payments, the Administrative Agent may establish additional Reserves
against the Borrowing Base for the amount of any landlord liens arising from
such delinquency.
 
6.19    Material Contracts.  Subject to Section 7.20, perform and observe all of
the terms and provisions of each Material Contract to be performed or observed
by any Loan Party or any of its Subsidiaries, take all such action required on
the part of any Loan Party or any of its Subsidiaries to maintain each such
Material Contract in full force and effect, enforce each such Material Contract
in accordance with its terms, take all such action to such end as may be from
time to time requested by the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such Material Contract
such demands and requests for information and reports or for action as any Loan
Party or any of its Subsidiaries is entitled to make under such Material
Contract, and cause each of its Subsidiaries to do so, except, in any case,
where the failure to do so, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.  In addition, the
Supply Agreement is shall at all times remain, in full force and effect.
 
6.20    ERISA.  
 
(a)    Comply in all material respects with the applicable provisions of ERISA
or any other applicable federal, state, provincial, local or foreign law dealing
with such matters, except where the failure to comply would reasonably be
expected to result in a claim or liability against any Loan Party or its
Affiliates of $150,000 or less.
 
(b)    Pay and discharge promptly any liability imposed upon it pursuant to the
provisions of Title IV of ERISA; provided, however, that neither any Loan Party
nor any ERISA Affiliate or any other Subsidiary of the Loan Parties shall be
required to pay any such liability if (i) the amount, applicability or validity
thereof shall be diligently contested in good faith by appropriate proceedings,
and (ii) such Person shall have set aside on its books reserves, in the opinion
of the independent certified public accountants of such Person, adequate with
respect thereto.
 
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(c)    Deliver to the Collateral Agent, promptly, and in any event within twenty
(20) days, after (i) the occurrence of any Reportable Event in respect of a
Plan, a copy of the materials that are filed with the PBGC, (ii) any Loan Party
or any  ERISA Affiliate or an administrator of any Plan files with participants,
beneficiaries or the PBGC a notice of intent to terminate any such Plan, a copy
of any such notice, (iii) the receipt of notice by any Loan Party or any ERISA
Affiliate or an administrator of any Plan from the PBGC of the PBGC’s intention
to terminate any Plan or to appoint a trustee to administer any such Plan, a
copy of such notice, (iv) the request by any Lender of copies of each annual
report that is filed on Treasury Form 5500 with respect to any Plan, together
with certified financial statements (if any) for the Plan and any actuarial
statements on Schedule B to such Form 5500, (v) any Loan Party or any ERISA
Affiliate knows or has reason to know of any event or condition which would
reasonably be expected to constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any Plan, an explanation of such event or condition, (vi) the
receipt by any Loan Party or any ERISA Affiliate of an assessment of withdrawal
liability under Section 4201 of ERISA from a Multiemployer Plan, a copy of such
assessment, (vii) any Loan Party or any ERISA Affiliate knows or has reason to
know of any event or condition which would reasonably be expected to cause any
one of them to incur a liability under Section 4062, 4063, 4064 or 4069 of ERISA
or Section 412(n) or 4971 of the Code, an explanation of such event or
condition, or (viii) any Loan Party or any ERISA Affiliate knows or has reason
to know that an application is to be, or has been, made to the Secretary of the
Treasury for a waiver of the minimum funding standard under the provisions of
Section 412 of the Code, a copy of such application, and in each case described
in clauses (i) through (iii) and (v) through (vii) together with a statement
signed by an officer setting forth details as to such Reportable Event, notice,
event or condition and the action which such Loan Party and any ERISA Affiliate
proposes to take with respect thereto.».
 
ARTICLE VII
NEGATIVE COVENANTS
 
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, no Loan Party shall, nor shall it permit any
Subsidiary to, directly or indirectly:
 
7.01    Liens.  Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired or
sign or file or suffer to exist under the UCC or any similar Law or statute of
any jurisdiction a financing statement that names any Loan Party or any
Subsidiary thereof as debtor; sign or suffer to exist any security agreement
authorizing any Person thereunder to file such financing statement; sell any of
its property or assets subject to an understanding or agreement (contingent or
otherwise) to repurchase such property or assets with recourse to it or any of
its Subsidiaries; or assign or otherwise transfer any accounts or other rights
to receive income, other than, as to all of the above, Permitted Encumbrances.
 
7.02    Investments.  Have outstanding, make, acquire or hold any Investment (or
become contractually committed to do so), directly or indirectly, or incur any
liabilities (including contingent obligations) for or in connection with any
Investment, except Permitted Investments.
 
7.03    Indebtedness; Disqualified Stock.
 
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Create, incur, assume, guarantee, suffer to exist or otherwise become or remain
liable with respect to, any Indebtedness (except Permitted Indebtedness) or
issue Disqualified Stock.
 
7.04    Fundamental Changes.  Merge, dissolve, liquidate, wind up, consolidate
with or into another Person, reorganize, enter into a plan of reorganization,
recapitalization or reclassify its Equity Interests (or agree to do any of the
foregoing), except that, so long as no Default or Event of Default shall have
occurred and be continuing prior to or immediately after giving effect to any
action described below or would result therefrom:
 
(a)    any Subsidiary may merge with any other Subsidiary or its direct Parent,
provided that a Loan Party shall be the continuing or surviving Person and if a
Borrower is party to such merger, such Borrower shall be the continuing or
surviving Person;
 
(b)    any CFC that is not a Loan Party may merge into any CFC that is not a
Loan Party; and
 
(c)    effect the Reverse Stock Split.
 
7.05    Dispositions.  Make any Disposition or enter into any agreement to make
any Disposition, except Permitted Dispositions.
 
7.06    Restricted Payments.  Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
or issue or sell any Equity Interests or accept any capital contribution, except
that, so long as no Default or Event of Default shall have occurred and be
continuing prior to or immediately after giving effect to any action described
below or would result therefrom each Subsidiary of a Loan Party may make
Restricted Payments to any Borrower except that, so long as no Default or Event
of Default shall have occurred and be continuing prior to or immediately after
giving effect to any action described below or would result therefrom: (a) each
(i) Loan Party may make Restricted Payments to any other Loan Party, and (ii)
Subsidiary of a Loan Party may make Restricted Payments to any other Loan Party;
(b) the Loan Parties and each Subsidiary may declare and make dividend payments
or other distributions payable solely in the common stock or other common Equity
Interests of such Person; (c) the Parent may declare and make dividend payments
or other Distributions in preferred Equity Interests (other than Disqualified
Stock) in connection with an exercise of the “poison pill” contained in its
Organizational Documents and (d) in connection with any stock split transaction
consummated by the Parent, the Parent may make cash payments for the retirement
of any fractional Equity Interests resulting therefrom; provided, however that
such cash payments shall not exceed $25,000 in the aggregate following the
Closing Date.
 
7.07    Prepayments of Indebtedness.  Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner any
Indebtedness, or make any payment in violation of any subordination terms of any
Subordinated Indebtedness, except (a) as long as no Event of Default then exists
or would result therefrom, regularly scheduled or mandatory repayments,
repurchases, redemptions or defeasances of Permitted Indebtedness (but excluding
on account of any Subordinated Indebtedness) or (b) voluntary prepayments,
repurchases, redemptions or defeasances of Permitted Indebtedness (but excluding
on account of any Subordinated Indebtedness) and (c) refinancings and refundings
of such Indebtedness in compliance with Section 7.03.
 
7.08    Change in Nature of Business.  
 
Engage in any line of business different from the business conducted by the Loan
Parties and their Subsidiaries on the date hereof or any business substantially
related or incidental thereto.
 
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7.09    Transactions with Affiliates.  Enter into, renew, extend or be a party
to any transaction of any kind with any Affiliate of any Loan Party, whether or
not in the ordinary course of business, other than on fair and reasonable terms
that are fully disclosed to the Administrative Agent, and that are no less
favorable to the Loan Parties or such Subsidiary than would be obtainable by the
Loan Parties or such Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate, provided that the foregoing
shall not apply to (i) Restricted Payments permitted pursuant to Section 7.06,
and (ii) the payment of director and officer compensation (including bonuses)
and other benefits (including retirement, health, stock option and other benefit
plans) and indemnification arrangements, in each case under this clause (ii),
made in the ordinary course of business, (iii) reimbursements for executive
personnel and any other such shared personnel as provided in the Business Plan,
and (iv) any transaction between or among the Loan Parties.
 
7.10    Burdensome Agreements.  Enter into or permit to exist any Contractual
Obligation (other than this Agreement or any other Loan Document) that (a)
limits the ability (i) of any Subsidiary to make Restricted Payments or other
distributions to any Loan Party or to otherwise transfer property to or invest
in a Loan Party, (ii) of any Subsidiary to Guarantee the Obligations, (iii) of
any Subsidiary to make or repay loans to a Loan Party, or (iv) of the Loan
Parties or any Subsidiary to create, incur, assume or suffer to exist Liens on
property of such Person in favor of the Collateral Agent; provided, however,
that this clause (iv) shall not prohibit (I) any negative pledge incurred or
provided in favor of any holder of Indebtedness permitted under clauses (c) and
(d) of the definition of Permitted Indebtedness solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness; or (II) the existence of or entry into of licenses, leases or
other contracts entered into in the ordinary course of business containing
customary restrictions on the assignment of such license, lease or contract, or
(b) requires the grant of a Lien to secure an obligation of such Person if a
Lien is granted to secure another obligation of such Person.
 
7.11    Use of Proceeds.  Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund Indebtedness originally incurred for such purpose.
 
7.12    Amendment of Material Documents.
 
Amend, modify or waive any of a Loan Party’s rights under (a) its Organization
Documents, except with respect to the Reverse Stock Split or (b) any Material
Contract or Material Indebtedness (other than on account of any refinancing
thereof otherwise permitted hereunder), in each case to the extent that such
amendment, modification or waiver would be reasonably likely to have a Material
Adverse Effect.
 
7.13    Corporate Name; Fiscal Year.
 
(a)          Change the Fiscal Year of any Loan Party, or the accounting
policies or reporting practices of the Loan Parties, except as required by GAAP.
 
(b)          (i) Change its name as it appears in official filings in the state
of its incorporation or other organization (ii) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (iii) change the type of entity that it is, (iv)
change its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least thirty (30) days prior written
notice to the Collateral Agent and after the Collateral Agent’s written
acknowledgment, which acknowledgment shall not be unreasonably withheld or
delayed, that any reasonable action requested by the Collateral Agent in
connection therewith, including to continue the perfection of any Liens in favor
of the Collateral Agent, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States.
 
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7.14    Deposit Accounts; Blocked Accounts; Credit Card Processors.
 
(a)           Open new DDAs or Blocked Accounts unless the Loan Parties shall
have delivered to the Collateral Agent appropriate DDA Notifications or Blocked
Account Agreements consistent with the provisions of Section 6.13 and otherwise
satisfactory to the Collateral Agent.
 
(b)           Enter into new agreements with credit card processors other than
the ones expressly contemplated herein or in Section 6.13 hereof unless the Loan
Parties shall have delivered to the Collateral Agent appropriate Credit Card
Notifications consistent with the provisions of Section 6.13 and otherwise
satisfactory to the Collateral Agent.
 
7.15    Consignments.  Consign any Inventory or sell any Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale (it
being understood that customer return and exchange policies relating to the sale
of Inventory in the ordinary course of business shall not be prohibited by this
Section 7.15).
 
7.16    [Reserved]
 
7.17    Minimum Availability.  Permit Excess Availability at any time to be less
than an amount equal to 7.5% of the then applicable Loan Cap (the “Minimum
Availability Block”).
 
7.18    Capital Expenditures.  Make Capital Expenditures in excess of (a) the
amount set forth on Schedule 7.18  for the Fiscal Year ending on or about
December 31, 2009; (b) 110% of the amount set forth for Capital Expenditures in
the Business Plan for the Fiscal Year ending on or about December 31, 2010; (c)
110% of the amount set forth for Capital Expenditures in the Business Plan for
the Fiscal Year ending on or about December 31, 2011; and (d) 110% of the amount
set forth for Capital Expenditures in the Business Plan, pro-rated through the
Maturity Date, for the Fiscal Year ending on or about December 31, 2012.
 
7.19    Locations.
 
(a)           Except (i) to accomplish sales of Inventory in the ordinary course
of business or (ii) the sale of obsolete equipment or fixtures (replaced by
equipment or fixtures of equal or greater value) or (iii) to utilize such of the
Collateral as is removed from such locations in the ordinary course of business
(such as motor vehicles), remove any Collateral from the chief executive office,
the Stores listed on Schedule 5.08(b), any Temporary Halloween Stores and
temporary off site storage.
 
(b)           Commit to, or open any location at which the Borrowers maintain,
offers for sale, or stores any of the Collateral, except those set forth in, or
contemplated by, the Business Plan, or any Temporary Halloween Stores.
 
7.20    Subordinated Debt Payments.  Make payments of principal or interest on
the Highbridge Note except as permitted by the Subordinated Provisions relating
thereto; provided that notwithstanding such Subordinated Provisions, no payment
of principal at the scheduled maturity date of the Highbridge Note shall be made
unless (x) such payments are made entirely, on a dollar for dollar basis, with
proceeds from (1) new Subordinated Indebtedness on terms and conditions
acceptable to the Administrative Agent and subordinated on terms acceptable to
the Administrative Agent, (2) the issuance by the Parent of additional shares of
common stock or (3) the issuance by Parent of other Equity Interests (including
Disqualified Stock) so long as such Equity Interests are on terms and conditions
acceptable to the Administrative Agent, and if requested and applicable,
subordinated on terms acceptable to Administrative Agent or (y) beginning sixty
(60) days prior to the date of such payment and ending on the date of such
payment (but prior to giving effect thereto), the Loan Parties (1) shall have an
average daily Excess Availability greater than or equal to $4,500,000, and (2)
shall not at any time have Excess Availability less than $4,500,000 for any
three (3) consecutive Business Days during such period and at all times
beginning on the date of such payment (after giving effect thereto) and ending
sixty (60) days following the date of such payment the Loan Parties shall have
Excess Availability greater than or equal to $3,000,000 (and at least five (5)
Business Days prior to such date, Borrower shall provide the Administrative
Agent with a written certification that provides for projected Excess
Availability during the following sixty (60) days); provided further, that in
either subclause (x) or (y) of this Section 7.20, no Event of Default shall have
occurred and be continuing or could be caused by such respective payment.
 
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
 
8.01    Events of Default.  Any of the following shall constitute an Event of
Default:
 
(a)          Non-Payment.  The Borrowers or any other Loan Party fails to pay
when and as required to be paid herein:
 
(i)           any amount of principal of or any interest on any Loan; or
 
(ii)           any L/C Obligation, deposit any funds as Cash Collateral in
respect of L/C Obligations, any interest on any L/C Obligation, any fee due
hereunder, or any other amount payable hereunder or under any other Loan
Document; or
 
(b)          Specific Covenants.  (i) Any Loan Party fails to perform or observe
any term, covenant or agreement contained in any of Sections 5.01, 6.01,
6.02(b), 6.02(f), 6.02(i), 6.03, 6.04, 6.05, 6.06, 6.07, 6.10, 6.11, 6.12, 6.13,
or 6.14(a) or Article VII of this Agreement; or (ii) any of the Loan Parties
fails to perform or observe any term, covenant or agreement contained in
Sections 4.04, 4.10 and 5.01 of the Security Agreement to which it is a party;
or
 
(c)          Other Defaults.  Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for ten (10) consecutive calendar days after the occurrence
thereof; or
 
(d)          Material Impairment.  Any material impairment of the value or
priority of the Credit Parties’ security interests in the Collateral; or
 
(e)          Material Adverse Effect.   The occurrence of any event or series of
events individually or in the aggregate which, causes a Material Adverse Effect;
or
 
(f)          Representations and Warranties.  Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of any
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith (including, without
limitation, any Borrowing Base Certificate) shall be incorrect or misleading in
any material respect when made or deemed made; or
 
(g)          Cross-Default.  Any Loan Party or any Subsidiary thereof (A) fails
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any (x) Material
Indebtedness, or (y) other Indebtedness, to the extent that such failure would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (other than Indebtedness hereunder), including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement, or (B) fails to observe or perform
any other agreement or condition relating to any such Material Indebtedness
(other than Indebtedness hereunder) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Material Indebtedness or the beneficiary or beneficiaries of any
Guarantee thereof (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or
 
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(h)          Default Under Other Agreements.  The occurrence of any breach or
default under any agreement between the Credit Parties and Loan Party or
instrument or paper given to the Credit Parties by such Loan Party, whether such
agreement, instrument, or paper now exists or hereafter arises, continuing
beyond any applicable cure or grace period thereunder, (notwithstanding that the
Credit Parties may not have exercised its rights upon default under any such
other agreement, instrument or paper).
 
(i)          Insolvency Proceedings, Etc.   Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Laws, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or a proceeding shall be commenced or a
petition filed, without the application or consent of such Person, seeking or
requesting the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed and the appointment
continues undischarged, undismissed or unstayed for forty-five (45) calendar
days (provided, however, that, during the pendency of such period, the Credit
Parties shall be relieved of their obligation to extend credit hereunder) or an
order or decree approving or ordering any of the foregoing shall be entered; or
any proceeding under any Debtor Relief Laws relating to any such Person or to
all or any material part of its property is instituted without the consent of
such Person and continues undismissed or unstayed for forty-five (45) calendar
days (provided, however, that, during the pendency of such period, the Credit
Parties shall be relieved of their obligation to extend credit hereunder), or an
order for relief is entered in any such proceeding; or
 
(j)          Inability to Pay Debts; Attachment.  (i) Any Loan Party or any
Subsidiary thereof becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due in the ordinary course of
business, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Person and not dismissed or bonded over within thirty (30) days; or
 
(k)          Judgments; Restraint of Business.  There is entered against any
Loan Party or any Subsidiary thereof (i) one or more judgments or orders for the
payment of money in an aggregate amount (as to all such judgments and orders)
exceeding $250,000 (to the extent not covered by independent third-party
insurance as to which the insurer is rated at least “A” by A.M. Best Company,
has been notified of the potential claim and does not dispute coverage), or (ii)
any one or more non-monetary judgments that have, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of ten (10) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, is not in effect; or
 
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(l)          Liens.  (i) A notice of Lien, levy, or assessment is filed of
record with respect to any of any Borrower’s properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, or any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon any of any Borrower’s properties or assets and
the same is not paid on the payment date thereof; or (ii) any Lien (other than a
Permitted Encumbrance) is placed on any of the Collateral by any Person and such
lien continues unreleased for a period of thirty (30) consecutive days; or
 
(m)          ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or would reasonably be expected to result
in liability of any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000 or
which would reasonably likely result in a Material Adverse Effect, or (ii) a
Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $50,000 or which would reasonably likely result
in a Material Adverse Effect; or
 
(n)          Invalidity of Loan Documents.  (i)  Any provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Loan Party or
any other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any provision of any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document or
seeks to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) any Lien purported to be created
under any Security Document shall cease to be, or shall be asserted by any Loan
Party or any other Person not to be, a valid and perfected Lien on any
Collateral, with the priority required by the applicable Security Document; or
 
(o)          Change of Control.  There occurs any Change of Control; or
 
(p)          Cessation of Business.  Except as otherwise expressly permitted
hereunder, any Loan Party shall take any action to suspend the operation of its
business in the ordinary course, liquidate all or a material portion of its
assets or Store locations, or employ an agent or other third party to conduct a
program of closings, liquidations or “Going-Out-Of-Business” sales of any
material portion of its business; or
 
(q)          Loss of Collateral.  There occurs any (i) uninsured loss, theft,
damage or destruction of or to any material portion of the Collateral, or (i)
sale (other than sales in the ordinary course of business or otherwise permitted
hereunder) of any material portion of the Collateral; or
 
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(r)          Breach of Contractual Obligation.  Any Loan Party or any Subsidiary
thereof fails to make any payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any
Material Contract or fails to observe or perform any other material agreement or
condition relating to any such Material Contract or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
occurs, the effect of which default or other event is to cause the counterparty
to such Material Contract to terminate such Material Contract in accordance with
its terms; or
 
(s)          Indictment.  The indictment or institution of any legal process or
proceeding against, any Loan Party, under any federal, state, municipal, and
other civil or criminal statute, rule, regulation, order, or other requirement
having the force of law where the relief, penalties, or remedies sought or
available include the forfeiture of any property of such Loan Party and/or the
imposition of any stay or other order, the effect of which could be to restrain
in any material way the conduct by such Loan Party of its business in the
ordinary course; or
 
(t)          Guaranty.  The termination or attempted termination of any Facility
Guaranty; or
 
(u)          Subordination; Subordinated Indebtedness.  (i)  The subordination
provisions of the documents evidencing or governing any Subordinated
Indebtedness (the “Subordinated Provisions”) shall, in whole or in part,
terminate, cease to be effective or cease to be legally valid, binding and
enforceable against any holder of the applicable Subordinated Indebtedness; (ii)
any Borrower or any other Loan Party shall, directly or indirectly, (A) make any
payment on account of any Subordinated Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to
the extent that such payment is permitted by each of the (x) terms of the
Subordinated Provisions applicable to such Subordinated Indebtedness and (y) as
applicable, Section 7.20, or (B) disavow or contest in any manner (x) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (y) that the Subordination Provisions exist for the benefit of the
Credit Parties, or (z) that all payments of principal of or premium and interest
on the applicable Subordinated Indebtedness, or realized from the liquidation of
any property of any Loan Party, shall be subject to any of the Subordination
Provisions; (iii) the occurrence and continuance of any default or event of
default in respect of any of the Seller Note, the Term Note, the Highbridge Note
or any additional Subordinated Indebtedness; or (iv) the occurrence of any
breach of any Subordination Agreement.
 
8.02    Remedies Upon Event of Default.  If any Event of Default occurs and is
continuing, the Administrative Agent may, or, at the request of the Required
Lenders shall, take any or all of the following actions:
 
(a)          declare the Commitments of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such Commitments and obligation shall be terminated;
 
(b)          declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Loan Parties;
 
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(c)   require that the Loan Parties Cash Collateralize the L/C Obligations; and
 
(d)          whether or not the maturity of the Obligations shall have been
accelerated pursuant hereto, proceed to protect, enforce and exercise all rights
and remedies of the Credit Parties under this Agreement, any of the other Loan
Documents or applicable Law, including, but not limited to, by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Credit Parties;
 
provided, however, that upon the entry of an order for relief with respect to
any Loan Party or any Subsidiary thereof under the Bankruptcy Code, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate, the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, and the obligation of the Loan
Parties to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the
Administrative Agent or any Lender.
 
No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.
 
8.03    Application of Funds.  After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:
 
First, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting fees, indemnities, Credit Party Expenses and other
amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and the Collateral Agent and amounts payable under Article
III) due and payable to the Administrative Agent and the Collateral Agent, each
in its capacity as such;
 
Second, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting indemnities, Credit Party Expenses, and other amounts
(other than principal, interest and fees) payable to the Lenders and the L/C
Issuer (including fees, charges and disbursements of counsel to the respective
Lenders and the L/C Issuer and amounts payable under Article III), ratably among
them in proportion to the amounts described in this clause Second payable to
them;
 
Third, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, payment to the Swing Line Lender of that portion of the
Obligations constituting accrued and unpaid interest on the Swing Line Loans;
 
Fourth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Committed Loans, L/C Borrowings and other Obligations,
and fees (including Letter of Credit Fees but excluding any Early Termination
Fees), ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Fourth payable to them;
 
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Fifth, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, to payment to the Swing Line Lender of that portion of the
Obligations constituting unpaid principal of the Swing Line Loans;
 
Sixth, to payment of that portion of the Obligations constituting unpaid
principal of the Committed Loans and L/C Borrowings, ratably among the Lenders
and the L/C Issuer in proportion to the respective amounts described in this
clause Sixth held by them;
 
Seventh, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit in proportion to the respective amounts described in
this clause
 
Seventh held by them;
 
Eighth, to payment of all other Obligations (including without limitation the
cash collateralization of unliquidated indemnification obligations as provided
in Section 10.04, but excluding any Other Liabilities), ratably among the Credit
Parties in proportion to the respective amounts described in this clause Eighth
held by them;
 
Ninth, to payment of that portion of the Obligations arising from Cash
Management Services to the extent secured under the Security Documents, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Ninth held by them;
 
Tenth, to payment of all other Obligations arising from Bank Products to the
extent secured under the Security Documents, ratably among the Credit Parties in
proportion to the respective amounts described in this clause Tenth held by
them; and
 
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.
 
Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Seventh above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
 
ARTICLE IX
ADMINISTRATIVE AGENT
 
9.01    Appointment and Authority.
 
(a)          Each of the Lenders and the L/C Issuer hereby irrevocably appoints
Wells Fargo Retail Finance, LLC to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto.  Except as
provided in Section 9.06, the provisions of this Article are solely for the
benefit of the Administrative Agent, the Lenders and the L/C Issuer, and no Loan
Party or any Subsidiary thereof shall have rights as a third party beneficiary
of any of such provisions.
 
(b)          Each of the Lenders (in its capacities as a Lender), Swing Line
Lender and the L/C Issuer hereby irrevocably appoints Wells Fargo Retail
Finance, LLC as Collateral Agent and authorizes the Collateral Agent to act as
the agent of such Lender and the L/C Issuer for purposes of acquiring, holding
and enforcing any and all Liens on Collateral granted by any of the Loan Parties
to secure any of the Obligations, together with such powers and discretion as
are reasonably incidental thereto.  In this connection, the Collateral Agent, as
“collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed
by the Collateral Agent pursuant to Section 9.05 for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents, or for exercising any rights and remedies thereunder at
the direction of the Collateral Agent), shall be entitled to the benefits of all
provisions of this Article IX and Article X (including Section 10.04(c)), as
though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents, as if set forth in full herein with respect
thereto.
 
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9.02    Rights as a Lender.  The Persons serving as the Agents hereunder shall
have the same rights and powers in their capacity as a Lender as any other
Lender and may exercise the same as though they were not the Administrative
Agent or the Collateral Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include
the Person serving as the Administrative Agent or the Collateral Agent hereunder
in its individual capacity.  Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Loan Parties
or any Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent or the Collateral Agent hereunder and without any duty to
account therefor to the Lenders.
 
9.03    Exculpatory Provisions.  The Agents shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the generality of the foregoing, the Agents:
 
(a)          shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
 
(b)          shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent or the Collateral Agent, as applicable, is required to
exercise as directed in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents), provided that no Agent shall be required to take any
action that, in its respective opinion or the opinion of its counsel, may expose
such Agent to liability or that is contrary to any Loan Document or applicable
Law; and
 
(c)          shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Loan Parties or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent, the Collateral Agent or any of its Affiliates in any
capacity.
 
No Agent shall be liable for any action taken or not taken by it (i) with the
Consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as such Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct as determined by a final and non-appealable judgment of a
court of competent jurisdiction.
The Agents shall not be deemed to have knowledge of any Default unless and until
notice describing such Default is given to such Agent by the Loan Parties, a
Lender or the L/C Issuer.  In the event that the Agents obtains such actual
knowledge or receives such a notice, the Agents shall give prompt notice thereof
to each of the other Credit Parties.  Upon the occurrence and during the
continuance of an Event of Default, the Agents shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders.  Unless and until the Agents shall have received such
direction, the Agents may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to any such Default or Event of
Default as it shall deem advisable in the best interest of the Credit
Parties.  In no event shall the Agents be required to comply with any such
directions to the extent that any Agent believes that its compliance with such
directions would be unlawful.
The Agents shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or the creation, perfection or priority
of any Lien purported to be created by the Security Documents, (v) the value or
the sufficiency of any Collateral, or (vi) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Agents.
 
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9.04    Reliance by Agents.
 
Each Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including, but not limited to, any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person.  Each Agent also may rely upon any statement made to it orally or
by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon.  In determining compliance
with any condition hereunder to the making of a Loan, or the issuance of a
Letter of Credit, that by its terms must be fulfilled to the satisfaction of a
Lender or the L/C Issuer, the Administrative Agent may presume that such
condition is satisfactory to such Lender or the L/C Issuer unless the
Administrative Agent shall have received written notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit.  Each Agent may consult with legal counsel (who may be
counsel for any Loan Party), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
 
9.05    Delegation of Duties.  Each Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document by
or through any one or more sub-agents appointed by such Agent.  Each Agent and
any such sub-agent may perform any and all of its duties and exercise its rights
and powers by or through their respective Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub-agent and to the Related
Parties of the Agents and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as such Agent.
 
9.06    Resignation of Agents.  Either Agent may at any time give written notice
of its resignation to the Lenders, the L/C Issuer and the Lead Borrower.  Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Lead Borrower, to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States.  If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent gives notice of its
resignation, then the retiring Agent may on behalf of the Lenders and the L/C
Issuer, appoint a successor Administrative Agent or Collateral Agent, as
applicable, meeting the qualifications set forth above; provided that if the
Administrative Agent or the Collateral Agent shall notify the Lead Borrower and
the Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (1) the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
Collateral held by the Collateral Agent on behalf of the Lenders or the L/C
Issuer under any of the Loan Documents, the retiring Collateral Agent shall
continue to hold such collateral security until such time as a successor
Collateral Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender and the L/C Issuer directly, until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this Section.  Upon the acceptance of a successor’s
appointment as Administrative Agent or Collateral Agent, as applicable,
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Agent, and
the retiring Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this Section).  The fees payable by the Borrowers to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Lead Borrower and such
successor.  After the retiring Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.04 shall continue
in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Administrative Agent
or Collateral Agent hereunder.
 
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Any resignation by Wells Fargo Retail Finance, LLC as Administrative Agent
pursuant to this Section shall also constitute the resignation of Wells Fargo
Retail Finance LLC, as Swing Line Lender and Wells Fargo Bank as L/C
Issuer.  Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder, (a) such successor shall succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing
Line Lender, (b) the retiring L/C Issuer shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents, and (c) the
successor L/C Issuer or Swing Line Lender shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer to
effectively assume the obligations of the retiring L/C Issuer with respect to
such Letters of Credit.
 
9.07    Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and
the L/C Issuer acknowledges that it has, independently and without reliance upon
the Agents or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender and the L/C
Issuer also acknowledges that it will, independently and without reliance upon
the Agents or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder.  Except as provided in Section 9.12,
the Agents shall not have any duty or responsibility to provide any Credit Party
with any other credit or other information concerning the affairs, financial
condition or business of any Loan Party that may come into the possession of the
Agents.
 
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9.08    Administrative Agent May File Proofs of Claim.  In case of the pendency
of any proceeding under any Debtor Relief Laws or any other judicial proceeding
relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Loan Parties) shall be
entitled and empowered, by intervention in such proceeding or otherwise
 
(a)          to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuer, the Administrative Agent and the other Credit Parties (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders, the L/C Issuer, the Administrative Agent, such Credit Parties and
their respective agents and counsel and all other amounts due the Lenders, the
L/C Issuer the Administrative Agent and such Credit Parties under Sections
2.03(i), 2.03(j), 2.09 and 10.04) allowed in such judicial proceeding; and
 
(b)          to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
 
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, if the Administrative Agent shall consent to the making of such payments
directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent
any amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other
amounts due the Administrative Agent under Sections 2.09 and 10.04.
 
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or the L/C Issuer or to
authorize the Administrative Agent to vote in respect of the claim of any Lender
or the L/C Issuer in any such proceeding.
 
9.09    Collateral and Guaranty Matters.  The Credit Parties irrevocably
authorize the Agents, at their option and in their discretion,
 
(a)    to release any Lien on any property granted to or held by the Collateral
Agent under any Loan Document (i) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than contingent indemnification
obligations for which no claim has been asserted) and the expiration or
termination of all Letters of Credit (or upon the Cash Collateralization of all
Letters of Credit in the manner set forth in Section 2.03(g)), (ii) that is sold
or to be sold as part of or in connection with any sale permitted hereunder or
under any other Loan Document, or (iii) if approved, authorized or ratified in
writing by the Required Lenders in accordance with Section 10.01;
 
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(b)          to subordinate any Lien on any property granted to or held by the
Collateral Agent under any Loan Document to the holder of any Lien on such
property that is permitted by the definition of Permitted Encumbrances; and
 
(c)          to release any Guarantor from its obligations under the Facility
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.
 
Upon request by any Agent at any time, the Required Lenders will confirm in
writing such Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under the Facility Guaranty pursuant to this Section 9.09.  In each
case as specified in this Section 9.09, the Agents will, at the Loan Parties’
expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted under the Security
Documents or to subordinate its interest in such item, or to release such
Guarantor from its obligations under the Facility Guaranty, in each case in
accordance with the terms of the Loan Documents and this Section 9.09.
 
9.10    Notice of Transfer.
 
The Agents may deem and treat a Lender party to this Agreement as the owner of
such Lender’s portion of the Obligations for all purposes, unless and until, and
except to the extent, an Assignment and Acceptance shall have become effective
as set forth in Section 10.06.
 
9.11    Reports and Financial Statements.
 
By signing this Agreement, each Lender:
 
(a)          agrees to furnish the Administrative Agent on the first day of each
month with a summary of all Other Liabilities due or to become due to such
Lender. In connection with any distributions to be made hereunder, the
Administrative Agent shall be entitled to assume that no amounts are due to any
Lender on account of Other Liabilities unless the Administrative Agent has
received written notice thereof from such Lender;
 
(b)          is deemed to have requested that the Administrative Agent furnish
such Lender, promptly after they become available, copies of all financial
statements required to be delivered by the Lead Borrower hereunder and all
commercial finance examinations and appraisals of the Collateral received by the
Agents (collectively, the “Reports”);
 
(c)          expressly agrees and acknowledges that the Administrative Agent
makes no representation or warranty as to the accuracy of the Reports, and shall
not be liable for any information contained in any Report;
 
(d)          expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agents or any other party
performing any audit or examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties'
books and records, as well as on representations of the Loan Parties' personnel;
 
(e)          agrees to keep all Reports confidential in accordance with the
provisions of Section 10.07 hereof; and
 
(f)          without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agents and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any Credit Extensions that the indemnifying Lender has
made or may make to the Borrowers, or the indemnifying Lender's participation
in, or the indemnifying Lender's purchase of, a Loan or Loans; and (ii) to pay
and protect, and indemnify, defend, and hold the Agents and any such other
Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including attorney
costs) incurred by the Agents and any such other Lender preparing a Report as
the direct or indirect result of any third parties who might obtain all or part
of any Report through the indemnifying Lender.
 
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9.12    Agency for Perfection.
 
Each Lender hereby appoints each other Lender as agent for the purpose of
perfecting Liens for the benefit of the Agents and the Lenders, in assets which,
in accordance with Article 9 of the UCC or any other applicable Law of the
United States can be perfected only by possession.  Should any Lender (other
than the Agents) obtain possession of any such Collateral, such Lender shall
notify the Agents thereof, and, promptly upon the Collateral Agent's request
therefor shall deliver such Collateral to the Collateral Agent or otherwise deal
with such Collateral in accordance with the Collateral Agent's instructions.
 
9.13    Indemnification of Agents.  The Lenders agree to indemnify the Agents
(to the extent not reimbursed by the Loan Parties and without limiting the
obligations of Loan Parties hereunder), ratably according to their Applicable
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against any Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted to be taken
by any Agent in connection therewith; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent’s gross negligence or willful misconduct as determined by a final and
nonappealable judgment of a court of competent jurisdiction.
 
9.14    Relation among Lenders.  The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agents) authorized to act for, any
other Lender.
 
9.15    Defaulting Lender.  
 
(a)          If for any reason any Lender shall fail or refuse to abide by its
obligations under this Agreement, including without limitation its obligation to
make available to Administrative Agent its Applicable Percentage of any Loans,
expenses or setoff or purchase its Applicable Percentage of a participation
interest in the Swing Line Loans or L/C Borrowings and such failure is not cured
within two (2) days of receipt from the Administrative Agent of written notice
thereof, then, in addition to the rights and remedies that may be available to
the other Credit Parties, the Loan Parties or any other party at law or in
equity, and not at limitation thereof, (i) such Defaulting Lender’s right to
participate in the administration of, or decision-making rights related to, the
Obligations, this Agreement or the other Loan Documents shall be suspended
during the pendency of such failure or refusal, and (ii) a Defaulting Lender
shall be deemed to have assigned any and all payments due to it from the Loan
Parties, whether on account of outstanding Loans, interest, fees or otherwise,
to the remaining non-Defaulting Lenders for application to, and reduction of,
their proportionate shares of all outstanding Obligations until, as a result of
application of such assigned payments the Lenders’ respective Applicable
Percentages of all outstanding Obligations shall have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.  The Defaulting Lender’s decision-making
and participation rights and rights to payments as set forth in clauses (i) and
(ii) hereinabove shall be restored only upon the payment by the Defaulting
Lender of its Applicable Percentage of any Obligations, any participation
obligation, or expenses as to which it is delinquent, together with interest
thereon at the Default Rate from the date when originally due until the date
upon which any such amounts are actually paid.
 
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(b)          The non-Defaulting Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to cause the
termination and assignment, without any further action by the Defaulting Lender
for no cash consideration (pro rata, based on the respective Commitments of
those Lenders electing to exercise such right), of the Defaulting Lender’s
Commitment to fund future Loans.  Upon any such purchase of the Applicable
Percentage of any Defaulting Lender, the Defaulting Lender’s share in future
Credit Extensions and its rights under the Loan Documents with respect thereto
shall terminate on the date of purchase, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance.
 
(c)          Each Defaulting Lender shall indemnify the Administrative Agent and
each non-Defaulting Lender from and against any and all loss, damage or
expenses, including but not limited to reasonable attorneys’ fees and funds
advanced by the Administrative Agent or by any non-Defaulting Lender, on account
of a Defaulting Lender’s failure to timely fund its Applicable Percentage of a
Loan or to otherwise perform its obligations under the Loan Documents.
 
ARTICLE X
MISCELLANEOUS
 
10.01    Amendments, Etc.  No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no Consent to any departure by any
Loan Party therefrom, shall be effective unless in writing signed by the
Administrative Agent, with the Consent of the Required Lenders, and the Lead
Borrower or the applicable Loan Party, as the case may be, and acknowledged by
the Administrative Agent, and each such waiver or Consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall:
 
(a)          extend or, increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written Consent of
such Lender;
 
(b)          postpone any date fixed by this Agreement or any other Loan
Document for (i) any payment or mandatory prepayment of principal, interest,
fees or other amounts due to the Lenders (or any of them) hereunder or under any
of the other Loan Documents without the written Consent of each Lender entitled
to such payment, or (ii) any scheduled or mandatory reduction of the Aggregate
Commitments hereunder or under any other Loan Document without the written
Consent of each Lender;
 
(c)          reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso
to this Section 10.01) any fees or other amounts payable hereunder or under any
other Loan Document, without the written Consent of each Lender entitled to such
amount; provided, however, that only the Consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrowers to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined
term used therein);
 
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(d)          change Section 2.13 or Section 8.03 in a manner that would alter
the pro rata sharing of payments required thereby without the written Consent of
each Lender;
 
(e)          change any provision of this Section or the definition of “Required
Lenders”, or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
Consent of each Lender;
 
(f)          except as expressly permitted hereunder or under any other Loan
Document, release, or limit the liability of, any Loan Party without the written
Consent of each Lender;
 
(g)          except for Permitted Dispositions, release all or substantially all
of the Collateral from the Liens of the Security Documents without the written
Consent of each Lender;
 
(h)          increase the Aggregate Commitments without the written Consent of
each Lender;
 
(i)          change the definition of the term “Borrowing Base” or any component
definition thereof if as a result thereof the amounts available to be borrowed
by the Borrowers would be increased without the written Consent of each Lender;
provided that the foregoing shall not limit the discretion of the Administrative
Agent to change, establish or eliminate any Reserves; and
 
(j)          except as expressly permitted herein or in any other Loan Document,
subordinate the Obligations hereunder or the Liens granted hereunder or under
the other Loan Documents, to any other Indebtedness or Lien, as the case may be
without the written Consent of each Lender;
 
and, provided further, that (i) no amendment, waiver or Consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or Consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver
or Consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and (iv)
no amendment, waiver or Consent shall, unless in writing and signed by the
Collateral Agent in addition to the Lenders required above, affect the rights or
duties of the Collateral Agent under this Agreement or any other Loan
Document.  Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or Consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender.
 
If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the Consent of each Lender and that has been approved by the Required
Lenders, the Lead Borrower may replace such Non-Consenting Lender in accordance
with Section 10.13; provided that such amendment, waiver, consent or release can
be effected as a result of the assignment contemplated by such Section (together
with all other such assignments required by the Lead Borrower to be made
pursuant to this paragraph).
 
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10.02    Notices, Financial Statements and Other Documents; Effectiveness;
Electronic Communications.
 
(a)          Notices, Financial Statements and Other Documents
Generally.  Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection (b)
below), all notices, financial statements and other documents and communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:
 
(i)           if to the Loan Parties, the Agents or the L/C Issuer or the Swing
Line Lender, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 10.02; and
 
(ii)           if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its Administrative
Questionnaire.
Notices, financial statements and other documents sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received; notices, financial statements and other documents
sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient).  Notices, financial statements and other documents delivered through
electronic communications to the extent provided in subsection (b) below, shall
be effective as provided in such subsection (b).
 
(b)          Electronic Communications.  Notices, financial statements and other
documents  and communications to the Lenders and the L/C Issuer hereunder may be
delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C
Issuer, as applicable, has notified the Administrative Agent that it is
incapable of receiving notices under such Article by electronic
communication.  The Administrative Agent or the Lead Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.
 
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
 
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(c)          Change of Address, Etc.  Each of the Loan Parties, the Agents and
the L/C Issuer and the Swing Line Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
other parties hereto.  Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
Lead Borrower, the Agents and the L/C Issuer and the Swing Line Lender.  In
addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.
 
(d)          Reliance by Agents, L/C Issuer and Lenders.  The Agents, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of the Loan Parties even if (i) such notices
were not made in a manner specified herein, were incomplete or were not preceded
or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation
thereof.  The Loan Parties shall indemnify the Agents, the L/C Issuer, each
Lender and the Related Parties of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Loan Parties.  All telephonic notices
to and other telephonic communications with the Agents may be recorded by the
Agents, and each of the parties hereto hereby consents to such recording.
 
10.03    No Waiver; Cumulative Remedies.  No failure by any Credit Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.  Without limiting the generality of the foregoing, the making
of a Loan or issuance of a Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether any Credit Party may have had notice or
knowledge of such Default at the time.
 
10.04    Expenses; Indemnity; Damage Waiver.
 
(a)          Costs and Expenses.  The Borrowers shall pay on demand all Credit
Party Expenses.
 
(b)          Indemnification by the Loan Parties.  The Loan Parties shall
indemnify the Agents (and any sub-agent thereof), each other Credit Party, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless (on an after
tax basis) from, any and all losses, claims, causes of action, damages,
liabilities, settlement payments, costs, and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee), incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by any
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Agents (and any sub-agents thereof) and their
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Credit Party to, a Blocked Account Bank or other Person which has entered into a
control agreement with any Credit Party hereunder, or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Borrower or any other Loan Party or any of
the Loan Parties’ directors, shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
 
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(c)          Reimbursement by Lenders.  Without limiting their obligations under
Section 9.13 hereof, to the extent that the Loan Parties for any reason fail to
indefeasibly pay any amount required under subsection (a) or (b) of this Section
to be paid by it, each Lender severally agrees to pay to the Agents (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Agents (or any such sub-agent) or the L/C Issuer in its capacity as
such, or against any Related Party of any of the foregoing acting for the Agents
(or any such sub-agent) or L/C Issuer in connection with such capacity.  The
obligations of the Lenders under this subsection (c) are subject to the
provisions of Section 2.12(d).
 
(d)          Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by applicable Law, the Loan Parties shall not assert, and hereby
waive, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.
 
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(e)          Payments.  All amounts due under this Section shall be payable on
demand therefor.
 
(f)          Survival.  The agreements in this Section shall survive the
resignation of any Agent and the L/C Issuer, the assignment of any Commitment or
Loan by any Lender, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.
 
10.05    Payments Set Aside.  To the extent that any payment by or on behalf of
the Loan Parties is made to any Credit Party, or any Credit Party exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by such
Credit Party in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Laws or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to
the Agents upon demand its Applicable Percentage (without duplication) of any
amount so recovered from or repaid by the Agents, plus interest thereon from the
date of such demand to the date such payment is made at a rate per annum equal
to the Federal Funds Rate from time to time in effect.  The obligations of the
Lenders and the L/C Issuer under clause (b) of the preceding sentence shall
survive the payment in full of the Obligations and the termination of this
Agreement.
 
10.06    Successors and Assigns.
 
(a)    Successors and Assigns Generally.  The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder or
under any other Loan Document without the prior written Consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of Section 10.06(b), (ii) by way of
participation in accordance with the provisions of Section 10.06(d), or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of Section 10.06(f) (and any other attempted assignment or transfer by any party
hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the Credit
Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
 
(b)    Assignments by Lenders.  Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans
(including for purposes of this Section 10.06(b), participations in L/C
Obligations and in Swing Line Loans) at the time owing to it); provided that any
such assignment shall be subject to the following conditions:
 
(i)           Minimum Amounts.
 
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(A)           in the case of an assignment of the entire remaining amount of the
assigning Lender's Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, no minimum amount need be assigned; and
 
(B)           in any case not described in subsection (b)(i)(A)of this Section,
the aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
the “Effective Date” is specified in the Assignment and Assumption, as of the
“Effective Date”, shall not be less than $500,000 unless each of the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing, the Lead Borrower otherwise consents (each such consent not
to be unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met;
 
(ii)           Proportionate Amounts.  Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to the Swing Line
Lender’s rights and obligations in respect of Swing Line Loans;
 
(iii)           Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this Section
and, in addition:
 
(A)           the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect
of any Commitment if such assignment is to a Person that is not a Lender, an
Affiliate of such Lender or an Approved Fund with respect to such Lender;
 
(B)           the consent of the L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding); and
 
(C)           the consent of the Swing Line Lender (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment in
respect of the assignment of any Commitment.
 
(iv)           Assignment and Assumption.  The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500, provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.
 
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment.  Upon request, the Borrowers (at their expense) shall execute and
deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Section 10.06(d).
 
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(c)    Register.  The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive, absent manifest error, and the Loan Parties,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Lead Borrower and any Lender
at any reasonable time and from time to time upon reasonable prior notice.  
 
(d)    Participations.  Any Lender may at any time, without the consent of, or
notice to, the Loan Parties or the Administrative Agent, sell participations to
any Person (other than a natural person or the Loan Parties or any of the Loan
Parties’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion
of such Lender's rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Loan Parties, the
Agents, the Lenders and the L/C Issuer shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.  Any Participant shall agree in writing to
comply with all confidentiality obligations set forth in Section 10.07 as if
such Participant was a Lender hereunder.
 
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Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any  provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant.  Subject to subsection (e) of this
Section, the Loan Parties agree that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Section
10.06(b).  To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender.
 
(e)    Limitations upon Participant Rights.  A Participant shall not be entitled
to receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Lead Borrower's prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of
the participation sold to such Participant and such Participant agrees, for the
benefit of the Loan Parties, to comply with Section 3.01(e) as though it were a
Lender.
 
(f)    Certain Pledges.  Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
 
(g)    Electronic Execution of Assignments.  The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable Law, including the Federal Electronic Signatures in Global and
National Commerce Act or any other similar state laws based on the Uniform
Electronic Transactions Act.
 
(h)    Resignation as L/C Issuer or Swing Line Lender after
Assignment.  Notwithstanding anything to the contrary contained herein, if at
any time Wells Fargo Retail Finance, LLC assigns all of its Commitment and Loans
pursuant to subsection (b) above, (i) Wells Fargo Bank may upon thirty (30)
days’ notice to the Lead Borrower and the Lenders, resign as L/C Issuer and/or
(ii) Wells Fargo Retail Finance, LLC  upon 30 days’ notice to the Lead Borrower,
resign as Swing Line Lender.  In the event of any such resignation as L/C Issuer
or Swing Line Lender, the Lead Borrower shall be entitled to appoint from among
the Lenders a successor L/C Issuer or Swing Line Lender  hereunder; provided,
however, that no failure by the Lead Borrower to appoint any such successor
shall affect the resignation of Wells Fargo Bank as L/C Issuer or Wells Fargo
Retail Finance, LLC as Swing Line Lender, as the case may be.  If Wells Fargo
Bank resigns as L/C Issuer, it shall retain all the rights, powers, privileges
and duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the Lenders
to make Base Rate Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.03(c)). If Wells Fargo Retail Finance, LLC resigns as
Swing Line Lender, it shall retain all the rights of the Swing Line Lender
provided for hereunder with respect to Swing Line Loans made by it and
outstanding as of the effective date of such resignation, including the right to
require the Lenders to make Base Rate Loans or fund risk participations in
outstanding Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment
of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and
(b) the successor L/C Issuer shall issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession or
make other arrangements satisfactory to Wells Fargo Bank to effectively assume
the obligations of Wells Fargo Bank with respect to such Letters of Credit.
 
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10.07    Treatment of Certain Information; Confidentiality.  Each of the parties
hereto agree to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its and its Affiliates’ respective partners, directors, officers, employees,
agents, funding sources, attorneys, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential on the same terms as provided herein), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable Laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) by each of the Credit Parties subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) by
each of the Credit Parties with the consent of the Lead Borrower, (h) by the
Loan Parties with the prior written consent of the Administrative Agent (except
in the case of disclosure to any bank, finance company or other lender) or (i)
to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to any Credit Party
or any of their respective Affiliates on a non-confidential basis from a source
other than the Loan Parties; provided, however, that in the case of any
disclosure pursuant to clause (c) above, the applicable party which is required
to disclose confidential Information agrees to give the other party, to the
extent practicable and not otherwise prohibited by any such Law, regulation,
subpoena, order or decree of a court or similar legal process, prior notice of
such disclosure (provided, however, no disclosing party shall incur any
liability to any other party or other Person for failing to provide such other
party or Person with any such prior notice); provided, further, however, that
the disclosing party shall disclose only that portion of the confidential
Information as is required to be disclosed, in its sole judgment, pursuant to
any such Law, regulation, subpoena, order or decree of a court or similar legal
process.  Any such required disclosure shall not, in and of itself, change the
status of the disclosed information as Information under the terms of this
Agreement.
For purposes of this Section, “Information” means (i) with respect to the Credit
Parties, all information received from the Loan Parties or any Subsidiary
thereof relating to the Loan Parties or any Subsidiary thereof or their
respective businesses, other than any such information that is available to any
Credit Party on a non-confidential basis prior to disclosure by the Loan Parties
or any Subsidiary thereof and (ii) with respect to the Loan Parties, all
information received from the Credit Parties or an Subsidiary thereof relating
to the Credit Parties or any Subsidiary thereof or their respective businesses,
other than any such information that is available to any Loan Party on a
non-confidential basis prior to disclosure by the Credit Parties or any
Subsidiary thereof.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
 
Each of the parties hereof acknowledge that (a) the Information may include
material non-public information concerning the Loan Parties or a Subsidiary, or
the Credit Parties or a Subsidiary, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law, including Federal and state securities Laws.
 
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10.08    Right of Setoff.  If an Event of Default shall have occurred and be
continuing or if any Lender shall have been served with a trustee process or
similar attachment relating to property of a Loan Party, each Lender, the L/C
Issuer and each of their respective Affiliates is hereby authorized at any time
and from time to time, after obtaining the prior written consent of the
Administrative Agent or the Required Lenders, to the fullest extent permitted by
applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender, the
L/C Issuer or any such Affiliate to or for the credit or the account of the
Borrowers or any other Loan Party against any and all of the Obligations now or
hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer, regardless of the adequacy of the Collateral, and
irrespective of whether or not such Lender or the L/C Issuer shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of the Borrowers or such Loan Party may be contingent or unmatured
or are owed to a branch or office of such Lender or the L/C Issuer different
from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender, the L/C Issuer and their respective
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have.  Each Lender and the L/C Issuer (through the
Administrative Agent) agrees to notify the Lead Borrower and the Administrative
Agent promptly after any such setoff and application, provided that the failure
to give such notice shall not affect the validity of such setoff and
application.
 
10.09    Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent
or any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrowers.  In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.
 
10.10    Counterparts; Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be as
effective as delivery of a manually executed counterpart of this Agreement.
 
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10.11    Survival.  All representations and warranties made hereunder and in any
other Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof.  Such representations and warranties have been or will be relied
upon by the Credit Parties, regardless of any investigation made by any Credit
Party or on their behalf and notwithstanding that any Credit Party may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.  Further, the provisions of Sections 3.01, 3.04, 3.05
and 10.04 and Article IX shall survive and remain in full force and effect
regardless of the repayment of the Obligations, the expiration or termination of
the Letters of Credit and the Commitments or the termination of this Agreement
or any provision hereof.  In connection with the termination of this Agreement
and the release and termination of the security interests in the Collateral, the
Agents may require such indemnities and collateral security as they shall
reasonably deem necessary or appropriate to protect the Credit Parties against
(x) loss on account of credits previously applied to the Obligations that may
subsequently be reversed or revoked, and (y) any obligations that may thereafter
arise with respect to the Other Liabilities.
 
10.12    Severability.  If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
10.13    Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if the Borrowers are required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 3.01, or if any Lender is a Defaulting Lender or a Non-Consenting
Lender, then the Borrowers may, at their sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 10.06), all of its interests,
rights and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:
 
(a)          the Borrowers shall have paid to the Administrative Agent the
assignment fee specified in Section 10.06(b);
 
(b)          such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrowers (in the case of all other amounts);
 
(c)          in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and
 
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(d)          such assignment does not conflict with applicable Laws.
 
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.
 
10.14    Governing Law; Jurisdiction; Etc.
 
(a)    GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
 
(b)    SUBMISSION TO JURISDICTION.  EACH LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE SUPERIOR COURT OF NORFOLK COUNTY, MASSACHUSETTS AND OF THE
UNITED STATES FEDERAL COURTS LOCATED IN THE DISTRICT OF MASSACHUSETTS, BOSTON,
MASSACHUSETTS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE LOAN PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
 
(c)    WAIVER OF VENUE.  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE LOAN PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
 
(d)    SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.
 
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(e)    ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION
COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
SOLELY IN A COURT OF THE COMMONWEALTH OF MASSACHUSETTS SITTING IN THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AS THE
ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.
 
10.15    Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
10.16    No Advisory or Fiduciary Responsibility.  In connection with all
aspects of each transaction contemplated hereby, the Loan Parties each
acknowledge and agree that: (i) the credit facility provided for hereunder and
any related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the Loan
Parties, on the one hand, and the Credit Parties, on the other hand, and each of
the Loan Parties is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, each Credit Party is and has been acting solely as a principal
and is not the financial advisor, agent or fiduciary, for the Loan Parties or
any of their respective Affiliates, stockholders, creditors or employees or any
other Person; (iii) none of the Credit Parties has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Loan Parties with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether any of the Credit
Parties has advised or is currently advising any Loan Party or any of its
Affiliates on other matters) and none of the Credit Parties has any obligation
to any Loan Party or any of its Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; (iv) the Credit Parties and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Loan Parties and their respective
Affiliates, and none of the Credit Parties has any obligation to disclose any of
such interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Credit Parties have not provided and will not provide any legal,
accounting, regulatory or tax advice with respect to any of the transactions
contemplated hereby (including any amendment, waiver or other modification
hereof or of any other Loan Document) and each of the Loan Parties has consulted
its own legal, accounting, regulatory and tax advisors to the extent it has
deemed appropriate.  Each of the Loan Parties hereby waives and releases, to the
fullest extent permitted by law, any claims that it may have against each of the
Credit Parties with respect to any breach or alleged breach of agency or
fiduciary duty.
 
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10.17    USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Loan Parties that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (as amended, the “Act”), it is required to obtain, verify
and record information that identifies each Loan Party, which information
includes the name and address of each Loan Party and other information that will
allow such Lender or the Administrative Agent, as applicable, to identify each
Loan Party in accordance with the Act.  Each Loan Party is in compliance, in all
material respects, with the Patriot Act.  No part of the proceeds of the Loans
will be used by the Loan Parties, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
 
10.18    Foreign Asset Control Regulations.  Neither of the advance of the Loans
nor the use of the proceeds of any thereof will violate the Trading With the
Enemy Act (50 U.S.C. § 1 et seq., as amended) (the "Trading With the Enemy Act")
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) (the "Foreign Assets
Control Regulations") or any enabling legislation or executive order relating
thereto (which for the avoidance of doubt shall include, but shall not be
limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)) (the "Executive Order") and (b) the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).  Furthermore,
none of the Borrowers or their Affiliates (a) is or will become a "blocked
person" as described in the Executive Order, the Trading With the Enemy Act or
the Foreign Assets Control Regulations or (b) engages or will engage in any
dealings or transactions, or be otherwise associated, with any such "blocked
person" or in any manner violative of any such order.
 
10.19    Time of the Essence.  Time is of the essence of the Loan Documents.
 
10.20    Press Releases.
 
(a)           Each Credit Party executing this Agreement agrees that neither it
nor its Affiliates will in the future issue any press releases or other public
disclosure using the name of Administrative Agent or its Affiliates or referring
to this Agreement or the other Loan Documents without at least two (2) Business
Days’ prior notice to Administrative Agent and without the prior written consent
of Administrative Agent unless (and only to the extent that) such Credit Party
or Affiliate is required to do so under applicable Law and then, in any event,
such Credit Party or Affiliate will consult with Administrative Agent before
issuing such press release or other public disclosure.
 
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(b)           Each Loan Party consents to the publication by Administrative
Agent or any Lender of advertising material relating to the financing
transactions contemplated by this Agreement using any Loan Party’s name, product
photographs, logo or trademark.  Administrative Agent or such Lender shall
provide a draft reasonably in advance of any advertising material to the Lead
Borrower for review and comment prior to the publication
thereof.  Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
 
10.21    Additional Waivers.
 
(a)    The Obligations are the joint and several obligation of each Loan Party.
To the fullest extent permitted by applicable Law, the obligations of each Loan
Party shall not be affected by (i) the failure of any Credit Party to assert any
claim or demand or to enforce or exercise any right or remedy against any other
Loan Party under the provisions of this Agreement, any other Loan Document or
otherwise, (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement or any other Loan
Document, or (iii) the failure to perfect any security interest in, or the
release of, any of the Collateral or other security held by or on behalf of the
Collateral Agent or any other Credit Party.
 
(b)    The obligations of each Loan Party  shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations after the termination of
the Commitments), including any claim of waiver, release, surrender, alteration
or compromise of any of the Obligations, and shall not be subject to any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of any of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Loan Party hereunder shall not be discharged or impaired or otherwise
affected by the failure of any Agent or any other Credit Party to assert any
claim or demand or to enforce any remedy under this Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, any default, failure or delay, willful or otherwise, in the
performance of any of the Obligations, or by any other act or omission that may
or might in any manner or to any extent vary the risk of any Loan Party or that
would otherwise operate as a discharge of any Loan Party as a matter of law or
equity (other than the indefeasible payment in full in cash of all the
Obligations after the termination of the Commitments).
 
(c)    To the fullest extent permitted by applicable Law, each Loan Party waives
any defense based on or arising out of any defense of any other Loan Party or
the unenforceability of the Obligations or any part thereof from any cause, or
the cessation from any cause of the liability of any other Loan Party, other
than the indefeasible payment in full in cash of all the Obligations and the
termination of the Commitments. The Collateral Agent and the other Credit
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or non-judicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with any other Loan Party, or exercise
any other right or remedy available to them against any other Loan Party,
without affecting or impairing in any way the liability of any Loan Party
hereunder except to the extent that all the Obligations have been indefeasibly
paid in full in cash and the Commitments have been terminated.  Each Loan Party
waives any defense arising out of any such election even though such election
operates, pursuant to applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party against
any other Loan Party, as the case may be, or any security.
 
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(d)    Each Borrower is obligated to repay the Obligations as joint and several
obligors under this Agreement.  Upon payment by any Loan Party of any
Obligations, all rights of such Loan Party against any other Loan Party arising
as a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations and the termination of the Commitments. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior indefeasible payment in
full of the Obligations and no Loan Party will demand, sue for or otherwise
attempt to collect any such indebtedness.  If any amount shall erroneously be
paid to any Loan Party on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Credit
Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement and the other Loan
Documents.  Subject to the foregoing, to the extent that any Borrower shall,
under this Agreement as a joint and several obligor, repay any of the
Obligations constituting Revolving Loans made to another Borrower hereunder or
other Obligations incurred directly and primarily by any other Borrower (an
"Accommodation Payment"), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower's Allocable Amount and the denominator of which
is the sum of the Allocable Amounts of all of the Borrowers.  As of any date of
determination, the "Allocable Amount" of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Borrower hereunder without (a) rendering such Borrower "insolvent"
within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (b) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.
 
10.22    Amendment and Restatement.
 
Effective as of the date hereof, each Borrower hereby agrees to become a
borrower, debtor and obligor under, and to bind itself to, the Existing Loan
Documents to which the Borrowers are bound generally (in each case, as modified
and restated hereby), and, in such capacity, to assume and bind itself to all
Obligations of the Borrowers thereunder (as modified and restated hereby).  The
terms, conditions, agreements, covenants, representations and warranties set
forth in and relating to the Existing Credit Agreement are hereby amended,
restated, replaced and superseded in their entirety (except as provided in the
preamble to this Agreement) by the terms, conditions, agreements, covenants,
representations and warranties set forth in this Agreement.  This Agreement does
not extinguish the obligations, including, without limitation, obligations for
the payment of money, outstanding under the Existing Credit Agreement or
discharge or release the obligations or the liens or priority of any mortgage,
pledge, security agreement or any other security therefor, which shall continue,
as modified and restated hereby, without interruption and in full force and
effect.  Nothing herein contained shall be construed as a substitution or
novation of the obligations outstanding under the Existing Credit Agreement or
instruments securing the same, which shall remain in full force and effect,
except in each case as amended, restated, replaced and superseded hereby or by
instruments executed in connection herewith.  Nothing expressed or implied in
this Agreement shall be construed as a release or other discharge of any
Borrower or guarantor from any of their obligations or liabilities under the
Existing Loan Documents or any of the security agreements, pledge agreements,
mortgages, guaranties or other loan documents executed in connection therewith,
except in each case as amended, restated, replaced and superseded hereby or by
instruments executed in connection herewith.  Each Borrower hereby confirms and
agrees that (i) the Existing Credit Agreement and each Existing Loan Document to
which it is a party is, and shall continue to be, in full force and effect and
is hereby amended, restated, replaced and superseded hereby or by instruments
executed in connection herewith, except that on and after the date hereof all
references in any such Existing Loan Document to “the Agreement”, “thereto”,
“thereof” “thereunder” or words of like import referring to the Existing Credit
Agreement shall mean the Existing Credit Agreement as amended, restated,
replaced and superseded by this Agreement; and (ii) to the extent that any such
Existing Loan Document purports to assign or pledge to the Lender a security
interest in or lien on, any collateral as security for the Liability (as defined
in the Existing Credit Agreement) of any Borrower from time to time existing in
respect of the Existing Credit Agreement, such pledge, assignment or grant of
the security interest or lien is hereby ratified and confirmed in all respects
in favor of the Administrative Agent, which shall remain in full force and
effect, as amended, restated, replaced and superseded hereby or by instruments
executed in connection herewith.
 
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10.23    No Strict Construction.
 
The parties hereto have participated jointly in the negotiation and drafting of
this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
 
10.24    Attachments.
 
The exhibits, schedules and annexes attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
 
Borrowers:
 
iPARTY RETAIL STORES CORP.
as Lead Borrower and a Borrower

By: /s/ SAL
PERISANO                                                                           
Name: Sal Perisano
Title: Chief Executive Officer

iPARTY CORP.
as a Borrower

By: /s/ SAL
PERISANO                                                                           
Name: Sal Perisano
Title: Chairman and Chief Executive Officer

 
Signature Page of Second Amended and Restated Credit Agreement

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Agents:
 
WELLS FARGO RETAIL FINANCE, LLC,
 
as Administrative Agent and Collateral Agent
 
By:  /s/ MICHELE
AYOU                                                                           
Name:   Michele Ayou
Title:     Vice President

 
Signature Page of Second Amended and Restated Credit Agreement

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Lenders:
 
WELLS FARGO RETAIL FINANCE, LLC,
as Lender and Swing Line Lender

By:  /s/ MICHELE
AYOU                                                                           
Name:   Michele Ayou
Title:     Vice President

 
 
Signature Page of Second Amended and Restated Credit Agreement