Exhibit 10.1
 
CREDIT AGREEMENT
 
by and among
 
PORTRAIT CORPORATION OF AMERICA INC.
 
as Parent Guarantor,
 
PCA LLC
 
and
 
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
 
as Borrowers,
 
THE LENDERS THAT ARE SIGNATORIES HERETO
 
as the Lenders,
 
and
 
WELLS FARGO FOOTHILL, INC.
 
as the Arranger and Administrative Agent
 
Dated as of July 15, 2005

 

 

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CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of July 15, 2005,
by and among the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and permitted assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”),
and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, “Agent”), PCA LLC, a Delaware limited
liability company (“PCA”), each of PCA’s Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with PCA, are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”) and PORTRAIT
CORPORATION OF AMERICA, INC., a Delaware corporation (“Parent Guarantor”).
 
The parties agree as follows:
 
1.  DEFINITIONS AND CONSTRUCTION.
 
1.1  Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.
 
1.2  Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
“financial statements” shall include the notes and schedules thereto. Any
reference to any Person in respect of a financial covenant or a related
definition shall be understood to mean such Person and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise. If at any time
any change in GAAP would affect the computation of any financial covenant set
forth in any Loan Document, and either Administrative Borrower or the Required
Lenders shall so request, Agent, the Lenders and the Borrowers shall negotiate
in good faith to amend such financial covenant to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided that, until so amended, (i) such financial covenant shall
continue to be computed in accordance with GAAP as in effect prior to such
change and (ii) the Credit Parties shall provide to Agent financial statements
and other documents required or requested under this Agreement setting forth a
reconciliation between calculations of such financial covenant made before and
after giving effect to such change in GAAP.
 
1.3  Code. Any terms used in this Agreement that are defined in the Code shall
be construed and defined as set forth in the Code unless otherwise defined
herein, provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.
 
1.4  Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,”“herein,”“hereby,”“hereunder,” and similar terms in this Agreement or
any other Loan Document refer to this Agreement or such other Loan Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations and other than
any Bank Product Obligations that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding and are not required to be repaid or
cash collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person’s successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness, in all material respects, of the information contained
therein.
 
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1.5  Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.
 
2.  LOAN AND TERMS OF PAYMENT.
 
2.1  Revolver Advances.
 
(a)  Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Lender with a Commitment agrees (severally, not jointly
or jointly and severally) to make advances (“Advances”) to Borrowers in an
amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of
an amount equal to the lesser of (i) the Maximum Revolver Amount less the sum of
(A) the Letter of Credit Usage, (B) the aggregate outstanding principal balance
of the Advances, and (C) all reserves established pursuant to Section 2.1(b),
and (ii) the Loan Limit less the sum of (A) the Letter of Credit Usage, (B) the
aggregate outstanding principal balance of the Advances, (C) all reserves
established pursuant to Section 2.1(b) and (D) the LC Facility Letter of Credit
Usage.
 
(b)  Anything to the contrary in this Section 2.1 notwithstanding, Agent shall
have the right to establish reserves in such amounts, and with respect to such
matters, as Agent in its Permitted Discretion shall deem necessary or
appropriate, against Availability, including reserves (i) with respect to
(A) sums that any Credit Party is required to pay by any Section of this
Agreement or any other Loan Document (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay, and (B) amounts owing by any Credit Party or
its Subsidiaries to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than a Permitted Lien), which Lien or trust,
in the Permitted Discretion of Agent likely would have a priority superior to
the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral, and (ii) after the occurrence and
during the continuance of an Event of Default, with respect to such other
matters as Agent in its Permitted Discretion shall deem necessary or
appropriate.
 
(c)  Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement.
 
2.2  LC Facility Letters of Credit.
 
(a)  Subject to the terms and conditions of this Agreement, the Issuing Lender
agrees to issue letters of credit for the account of Borrowers (each, an “LC
Facility L/C”) or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an “LC Facility L/C
Undertaking”) with respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo)
for the account of Borrowers to the extent such LC Facility Letters of Credit
are issued for a Permitted Use. Each request for the issuance of an LC Facility
Letter of Credit or the amendment, renewal, or extension of any outstanding LC
Facility Letter of Credit shall be made in writing by an Authorized Person and
delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be
in form and substance satisfactory to the Issuing Lender in its Permitted
Discretion and shall specify (i) the amount of such LC Facility Letter of
Credit, (ii) the date of issuance, amendment, renewal, or extension of such LC
Facility Letter of Credit, (iii) the expiration date of such LC Facility Letter
of Credit, (iv) the name and address of the beneficiary thereof (or the
beneficiary of the Underlying Letter of Credit, as applicable), and (v) such
other information (including, in the case of an amendment, renewal, or
extension, identification of the outstanding LC Facility Letter of Credit to be
so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such LC Facility Letter of Credit. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an LC Facility
L/C Undertaking. The Issuing Lender shall have no obligation to issue a LC
Facility Letter of Credit if any of the following would result after giving
effect to the issuance of such requested LC Facility Letter of Credit:
 
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(i)  the LC Facility Letter of Credit Usage would exceed $20,000,000,
 
(ii)  the LC Facility Letter of Credit Usage would exceed the Maximum Credit
Amount less the sum of (A) the outstanding amount of Advances, (B) the Letter of
Credit Usage and (C) all reserves established pursuant to Section 2.1(b), or
 
(iii)  the LC Facility Letter of Credit Usage would exceed the Loan Limit less
the sum of (A) the outstanding amount of Advances, (B) all reserves established
pursuant to Section 2.1(b) and (C) the Letter of Credit Usage.
 
Borrowers and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date so long as such existing letters of credit
were issued for a Permitted Use. Each LC Facility Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under an LC Facility
Letter of Credit, Borrowers shall reimburse such LC Facility L/C Disbursement to
Issuing Lender by paying to Agent an amount equal to such LC Facility L/C
Disbursement within 24 hours (provided, that, if the end of such 24 hour period
would occur on a day that is not a Business Day, then such period shall be
extended to the hour which would otherwise constitute the 24th hour of such
initial period, but as it occurs on the next Business Day) after written notice
(which may be sent by either email or facsimile) of such LC Facility L/C
Disbursement is provided to Administrative Borrower, and, in the absence of such
reimbursement, the LC Facility L/C Disbursement shall bear interest at the rate
then applicable to Advances that are Base Rate Loans under Section 2.6. Promptly
following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.2(c) to reimburse
the Issuing Lender, then to such Lenders and the Issuing Lender as their
interests may appear.
 
(b)  Promptly following receipt of a notice of LC Facility L/C Disbursement
pursuant to Section 2.2(a), each Lender with a Commitment agrees to fund its Pro
Rata Share of such LC Facility L/C Disbursement and Agent shall promptly pay to
Issuing Lender the amounts so received by it from the Lenders. By the issuance
of an LC Facility Letter of Credit (or an amendment to an LC Facility Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Issuing Lender or the Lenders with Commitments, the Issuing Lender shall
be deemed to have granted to each Lender with a Commitment, and each Lender with
a Commitment shall be deemed to have purchased, a participation in each LC
Facility Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such LC Facility Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender’s Pro Rata Share of any payments made by the Issuing Lender under such LC
Facility Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Commitment hereby absolutely and unconditionally agrees to
pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata
Share of each LC Facility L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in Section 2.2(a), or of any
reimbursement payment required to be refunded to Borrowers for any reason. Each
Lender with a Commitment acknowledges and agrees that its obligation to deliver
to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share of each LC Facility L/C Disbursement made by the
Issuing Lender pursuant to this Section 2.2(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of each LC
Facility L/C Disbursement made by the Issuing Lender in respect of such LC
Facility Letter of Credit as provided in this Section, such Lender shall be
deemed to be a Defaulting Lender and Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
 
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(c)  Each Borrower hereby agrees to indemnify, save, defend, and hold Agent, the
Issuing Lender and the Lenders having a Commitment harmless from any loss, cost,
expense, or liability, and reasonable attorneys fees incurred by such Persons
arising out of or in connection with any LC Facility Letter of Credit; provided,
however, that no Borrower shall be obligated hereunder to indemnify any such
Person for any loss, cost, expense, or liability to the extent that it is caused
by the gross negligence or willful misconduct of such Person. Each Borrower
agrees to be bound by the Underlying Issuer’s regulations and interpretations of
any Underlying Letter of Credit or by Issuing Lender’s interpretations of any LC
Facility L/C issued by Issuing Lender to or for such Borrower’s account, even
though this interpretation may be different from such Borrower’s own, and each
Borrower understands and agrees that the Lender Group shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrowers’ instructions or those contained in the LC Facility Letter
of Credit or any modifications, amendments, or supplements thereto. Each
Borrower understands that the LC Facility L/C Undertakings may require Issuing
Lender to indemnify the Underlying Issuer for certain costs or liabilities
arising out of claims by Borrowers against such Underlying Issuer. Each Borrower
hereby agrees to indemnify, save, defend, and hold the Lender Group harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by the Lender Group under any LC Facility L/C Undertaking
as a result of the Lender Group’s indemnification of any Underlying Issuer;
provided, however, that no Borrower shall be obligated hereunder to indemnify
for any loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower hereby acknowledges and agrees that neither
the Lender Group nor the Issuing Lender shall be responsible for delays, errors,
or omissions resulting from the malfunction of equipment in connection with any
LC Facility Letter of Credit.
 
(d)  Each Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender’s instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
 
(e)  Any and all issuance charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
 
(f)  If by reason of (i) any change after the Closing Date in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
 
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(i)  any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any LC Facility Letter of Credit issued hereunder, or
 
(ii)  there shall be imposed on the Underlying Issuer or the Lender Group any
other condition regarding any Underlying Letter of Credit or any LC Facility
Letter of Credit issued pursuant hereto;
 
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any LC
Facility Letter of Credit or to reduce the amount receivable in respect thereof
by the Lender Group, then, and in any such case, Agent may, at any time within a
reasonable period not exceeding 180 days after the additional cost is incurred
or the amount received is reduced, notify Administrative Borrower, and Borrowers
shall pay within 1 Business Day of demand for such amounts as Agent may specify
to be necessary to compensate the Lender Group for such additional cost or
reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth, in reasonable detail, the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.
 
2.3  Borrowing Procedures and Settlements.
 
(a)  Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. Unless Swing Lender
is not obligated to make a Swing Loan pursuant to Section 2.3(b) below, such
notice must be received by Agent no later than 1:00 p.m. (Georgia time) on the
Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; provided, however, that if Swing Lender is not obligated to make a Swing
Loan as to a requested Borrowing, such notice must be received by Agent no later
than 1:00 p.m. (Georgia time) on the Business Day prior to the date that is the
requested Funding Date. At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.
 
(b)  Making of Swing Loans. In the case of a request for an Advance and so long
as either (i) the aggregate amount of Swing Loans made since the last Settlement
Date plus the amount of the requested Advance does not exceed $5,000,000, or
(ii) Swing Lender, in its sole discretion, shall agree to make a Swing Loan
notwithstanding the foregoing limitation, Swing Lender, as a Lender, shall make
an Advance in the amount of such Borrowing (any such Advance made solely by
Swing Lender as a Lender pursuant to this Section 2.3(b) being referred to as a
“Swing Loan” and such Advances being referred to collectively as “Swing Loans”)
available to Borrowers on the Funding Date applicable thereto by transferring
immediately available funds to the Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all payments on any Swing
Loan shall be payable to Swing Lender as a Lender solely for its own account.
Subject to the provisions of Section 2.3(d)(ii), Swing Lender as a Lender shall
not make and shall not be obligated to make any Swing Loan if Swing Lender has
actual knowledge that (i) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing (unless such condition has been waived in accordance with
the terms of this Agreement), or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not otherwise
be required to determine whether the applicable conditions precedent set forth
in Section 3 have been satisfied on the Funding Date applicable thereto prior to
making any Swing Loan. The Swing Loans shall be secured by the Agent’s Liens,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
 
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(c)  Making of Loans.
 
(i)  In the event that Swing Lender is not obligated to make a Swing Loan, then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a),
Agent shall notify the Lenders, not later than 4:00 p.m. (Georgia time) on the
Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, not later than 1:00 p.m. (Georgia time) on the Funding Date
applicable thereto. After Agent’s receipt of the proceeds of such Advances,
Agent shall make the proceeds thereof available to Administrative Borrower on
the applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to Administrative Borrower’s Designated Account;
provided, however, that, subject to the provisions of Section 2.3(d)(ii), Agent
shall not request any Lender to make, and no Lender shall have the obligation to
make, any Advance if Agent shall have actual knowledge that (1) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the Availability on
such Funding Date.
 
(ii)  Unless Agent receives notice from a Lender prior to 12:00 p.m. (Georgia
time) on the date of a Borrowing, that such Lender will not make available as
and when required hereunder to Agent for the account of Borrowers the amount of
that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender
has made or will make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute such
Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.
 
(iii)  Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in
the absence of such transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the extent that such
Defaulting Lender’s Advance was funded by the other members of the Lender Group)
or, if so directed by Administrative Borrower and if no Default or Event of
Default had occurred and is continuing (and to the extent such Defaulting
Lender’s Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrowers as if such Defaulting Lender had made Advances to
Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the
amount of all such payments received and retained by Agent for the account of
such Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero. This Section shall remain effective with respect to such Lender until
(x) the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and
Administrative Borrower shall have waived such Defaulting Lender’s default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting Lender in respect
thereof. The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrowers of
their duties and obligations hereunder to Agent or to the Lenders other than
such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall
constitute a material breach by such Defaulting Lender of this Agreement and
shall entitle Administrative Borrower at its option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance in favor of
the substitute Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being repaid its
share of the outstanding Obligations (other than Bank Product Obligations, but
including an assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind whatsoever; provided
however, that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender Groups’ or
Borrowers’ rights or remedies against any such Defaulting Lender arising out of
or in relation to such failure to fund.
 
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(d)  Protective Advances and Optional Overadvances.
 
(i)  Agent hereby is authorized by Borrowers and the Lenders, from time to time
in Agent’s sole discretion, (A) after the occurrence and during the continuance
of a Default or an Event of Default, or (B) at any time that any of the other
applicable conditions precedent set forth in Section 3 are not satisfied, to
make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the likelihood of repayment
of the Obligations (other than the Bank Product Obligations), or (3) to pay any
other amount chargeable to Borrowers pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses described in
Section 9 (any of the Advances described in this Section 2.3(d)(i) shall be
referred to as “Protective Advances”).
 
(ii)  Any contrary provision of this Agreement notwithstanding, the Lenders
hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing
Lender, as applicable, may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so long
as (A) after giving effect to such Advances, the outstanding Revolver Usage does
not exceed the Availability by more than $3,000,000, and (B) after giving effect
to such Advances, the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount. In the event Agent
obtains actual knowledge that the Revolver Usage exceeds the amounts permitted
by the immediately foregoing provisions, regardless of the amount of, or reason
for, such excess, Agent shall notify the Lenders as soon as practicable (and
prior to making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders with Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended to reduce, within
a reasonable time, the outstanding principal amount of the Advances to Borrowers
to an amount permitted by the preceding paragraph. In such circumstances, if any
Lender with a Commitment disagrees over the proposed terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders. Each
Lender with a Commitment shall be obligated to settle with Agent as provided in
Section 2.3(e) for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(d)(ii), and any
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
 
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(iii)  Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be
eligible to be a LIBOR Rate Loan and all payments on the Protective Advances
shall be payable to Agent solely for its own account. The Protective Advances
and Overadvances shall be repayable on demand, secured by the Agent’s Liens,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans. The provisions of this
Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the
Lenders and are not intended to benefit any Borrower in any way.
 
(e)  Settlement. It is agreed that each Lender’s funded portion of the Advances
is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share
of the outstanding Advances. Such agreement notwithstanding, Agent, Swing
Lender, and the other Lenders agree (which agreement shall not be for the
benefit of any Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Advances, the Swing Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:
 
(i)  Agent shall request settlement (“Settlement”) with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent, (1) on behalf of
Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with
respect to the outstanding Protective Advances, and (3) with respect to
Borrowers’ or their Subsidiaries’ Collections received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 5:00 p.m. (Georgia time) on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the “Settlement Date”). Such notice of a
Settlement Date shall include a summary statement of the amount of outstanding
Advances, Swing Loans, and Protective Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained herein (including
Section 2.3(b)(iii)): (y) if a Lender’s balance of the Advances (including Swing
Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the
Advances (including Swing Loans and Protective Advances) as of a Settlement
Date, then Agent shall, by no later than 3:00 p.m. (Georgia time) on the
Settlement Date, transfer in immediately available funds to a Deposit Account of
such Lender (as such Lender may designate), an amount such that each such Lender
shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata
Share of the Advances (including Swing Loans and Protective Advances), and
(z) if a Lender’s balance of the Advances (including Swing Loans and Protective
Advances) is less than such Lender’s Pro Rata Share of the Advances (including
Swing Loans and Protective Advances) as of a Settlement Date, such Lender shall
no later than 3:00 p.m. (Georgia time) on the Settlement Date transfer in
immediately available funds to the Agent’s Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances (including Swing Loans and Protective
Advances). Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Swing Loans or Protective Advances and, together with the portion of
such Swing Loans or Protective Advances representing Swing Lender’s Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any such amount is
not made available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
 
(ii)  In determining whether a Lender’s balance of the Advances, Swing Loans,
and Protective Advances is less than, equal to, or greater than such Lender’s
Pro Rata Share of the Advances, Swing Loans, and Protective Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount shall be
distributed by Agent to that Lender as part of such next Settlement.
 
(iii)  Between Settlement Dates, Agent, to the extent no Protective Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections of Borrowers
or their Subsidiaries received since the then immediately preceding Settlement
Date have been applied to Swing Lender’s Pro Rata Share of the Advances other
than to Swing Loans, as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders, to be applied to the outstanding Advances of such Lenders, an amount
such that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect
to Protective Advances, and each Lender (subject to the effect of agreements
between Agent and individual Lenders) with respect to the Advances other than
Swing Loans and Protective Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.
 
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(f)  Notation. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including the Swing Loans owing to Swing Lender,
and Protective Advances owing to Agent, and the interests therein of each
Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. 
 
(g)  Lenders’ Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
 
2.4  Payments.
 
(a)  Payments by Borrowers.
 
(i)  Except as otherwise expressly provided herein, all payments by Borrowers
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 2:00 p.m. (Georgia time)
on the date specified herein. Any payment received by Agent later than 2:00 p.m.
(Georgia time), shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until such
following Business Day.
 
(ii)  Unless Agent receives notice from Administrative Borrower prior to the
date on which any payment is due to the Lenders that Borrowers will not make
such payment in full as and when required, Agent may assume that Borrowers have
made (or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender severally shall repay
to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
 
(b)  Apportionment and Application.
 
(i)  Except as otherwise provided with respect to Defaulting Lenders and except
as otherwise provided in the Loan Documents (including agreements between Agent
and individual Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance
of the Revolver Obligations to which such payments relate held by each Lender)
and payments of fees and expenses (other than fees or expenses that are for
Agent’s separate account, after giving effect to any agreements between Agent
and individual Lenders) shall be apportioned ratably among the Lenders having a
Pro Rata Share of the type of Commitment or Revolver Obligation to which a
particular fee relates. All payments shall be remitted to Agent and all such
payments, and all proceeds of Collateral received by Agent, shall be applied as
follows:
 
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(A)  first, to pay all letter of credit fees and accrued interest due with
respect to LC Facility Letters of Credit until paid in full,
 
(B)  second, to pay all unreimbursed LC Facility L/C Disbursements until paid in
full,
 
(C)  third, if an Event of Default has occurred and is continuing, to Agent, to
be held by Agent, for the ratable benefit of Issuing Lender and those Lenders
having a Commitment, as cash collateral in an amount up to 105% of the LC
Facility Letter of Credit Usage until paid in full,
 
(D)  fourth, ratably to pay any Lender Group Expenses then due to Agent or any
of the Lenders under the Loan Documents, until paid in full,
 
(E)  fifth, ratably to pay any fees or premiums then due to Agent (for its
separate account, after giving effect to any agreements between Agent and
individual Lenders) or any of the Lenders under the Loan Documents until paid in
full,
 
(F)  sixth, to pay interest due in respect of all Protective Advances until paid
in full,
 
(G)  seventh, to pay the principal of all Protective Advances until paid in
full,
 
(H)  eighth, ratably to pay interest due in respect of the Advances (other than
Protective Advances) and the Swing Loans until paid in full,
 
(I)  ninth, to pay the principal of all Swing Loans until paid in full,
 
(J)  tenth, so long as no Event of Default has occurred and is continuing, and
at Agent’s election (which election Agent agrees will not be made if an
Overadvance would be created thereby), to pay any Bank Product Obligations then
due and owing, until paid in full,
 
(K)  twelfth, so long as no Event of Default has occurred and is continuing, to
pay the principal of all Advances until paid in full,
 
(L)  thirteenth, if an Event of Default has occurred and is continuing, ratably
(i) to pay the principal of all Advances until paid in full, (ii) to Agent, to
be held by Agent, for the ratable benefit of Issuing Lender and those Lenders
having a Commitment, as cash collateral in an amount up to 105% of the Letter of
Credit Usage until paid in full, and (iii) to Agent, to be held by Agent, for
the benefit of the Bank Product Providers, as cash collateral in an amount up to
the amount of the Bank Product Reserve established prior to the occurrence of,
and not in contemplation of, the subject Event of Default until the Bank Product
Obligations have been paid in full or the cash collateral amount therefor has
been exhausted,
 
(M)  fourteenth, if an Event of Default has occurred and is continuing, to pay
any other Obligations (including the provision of amounts to Agent, to be held
by Agent, for the benefit of the Bank Product Providers, as cash collateral in
an amount up to the amount determined by Agent in its Permitted Discretion as
the amount necessary to secure the Bank Product Obligations), and
 
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(N)  fifteenth, to Borrowers (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.
 
(ii)  Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in
Section 2.3(e).
 
(iii)  In each instance, so long as no Event of Default has occurred and is
continuing, this Section 2.4(b) shall not apply to any payment made by Borrowers
to Agent and specified by Borrowers to be for the payment of specific Revolver
Obligations then due and payable (or prepayable) under any provision of this
Agreement.
 
(iv)  For purposes of the foregoing, “paid in full” means payment of all amounts
owing under the Loan Documents according to the terms thereof, including loan
fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
 
(v)  In the event of a direct conflict between the priority provisions of this
Section 2.4 and other provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
 
(vi)  In the event, pursuant to the provisions of Section 2.4(b)(i) above, Agent
is holding cash collateral with respect to any LC Facility Letter of Credit
Usage and/or Letter of Credit Usage in connection with the occurrence of an
Event of Default and such Event of Default is waived in accordance with the
terms of this Agreement, Agent agrees, unless the terms of such waiver provide
otherwise, to release such cash collateral within 1 Business Day after the
execution of such waiver.
 
(c)  Loan Limit. If, at any time or for any reason, the aggregate outstanding
principal balance of the Advances, Letter of Credit Usage and LC Facility Letter
of Credit Usage exceeds the Loan Limit, Borrowers shall immediately prepay the
Advances, or if no Advances are then outstanding, provide cash collateral with
respect to the LC Facility Letters of Credit and/or the Letters of Credit (such
cash collateral to be provided in the amounts and in the order of priority set
forth in Section 2.4(b) above as if an Event of Default had occurred) in the
amount necessary to eliminate such excess. In the event Agent is holding cash
collateral with respect to any LC Facility Letter of Credit and/or Letter of
Credit pursuant to the provisions of this Section 2.4(c), if thereafter the
aggregate outstanding principal balance of the Advances, Letter of Credit Usage
and LC Facility Letter of Credit Usage no longer exceeds the Loan Limit, Agent
agrees to release such cash collateral within 1 Business Day after such
compliance has been established.
 
2.5  Overadvances. If, at any time or for any reason, the amount of Obligations
owed by Borrowers to the Lender Group pursuant to Section 2.1, Section 2.2 or
Section 2.12 is greater than any of the limitations set forth in Section 2.1,
Section 2.2 or Section 2.12, as applicable (an “Overadvance”), except as
otherwise permitted by Section 2.3(d), Borrowers immediately shall pay to Agent,
in cash, the amount of such excess, which amount shall be used by Agent to
reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). In addition, Borrowers hereby promise to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
 
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2.6  Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.
 
(a)  Interest Rates. Except as provided in Section 2.6(c) below, all Obligations
(except for undrawn Letters of Credit and LC Facility Letters of Credit and
except for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof as
follows (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan,
at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and
(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate
Margin. The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 6.00%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
 
(b)  Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of
the Lenders with the applicable Commitment, subject to any agreements between
Agent and individual Lenders), a letter of credit fee (in addition to the
charges, commissions, fees, and costs set forth in Sections 2.2(e) and  2.12(e))
which shall accrue at a per annum rate equal to the then applicable LIBOR Rate
Margin times the Daily Balance of the undrawn amount of all outstanding LC
Facility Letters of Credit and all Letters of Credit.
 
(c)  Default Rate. Upon the occurrence and during the continuation of an Event
of Default (and at the election of Agent or the Required Lenders),
 
(i)  all Obligations (except for undrawn Letters of Credit and LC Facility
Letters of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2 percentage points above
the per annum rate otherwise applicable hereunder, and
 
(ii)  the letter of credit fee provided for above shall be increased to 2
percentage points above the per annum rate otherwise applicable hereunder.
 
(d)  Payment. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, letter of credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.2(e) and Section 2.12(e) (as and when accrued or incurred), all fees
and costs provided for in Section 2.11 (as and when accrued or incurred), and
all other payments as and when due and payable under any Loan Document
(including any amounts due and payable to the Bank Product Providers in respect
of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’
Loan Account, which amounts thereafter shall constitute Advances hereunder and
shall accrue interest at the rate then applicable to Advances hereunder. Any
interest not paid when due shall be compounded by being charged to Borrowers’
Loan Account and shall thereafter constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances that are Base Rate Loans
hereunder. Notwithstanding the foregoing, no interest or letter of credit fees
due with respect to the LC Facility Letters of Credit shall be charged to
Borrower’s Loan Account or otherwise constitute Advances, but shall instead be
payable monthly in arrears and within 24 hours of any demand therefor by Agent,
such demands to be made (i) on or about the first day of each month with respect
to the letter of credit fee payable pursuant to Section 2.6(b) and (ii) on or
about the fifteenth day of each month with respect to all other amounts.
 
(e)  Computation. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual number of days
elapsed. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
 
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(f)  Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess. The
Lender Group and all other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from time to time in effect. In
furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, or interest in
excess of the Maximum Interest. No Credit Party nor any endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the Maximum Interest, and the provisions of this section
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Lender Group expressly disavows any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated. If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the Maximum Interest, or (c) any Lender or any other holder of any or
all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest and other
amounts deemed interest on any or all of the Obligations to an amount in excess
of the Maximum Interest, then all sums determined to constitute interest in
excess of the Maximum Interest shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender’s or holder’s option, promptly returned to Administrative Borrower upon
such determination. In determining whether or not the interest paid or payable,
under any specific circumstance, exceeds the Maximum Interest, the Lender Group
and Borrowers shall to the greatest extent permitted under applicable law, (x)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (y) exclude the voluntary prepayments and the effects thereof, and
(z) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing
Obligations in accordance with the amounts outstanding from time to time
thereunder and the Maximum Interest in order to lawfully charge the Maximum
Interest. In the event applicable law provides for an interest ceiling under
Chapter 303 of the Texas Finance Code (the “Texas Finance Code”) as amended, for
that day, the ceiling shall be the “weekly ceiling” as defined in the Texas
Finance Code; provided that if any applicable law permits greater interest, the
law permitting the greatest interest shall apply. To the extent that the
interest rate or rates otherwise payable under this Agreement plus any other
amounts paid under this Agreement are limited under applicable law, each Lender
agrees to limit the interest to which it is otherwise entitled to the Maximum
Interest. Such limitation for each Lender for any period shall be in an amount
equal to such Lender’s Pro Rata Share multiplied by the difference between the
Applicable Facility Interest and the Maximum Interest. For purposes of this
calculation at any date of determination, any fees or charges included in the
calculation of interest not directly related to each of the Advances, Letters of
Credit, and LC Facility Letters of Credit shall be allocated ratably to each
based upon the outstanding Obligations of each compared to all Obligations.
 
2.7  Cash Management.
 
(a)  Borrowers shall and shall cause each of their domestic Subsidiaries to
(i) establish and maintain cash management services of a type and on terms
satisfactory to Agent in its Permitted Discretion at one or more of the banks
set forth on Schedule 2.7(a) (each a “Cash Management Bank”), and shall request
in writing and otherwise take such reasonable steps to ensure that all of their
and their domestic Subsidiaries’ Account Debtors forward payment of the amounts
owed by them directly to such Cash Management Bank, and (ii) deposit or cause to
be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all of their Collections (including those
sent directly by their Account Debtors to Borrowers or their domestic
Subsidiaries) into a bank account in Administrative Borrower’s name and subject
to the control of Agent (a “Cash Management Account”) at one of the Cash
Management Banks.
 
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(b)  Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrowers, in form and substance acceptable to Agent
in its Permitted Discretion. Each such Cash Management Agreement shall provide,
among other things, that (i) the Cash Management Bank will comply with any
instructions originated by Agent directing the disposition of the funds in such
Cash Management Account without further consent by Borrowers or their
Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent’s Account.
 
(c)  So long as no Default or Event of Default has occurred and is continuing,
Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be satisfactory to Agent in its Permitted
Discretion, and (ii) prior to the time of the opening of such Cash Management
Account, a Borrower or its Subsidiary, as applicable, and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers (or their Subsidiaries, as applicable) shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent’s reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent’s liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent’s reasonable judgment.
 
(d)  The Cash Management Accounts shall be cash collateral accounts subject to
Control Agreements.
 
(e)  Within the time frame specified in Section 5.20(g), each Credit Party and
its domestic Subsidiaries which receives Collections through credit card charges
shall establish and maintain Credit Card Agreements with Agent and each Credit
Card Processor. Each such Credit Card Agreement shall provide, among other
things, that each such Credit Card Processor shall transfer all proceeds of
credit card charges for sales by such Credit Party or such Subsidiary, as
applicable, received by it (or other amounts payable by such Credit Card
Processor) into a Cash Management Account (or such other Deposit Account as
Agent may designate pursuant to any Credit Card Agreement) on a daily basis. No
Credit Party nor any of its domestic Subsidiaries may change any direction or
designation set forth in the Credit Card Agreements regarding payment of charges
without the prior written consent of Agent. Without limiting the foregoing or
any other provision of this Agreement, in the event a Credit Card Agreement is
not in effect with respect to any credit card charge processing arrangement of
any applicable Credit Party or its Subsidiaries, such Credit Party or such
Subsidiary (as applicable) shall, (i) instruct such Credit Card Processor to
remit all proceeds of credit card charges or sales processed by such processor
to a Cash Management Account and, except as set forth in the following clause
(ii), shall not rescind or alter such instruction without the prior written
consent of Agent and (ii) pursuant to a joint notice from the applicable Credit
Party or Subsidiary of a Credit Party and Agent, instruct such Credit Card
Processor to remit all proceeds of credit card charges or sales processed by
such processor to a Cash Management Account and shall not rescind or alter such
instruction without the prior written consent of Agent.
 
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2.8  Crediting Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made
to the Agent’s Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then Borrowers shall be deemed not to have made such payment and
interest shall be calculated accordingly. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Agent only
if it is received into the Agent’s Account on a Business Day on or before
2:00 p.m. (Georgia time). If any payment item is received into the Agent’s
Account on a non-Business Day or after 2:00 p.m. (Georgia time) on a Business
Day, it shall be deemed to have been received by Agent as of the opening of
business on the immediately following Business Day.
 
2.9  Designated Account. Agent is authorized to make the Advances and Issuing
Lender is authorized to issue the Letters of Credit and LC Facility Letters of
Credit, under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person or, without
instructions, if pursuant to Section 2.6(d). Administrative Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrowers
and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Protective Advance, or Swing Loan
requested by Borrowers and made by Agent or the Lenders hereunder shall be made
to the Designated Account.
 
2.10  Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
on which Borrowers will be charged with all Advances (including Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers’ account, the Letters of Credit and LC Facility
Letters of Credit issued by Issuing Lender for Borrowers’ account, and with all
other payment Obligations hereunder or under the other Loan Documents (except
for Bank Product Obligations), including, accrued interest, fees and expenses,
and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will
be credited with all payments received by Agent from Borrowers or for Borrowers’
account, including all amounts received in the Agent’s Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
 
2.11  Fees. Borrowers shall pay to Agent, as and when due and payable under the
terms of the Fee Letter, the fees set forth in the Fee Letter. 
 
2.12  Letters of Credit.
 
(a)  Subject to the terms and conditions of this Agreement, the Issuing Lender
agrees to issue letters of credit for the account of Borrowers (each, an “L/C”)
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an “L/C Undertaking”) with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
 
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(i)  the Letter of Credit Usage would exceed Availability, or
 
(ii)  the Letter of Credit Usage would exceed $5,000,000,
 
(iii)  the Letter of Credit Usage would exceed the Maximum Revolver Amount less
the sum of (A) the outstanding amount of Advances and (B) all reserves
established pursuant to Section 2.1(b), or
 
(iv)  the Letter of Credit Usage would exceed the Loan Limit less the sum of (A)
the outstanding amount of Advances, (B) all reserves established pursuant to
Section 2.1(b) and (C) the LC Facility Letter of Credit Usage.
 
Borrowers and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers
immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to
Agent an amount equal to such L/C Disbursement (a) not later than 2:00 p.m.,
Georgia time, on the date that such L/C Disbursement is made, if Administrative
Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 1:00 p.m., Georgia time, on the date that such L/C
Disbursement is made, or (b) if such notice is received by Administrative
Borrower after 1:00 p.m. on the date that such L/C Disbursement is made, then
not later than 2:00 p.m., Georgia time, on the next Business Day. In the absence
of such reimbursement, the L/C Disbursement immediately and automatically shall
be deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6,
provided, that, the failure to make such reimbursement shall not constitute a
Default or Event of Default hereunder. To the extent an L/C Disbursement is
deemed to be an Advance hereunder, Borrowers’ obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance. Promptly
following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse
the Issuing Lender, then to such Lenders and the Issuing Lender as their
interests may appear.
 
(b)  Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Commitment agrees to fund its Pro Rata Share
of any Advance deemed made pursuant to the foregoing subsection on the same
terms and conditions as if Borrowers had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the Lenders.
By the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders with Commitments, the Issuing Lender shall be
deemed to have granted to each Lender with a Commitment, and each Lender with a
Commitment shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender agrees to pay to Agent,
for the account of the Issuing Lender, such Lender’s Pro Rata Share of any
payments made by the Issuing Lender under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender with a Commitment
hereby absolutely and unconditionally agrees to pay to Agent, for the account of
the Issuing Lender, such Lender’s Pro Rata Share of each L/C Disbursement made
by the Issuing Lender and not reimbursed by Borrowers on the date due as
provided in clause (a) of this Section, or of any reimbursement payment required
to be refunded to Borrowers for any reason. Each Lender with a Commitment
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share of each
L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender’s Pro
Rata Share of each L/C Disbursement made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of the Issuing Lender)
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.
 
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(c)  Each Borrower hereby agrees to indemnify, save, defend, and hold Agent, the
Issuing Lender and the Lenders having a Commitment harmless from any loss, cost,
expense, or liability, and reasonable attorneys fees incurred by such Persons
arising out of or in connection with any LC Facility Letter of Credit; provided,
however, that no Borrower shall be obligated hereunder to indemnify any such
Person for any loss, cost, expense, or liability to the extent that it is caused
by the gross negligence or willful misconduct of such Person. Each Borrower
agrees to be bound by the Underlying Issuer’s regulations and interpretations of
any Underlying Letter of Credit or by Issuing Lender’s interpretations of any
L/C issued by Issuing Lender to or for such Borrower’s account, even though this
interpretation may be different from such Borrower’s own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers’ instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group’s
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the Lender Group nor the
Issuing Lender shall be responsible for delays, errors, or omissions resulting
from the malfunction of equipment in connection with any Letter of Credit.
 
(d)  Each Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender’s instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
 
(e)  Any and all issuance charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
 
(f)  If by reason of (i) any change after the Closing Date in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
 
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(i)  any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or
 
(ii)  there shall be imposed on the Underlying Issuer or the Lender Group any
other condition regarding any Underlying Letter of Credit or any Letter of
Credit issued pursuant hereto;
 
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt. If such payment is not made within one
Business Day of demand therefore, such amounts immediately and automatically
shall be deemed to be an Advance hereunder and, thereafter, shall bear interest
at the rate then applicable to Advances that are Base Rate Loans under
Section 2.6, provided, that, the failure to make such payment shall not
constitute a Default or Event of Default hereunder. The determination by Agent
of any amount due pursuant to this Section, as set forth in a certificate
setting forth, in reasonable detail, the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
 
2.13  LIBOR Option.
 
(a)  Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR
Option”) to have interest on all or a portion of the Advances be charged at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period applicable
thereto, (provided, however, that, subject to the following clauses (ii) and
(iii), in the case of any Interest Period greater than 3 months in duration,
interest shall be payable at 3 month intervals after the commencement of the
applicable Interest Period and on the last day of such Interest Period),
(ii) the occurrence of an Event of Default in consequence of which the Required
Lenders or Agent on behalf thereof have elected to accelerate the maturity of
all or any portion of the Obligations, or (iii) termination of this Agreement
pursuant to the terms hereof. On the last day of each applicable Interest
Period, unless Administrative Borrower properly has exercised the LIBOR Option
with respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that Advances bear interest at a rate based upon the LIBOR Rate and Agent shall
have the right to convert the interest rate on all outstanding LIBOR Rate Loans
to the rate then applicable to Base Rate Loans hereunder.
 
(b)  LIBOR Election.
 
(i)  Administrative Borrower may, at any time and from time to time, so long as
no Event of Default has occurred and is continuing, elect to exercise the LIBOR
Option by notifying Agent prior to 2:00 p.m. (Georgia time) at least 3 Business
Days prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Administrative Borrower’s election of the LIBOR Option for
a permitted portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent before the
LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received
by Agent prior to 5:00 p.m. (Georgia time) on the same day). Promptly upon its
receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of
the Lenders having a Commitment.
 
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(ii)  Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and
hold Agent and the Lenders having a Commitment harmless against any loss, cost,
or expense incurred by Agent or any such Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, “Funding Losses”). WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
WHICH IN ANY WAY OR TO ANY EXTENT IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON
OR UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY. Funding Losses shall, with
respect to Agent or any Lender having a Commitment, be deemed to equal the
amount determined by Agent or such Lender to be the excess, if any, of (x) the
amount of interest (excluding any LIBOR Rate Margin) that would have accrued on
the principal amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (y) the amount of interest
that would accrue on such principal amount for such period at the interest rate
which Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period
in the London interbank market. A certificate of Agent or a Lender delivered to
Administrative Borrower setting forth, in reasonable detail, any amount or
amounts that Agent or such Lender is entitled to receive pursuant to this
Section 2.13 shall be conclusive absent manifest error.
 
(iii)  Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any
given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of
at least $500,000 and integral multiples of $100,000 in excess thereof.
 
(c)  Prepayments. Borrowers may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date that is
not the last day of the Interest Period applicable thereto, including as a
result of any automatic prepayment through the required application by Agent of
proceeds of Borrowers’ and their Subsidiaries’ Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with clause (b)(ii) above. In the event Agent
receives a payment with respect to the Obligations and at such time no
Obligations other than LIBOR Rate Loans are outstanding, unless an Event of
Default has occurred and is continuing, Agent shall not apply such payment to
such LIBOR Rate Loans until the last day of the Interest Period therefor, and in
such case, Agent shall hold such received funds as cash collateral for the
Obligations until so applied.
 
(d)  Special Provisions Applicable to LIBOR Rate.
 
(i)  The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any Eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender shall
give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Administrative
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(ii) above).
 
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(ii)  In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Administrative Borrower and
Agent promptly shall transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender’s notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.
 
(e)  No Requirement of Matched Funding. Anything to the contrary contained
herein notwithstanding, neither Agent, nor any Lender, nor any of their
Participants, is required actually to acquire Eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring Eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans, except that such Lender shall not be entitled to
any Funding Losses.
 
2.14  Capital Requirements. If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender’s or
such holding company’s capital as a consequence of such Lender’s Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender’s or such holding company’s then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity’s capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital relating to a period not to exceed 180 days prior
to such demand as and when such reduction is determined, payable within 90 days
after presentation by such Lender of a statement in the amount and setting forth
in reasonable detail such Lender’s calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
 

2.15  Joint and Several Liability of Borrowers.
 
(a)  Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the applicable members of the Lender Group under this Agreement, for
the mutual benefit, directly and indirectly, of each Borrower and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
 
(b)  Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Borrower without preferences or distinction among them.
 
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(c)  If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.
 
(d)  The Obligations of each Borrower under the provisions of this Section 2.15
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each Borrower to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
 
(e)  Except as otherwise expressly provided in this Agreement, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
any Advances, Letters of Credit or LC Facility Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of
any of the Obligations, the acceptance of any payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by Agent or Lenders at any time or times in respect of
any default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this
Section 2.15, it being the intention of each Borrower that, so long as any of
the Obligations hereunder remain unsatisfied, the Obligations of each Borrower
under this Section 2.15 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each Borrower under
this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.
 
(f)  Each Borrower represents and warrants to Agent and Lenders that such
Borrower is currently informed of the financial condition of Borrowers and of
all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers’ financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
 
(g)  Each Borrower waives all rights and defenses arising out of an election of
remedies by Agent or any Lender, even though that election of remedies, such as
a nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement
against such Borrower.
 
(h)  Each Borrower waives all rights and defenses that such Borrower may have
because the Obligations are secured by Real Property. This means, among other
things:
 
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(i)  Agent and Lenders may collect from such Borrower without first foreclosing
on any Real or Personal Property Collateral pledged by Borrowers.
 
(ii)  If Agent or any Lender forecloses on any Real Property Collateral pledged
by Borrowers:
 
(A)  The amount of the Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price.
 
(B)  Agent and Lenders may collect from such Borrower even if Agent or Lenders,
by foreclosing on the Real Property Collateral, has destroyed any right such
Borrower may have to collect from the other Borrowers.
 
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property.
 
(i)  The provisions of this Section 2.15 are made for the benefit of Agent,
Lenders and their respective successors and assigns, and may be enforced by it
or them from time to time against any or all Borrowers as often as occasion
therefor may arise and without requirement on the part of any such Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.15 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by any Agent or Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this
Section 2.15 will forthwith be reinstated in effect, as though such payment had
not been made.
 
(j)  Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations
have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to any Agent or Lender hereunder
or under any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.
 
(k)  Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).
 
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3.  CONDITIONS; TERM OF AGREEMENT.
 
3.1  Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial extension of credit provided for hereunder, is
subject to the fulfillment, to the satisfaction of Agent and each Lender of each
of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent).
 
3.2  Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder at any time
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
 
(a)  the representations and warranties contained in this Agreement or in the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such extension of credit, 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
date of such extension of credit, nor shall either result from the making
thereof;
 
(c)  no injunction, writ, restraining order, or other order of any nature
restricting or prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates; and
 
(d)  no Material Adverse Change shall have occurred since the date of the latest
financial statements of the Credit Parties submitted to Agent on or before the
Closing Date.
 
3.3  Term. This Agreement shall continue in full force and effect for a term
ending on May 1, 2009 (the “Maturity Date”). The foregoing notwithstanding, the
Lender Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
 
3.4  Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with
respect to outstanding Letters of Credit and LC Facility Letters of Credit and
including all Bank Product Obligations) immediately shall become due and payable
without notice or demand (including (a) either (i) providing cash collateral to
be held by Agent for the benefit of those Lenders with a Commitment in an amount
equal to 105% of the sum of the Letter of Credit Usage and the LC Facility
Letter of Credit Usage, or (ii) causing the original Letters of Credit and LC
Facility Letters of Credit to be returned to the Issuing Lender, and
(b) providing cash collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Agent for the
benefit of the Bank Product Providers with respect to the Bank Product
Obligations). No termination of this Agreement, however, shall relieve or
discharge Borrowers or their Subsidiaries of their duties, Obligations, or
covenants hereunder or under any other Loan Document and the Agent’s Liens in
the Collateral shall remain in effect until all Obligations have been paid in
full and the Lender Group’s obligations to provide additional credit hereunder
have been terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lender Group’s obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrowers’ sole expense, execute and deliver any termination
statements, lien releases, mortgage releases, discharges of security interests,
and other similar discharge or release documents (and, if applicable, in
recordable form) as are reasonably necessary to release, as of record, the
Agent’s Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations. 
 
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3.5  Early Termination by Borrowers. Borrowers have the option, at any time upon
30 days prior written notice by Administrative Borrower to Agent, to terminate
this Agreement by paying to Agent, in cash, the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Commitment in an amount equal to 105% of the sum of the
Letter of Credit Usage and LC Facility Letter of Credit Usage, or (ii) causing
the original Letters of Credit and LC Facility Letters of Credit to be returned
to the Issuing Lender, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with
respect to the Bank Product Obligations), in full. If Administrative Borrower
has sent a notice of termination pursuant to the provisions of this Section,
then the Commitments shall terminate and Borrowers shall be obligated to repay
the Obligations (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Commitment in an amount equal
to 105% of the sum of the Letter of Credit Usage and LC Facility Letter of
Credit Usage, or (ii) causing the original Letters of Credit and LC Facility
Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the Bank Product Obligations), in full,
on the date set forth as the date of termination of this Agreement in such
notice; provided, however, no more than four times during the term of this
Agreement, Administrative Borrower may revoke or extend the stated termination
date in a notice of termination of this Agreement which has been provided to
Agent.
 
4.  REPRESENTATIONS AND WARRANTIES.
 
In order to induce the Lender Group to enter into this Agreement, each Credit
Party makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
Closing Date and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
 
4.1  No Encumbrances. Each Credit Party and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, its
Real Property, in each case, free and clear of Liens except for Permitted Liens.
 
4.2  Accounts. As to each Account that is identified by a Borrower as one of its
Account in any report submitted to Agent, such Account is (a) a bona fide
existing payment obligation of the applicable Account Debtors created by the
sale and delivery of Inventory or the rendition of services to such Account
Debtors in the ordinary course of such Borrower’s business, and (b) owed to such
Borrower without any known defenses, disputes, offsets, counterclaims, or rights
of return or cancellation.
 
4.3  Inventory. As to each item of Inventory that is identified by a Borrower as
such Borrower’s Inventory in any report submitted to Agent, such Inventory is of
good and merchantable quality, free from known defects.
 
4.4  Equipment. Each material item of Equipment of Borrowers and their
Subsidiaries is used or held for use in their business and is in good working
order, ordinary wear and tear and damage by casualty excepted.
 
4.5  Location of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair) of any Credit Party or its
Subsidiaries are not stored with a bailee, warehouseman, or similar party and
are located only at, or in-transit between, the locations identified on
Schedule 4.5 (as such Schedule may be updated pursuant to Section 5.9).
 
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4.6  Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries’ Inventory and the book value thereof.
 
4.7  State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.
 
(a)  The jurisdiction of organization of each Credit Party and each of its
Subsidiaries is set forth on Schedule 4.7(a) (as such Schedule may be updated in
connection with any transaction permitted by this Agreement). 
 
(b)  The chief executive office of each Credit Party and each of its
Subsidiaries is located at the address indicated on Schedule 4.7(b) (as such
Schedule may be updated pursuant to Section 5.9). 
 
(c)  Each Credit Party’s and each of its Subsidiaries’ organizational
identification number, if any, are identified on Schedule 4.7(c) (as such
Schedule may be updated in connection with any transaction permitted by this
Agreement).
 
(d)  As of the Closing Date, no Credit Party or any of its Subsidiaries holds
any commercial tort claims, except as set forth on Schedule 4.7(d) (as such
Schedule may be updated pursuant to the terms of the Security Agreement). 
 
4.8  Due Organization and Qualification; Subsidiaries.
 
(a)  Each Credit Party is duly organized and existing and in good standing under
the laws of the jurisdiction of its organization and qualified to do business in
any state where the failure to be so qualified reasonably could be expected to
result in a Material Adverse Change.
 
(b)  Set forth on Schedule 4.8 (as such Schedule may be updated in connection
with any transaction permitted by this Agreement), is a complete and accurate
description of the authorized capital Stock of each Credit Party, by class, and,
as of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 4.8, there
are no subscriptions, options, warrants, or calls relating to any shares of any
Credit Party’s capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Credit Party is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock prior to the Maturity Date.
 
(c)  Set forth on Schedule 4.8 (as such Schedule may be updated in connection
with any transaction permitted by this Agreement), is a complete and accurate
list of each Credit Party’s direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by the applicable Credit Party. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.
 
4.9  Due Authorization; No Conflict.
 
(a)  As to each Credit Party, the execution, delivery, and performance by such
Credit Party of this Agreement and the other Loan Documents to which it is a
party have been duly authorized by all necessary action on the part of such
Credit Party.
 
(b)  As to each Credit Party, the execution, delivery, and performance by such
Credit Party of this Agreement and the other Loan Documents to which it is a
party do not and will not (i) violate any provision of federal, state, or local
law or regulation applicable to any Credit Party, the Governing Documents of any
Credit Party, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Credit Party, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Credit Party where such
default is reasonably likely to result in the termination of such contract,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of any Credit Party, other than
Permitted Liens, or (iv) require any approval of any Credit Party’s
interestholders or any approval or consent of any Person under any material
contractual obligation of any Credit Party, other than consents or approvals
that have been obtained and that are still in force and effect or where the
failure to obtain such consents or approvals is not reasonably likely to result
in the termination of any such contract.
 
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(c)  Other than the filing of financing statements and the recordation of the
Copyright Security Agreement, the Patent Security Agreement, the Trademark
Security Agreement and the Mortgages, the execution, delivery, and performance
by each Credit Party of this Agreement and the other Loan Documents to which
such Credit Party is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
 
(d)  As to each Credit Party, this Agreement and the other Loan Documents to
which such Credit Party is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Credit Party will be the
legally valid and binding obligations of such Credit Party, enforceable against
such Credit Party in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’
rights generally.
 
(e)  The Agent’s Liens are validly created, perfected (to the extent such Liens
may be perfected by the filings contemplated to be made, and agreements
contemplated to be entered into, by the Loan Documents), and first priority
Liens, subject only to Permitted Liens.
 
4.10  Litigation. Other than those matters disclosed on Schedule 4.10, and other
than matters that reasonably could not be expected to result in a Material
Adverse Change, there are no actions, suits, or proceedings pending or, to the
best knowledge of each Credit Party, threatened against any Credit Party or any
of its Subsidiaries. 
 
4.11  No Material Adverse Change. All financial statements relating to the
Credit Parties and their Subsidiaries that have been delivered by any Credit
Party to the Lender Group have been prepared in accordance with GAAP (except, in
the case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, the Credit Parties’ and their respective Subsidiaries’ financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change since the date of the latest
financial statements submitted to Agent on or before the Closing Date.
 
4.12  Fraudulent Transfer.
 
(a)  As of the Closing Date, the Borrowers, taken as a whole, are Solvent and
the Credit Parties and their respective Subsidiaries, taken as a whole, are
Solvent.
 
(b)  No transfer of property is being made by any Credit Party or any of its
Subsidiaries and no obligation is being incurred by any Credit Party or any of
its Subsidiaries 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 Credit Party or its
Subsidiaries.
 
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4.13  Employee Benefits.
 
(a)  Set forth on Schedule 4.13(a) is a complete and accurate list of all Plans
that (i) meet the definition of an “employee pension benefit plan” under Section
3(2) of ERISA, (ii) are Pension Plans or unfunded deferred compensation plans
and (iii) that are currently maintained or contributed to by any Credit Party,
any of their respective Subsidiaries or any of their respective ERISA Affiliates
as of the Closing Date.
 
(b)  each Credit Party, their respective Subsidiaries, and their respective
ERISA Affiliates are in compliance with applicable provisions and requirements
of ERISA and the regulations and published interpretations thereunder with
respect to each Plan, and have performed their obligations under each Plan,
except as would not reasonably be expected to result in a material liability to
any Credit Party or Subsidiary of a Credit Party.
 
(c)  No ERISA Event has occurred or is reasonably expected to occur.
 
(d)  Except to the extent required under Section 4980B of the IRC, no Plan
provides health benefits (through the purchase of insurance or otherwise) for
any retired or former employee of any Credit Party, any of their respective
Subsidiaries or any of their respective ERISA Affiliates, except as would not
reasonably be expected to result in a material liability to any Credit Party or
Subsidiary of a Credit Party.
 
(e)  As of the most recent valuation date for any Pension Plan, the amount of
outstanding benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $1,000,000.
 
(f)  All liabilities under each Plan are (i) funded to at least the minimum
level required by law or, if higher, to the level required by the terms
governing the Plans, (ii) insured with a reputable insurance company, (iii)
provided for or recognized in the financial statements most recently delivered
to Agent pursuant to Section 5.3 hereof to the extent required by GAAP or (iv)
estimated in the formal notes to the financial statements most recently
delivered to Agent pursuant to Section 5.3 hereof to the extent required by
GAAP.
 
(g)  To the best knowledge of each Credit Party, there are no circumstances
which are reasonably expected to give rise to a material liability in relation
to any Plan which is not funded, insured, provided for, recognized or estimated
in the manner described in subsection (f) above.
 
4.14  Environmental Condition. Except as set forth on Schedule 4.14, (a) to each
Credit Party’s knowledge, no Credit Party’s or its Subsidiaries’ properties or
assets has ever been used by such Person, or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such use, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to each Credit Party’s knowledge, no Credit
Party’s or its Subsidiaries’ properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) none of the Credit Parties nor any of
their respective Subsidiaries have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by any Credit Party or its Subsidiaries, and (d) none of the Credit
Parties nor any of their Subsidiaries have received a summons, citation, notice,
or directive from the United States Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by any
Credit Party or any of its Subsidiaries resulting in the releasing or disposing
of Hazardous Materials into the environment.
 
4.15  Intellectual Property. Each Credit Party and each Subsidiary of a Credit
Party owns, or holds licenses in or otherwise has the right to use, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are reasonably necessary to the conduct of its business as currently conducted,
and attached hereto as Schedule 4.15 (as updated from time to time) is a true,
correct, and complete listing of all material patents, patent applications,
trademarks, trademark applications, copyright registrations and applications for
registrations as to which such Credit Party or one of its Subsidiaries is the
owner or is an exclusive licensee.
 
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4.16  Leases. Each Credit Party and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating and all of such material
leases are valid and subsisting and no material default by such Credit Party or
its Subsidiaries exists under any of them.
 
4.17  Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 (as
such Schedule may be updated from time to time) is a listing of all of each
Credit Party’s and its Subsidiaries’ Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (a) the name and
address of such Person, and (b) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.
 
4.18  Complete Disclosure. All factual information other than financial
projections or forecasts (taken as a whole) furnished by or on behalf of any
Credit Party or their respective Subsidiaries in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information other than financial projections or forecasts
(taken as a whole) hereafter furnished by or on behalf of any Credit Party or
their respective Subsidiaries in writing to Agent or any Lender will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. On the Closing Date, the Closing Date Projections represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent the Credit Parties’ good faith estimate of
their and their respective Subsidiaries’ future performance for the periods
covered thereby in light of the circumstances under which such information was
provided (it being understood that such Closing Date Projections and other
Projections are uncertain by nature and may not be realized).
 
4.19  Indebtedness. Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of each Credit Party and each Subsidiary of a Credit Party
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and describes the principal terms thereof.
 
4.20  Material Contracts. Set forth on Schedule 4.20 (which Borrowers may amend
from time to time pursuant to Section 5.2) is a complete and accurate list, as
of the Closing Date, of all Material Contracts, showing the parties and subject
matter thereof and amendments and modifications thereto. Each Material Contract
(a) is in full force and effect and is binding upon and enforceable against each
Borrower, and to the Borrowers’ best knowledge, each other Person that is a
party thereto in accordance with its terms, (b) has not been otherwise amended
or modified (other than amendments or modifications that are not prohibited by
the terms of this Agreement or any other Loan Document), except that there have
been no amendments or modifications to the Note Documents without the requisite
consent provided for hereunder, and (c) is not in default due to the action of
any Borrower.
 
4.21  Note Documents. Credit Parties have delivered to Agent true and correct
copies of the Note Documents. The transactions contemplated by the Note
Documents will be consummated (a) contemporaneously with the making of the
initial Advances hereunder and (b) in accordance with their respective terms.
 
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5.  AFFIRMATIVE COVENANTS.
 
Each Credit Party covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, such Credit Party shall and
shall cause each of their respective Subsidiaries to do all of the following:
 
5.1  Accounting System. Maintain a system of accounting that enables the Credit
Parties to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to their and their Subsidiaries’ sales.
 
5.2  Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with each of the reports set forth on Schedule 5.2 at
the times specified therein. In addition, each Borrower agrees to cooperate
fully with Agent to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth above.
 
5.3  Financial Statements, Reports, Certificates. Deliver to Agent, with copies
to each Lender, each of the financial statements, reports, or other items set
forth on Schedule 5.3 at the time specified herein. In addition, each Credit
Party agrees that none of its Subsidiaries will have a fiscal year different
from that of such Credit Party.
 
5.4  Credit Party Reports. Cause each Credit Party to deliver its annual
financial statements at the time when Parent Guarantor provides its audited
financial statements to Agent, but only to the extent such Credit Party’s
financial statements are not consolidated with Parent Guarantor’s financial
statements.
 
5.5  Inspection. Permit Agent and each of its authorized representatives or
agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its
affairs, finances, and accounts with, and to be advised as to the same by, its
officers and employees at such reasonable times and intervals as Agent may
designate and, so long as no Default or Event of Default exists, with reasonable
prior notice to and during regular business hours of Administrative Borrower.
 
5.6  Maintenance of Properties. Maintain and preserve all of their tangible
properties which are necessary or useful in the proper conduct to their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, so as to prevent any loss or
forfeiture thereof or thereunder.
 
5.7  Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against such
Credit Party, its Subsidiaries, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period,
except to the extent that (a) the validity of such assessment or tax shall be
the subject of a Permitted Protest or (b) such assessments or taxes do not
exceed, in the aggregate at any one time owing, $50,000. Except with respect to
taxes not exceeding, in the aggregate at any one time owing, $50,000, each
Credit Party will and will cause their Subsidiaries to make timely (after giving
effect to any extensions) payment or deposit of all tax payments and withholding
taxes required of them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Agent with proof satisfactory to Agent in
its Permitted Discretion indicating that the applicable Credit Party or
Subsidiary of a Credit Party has made such payments or deposits. 
 
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5.8  Insurance.
 
(a)  At the Credit Parties’ expense, maintain insurance respecting their
respective, and their respective Subsidiaries’, assets wherever located,
covering loss or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. Borrowers also shall maintain business interruption, general
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation as ordinarily are insured
against by other Persons engaged in the same or similar businesses. All such
policies of insurance shall be in such amounts and with such insurance companies
as are reasonably satisfactory to Agent. In accordance with Section 5.20, the
Credit Parties shall deliver certified copies of all such policies to Agent with
an endorsement naming Agent as a loss payee (under a satisfactory lender’s loss
payable endorsement) or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
 
(b)  Administrative Borrower shall give Agent prompt notice of any loss
exceeding $250,000 (for any one occurrence or series of related occurrences)
covered by such insurance. So long as no Event of Default has occurred and is
continuing, the applicable Credit Party shall have the exclusive right to adjust
any losses payable under any such insurance policies (other than workers’
compensation insurance) which are less than $500,000 (for any one occurrence or
series of related occurrences). Following the occurrence and during the
continuation of an Event of Default, or in the case of any losses payable under
such insurance exceeding $500,000, Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies, without any
liability to any Credit Party whatsoever in respect of such adjustments. Any
monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or to be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations; provided,
however, that, with respect to any such monies in an aggregate amount during any
12 consecutive month period not in excess of $1,000,000, so long as (A) no
Default or Event of Default shall have occurred and is continuing,
(B) Borrowers’ Excess Availability is greater than $5,000,000,
(C) Administrative Borrower shall have given Agent prior written notice of the
applicable Credit Party’s or its applicable Subsidiary’s intention to apply such
monies to the costs of repairs, replacement, or restoration of the property
which is the subject of the loss, destruction, or taking by condemnation,
(D) the monies are held in a cash collateral account in which Agent has a
perfected first-priority security interest, and (E) the applicable Credit Party
or its applicable Subsidiary completes such repairs, replacements, or
restoration within 180 days after the initial receipt of such monies, the
applicable Credit Party or its applicable Subsidiary shall have the option to
apply such monies to the costs of repairs, replacement, or restoration of the
property which is the subject of the loss, destruction, or taking by
condemnation unless and to the extent that such applicable period shall have
expired without such repairs, replacements, or restoration being made, in which
case, any amounts remaining in the cash collateral account shall be paid to
Agent and applied as set forth above. Notwithstanding the foregoing, the
provisions of this Section 5.8(b) shall not apply to the insurance claims set
forth on Schedule 5.8(b) hereto.
 
(c)  The Credit Parties shall obtain and maintain, at their sole cost and
expense, key man life insurance, on terms and issued by a company satisfactory
to Agent in its Permitted Discretion, with respect to Barry Feld and Don
Norsworthy in an amount no less than $5,000,000 in the aggregate. The Credit
Parties shall, and shall cause their Subsidiaries to, collaterally assign all
key man life insurance policies owned by any of them to Agent pursuant to
documentation acceptable to Agent in its Permitted Discretion.
 
5.9  Location of Inventory and Equipment. Except for Inventory and Equipment
having a book value of less than $250,000 in the aggregate for all Credit
Parties and their respective Subsidiaries (inclusive of Inventory and Equipment
permitted to be stored with bailees, warehousemen and similar parties pursuant
to Section 6.15), keep the Credit Parties’ and their Subsidiaries’ Inventory and
Equipment (other than vehicles and Equipment out for repair or refurbishment or
in transit) only at the locations identified on Schedule 4.5 and their chief
executive offices only at the locations identified on Schedule 4.7(b); provided,
however, that Administrative Borrower may amend Schedule 4.5 or Schedule 4.7 so
long as such amendment occurs by written notice to Agent not less than 30 days
prior to the date on which such Inventory or Equipment is moved to such new
location or such chief executive office is relocated, so long as, with respect
to assets of the Credit Parties and their domestic Subsidiaries, such new
location is within the continental United States, and at the time of such
written notification, the applicable Credit Party provides Agent a Collateral
Access Agreement with respect thereto.
 
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5.10  Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change.
 
5.11  Leases. Pay when due all rents and other amounts payable under any
material leases to which such Credit Party or any Subsidiary of such Credit
Party is a party or by which any Credit Party’s or any of its Subsidiaries’
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
 
5.12  Existence. Except as otherwise expressly permitted by this Agreement, at
all times preserve and keep in full force and effect each Credit Party’s and
each of its Subsidiaries’ valid existence and good standing and any rights and
franchises material to their businesses.
 
5.13  Environmental.
 
(a)  Keep any property either owned or operated by any Credit Party or any
Subsidiary of a Credit Party free of any material Environmental Liens or post
bonds or other financial assurances sufficient to satisfy the obligations or
liability evidenced by such Environmental Liens, (b) comply, in all material
respects, with Environmental Laws and provide to Agent documentation of such
compliance which Agent reasonably requests, (c) promptly notify Agent of any
release of a Hazardous Material in any reportable quantity from or onto property
owned or operated by any Credit Party or any Subsidiary of a Credit Party and
take any Remedial Actions required to abate said release or otherwise to come
into material compliance with applicable Environmental Law, and (d) promptly,
but in any event within 5 days of its receipt thereof, provide Agent with
written notice of any of the following: (i) notice that an Environmental Lien
has been filed against any of the real or personal property of any Credit Party
or any Subsidiary of a Credit Party, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against any Credit
Party or any Subsidiary of a Credit Party, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
 
5.14  Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished and taken as a whole with all other such information so furnished, any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made. The foregoing to the contrary notwithstanding,
any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or
modifying this Agreement or any of the Schedules hereto.
 
5.15  Control Agreements. Take all reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 6.12) all of
its Securities Accounts, Deposit Accounts, electronic chattel paper, investment
property, and letter of credit rights.
 
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5.16  Formation of Subsidiaries. At the time that any Credit Party forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Credit Party shall, as Agent may request in its
Permitted Discretion, (a) cause such new Subsidiary to provide to Agent a
joinder hereto, to the Guaranty and the Security Agreement, together with such
other security documents (including Mortgages with respect to any owned Real
Property of such new Subsidiary having a fair market value of $500,000 or more
for any one location or $1,000,000 in the aggregate for all such Real Property)
and joinders to such other Loan Documents as Agent may request in its Permitted
Discretion, as well as appropriate financing statements (and with respect to all
property subject to a Mortgage, fixture filings), all in form and substance
satisfactory to Agent in its Permitted Discretion (including being sufficient to
grant Agent a first priority Lien (subject to Permitted Liens) in and to the
assets of such newly formed or acquired Subsidiary), (b) provide to Agent a
pledge agreement and appropriate certificates and powers and/or financing
statements, pledging all of the direct or beneficial ownership interest in such
new Subsidiary, in form and substance satisfactory to Agent in its Permitted
Discretion, and (c) provide to Agent all other documentation, including one or
more opinions of counsel satisfactory to Agent in its Permitted Discretion with
respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance or other documentation with
respect to all property subject to a Mortgage). Any document, agreement, or
instrument executed or issued pursuant to this Section 5.16 shall be a Loan
Document. Notwithstanding the foregoing, if a Subsidiary that is so formed or
acquired is a Controlled Foreign Corporation, then clause (a) of the immediately
preceding sentence shall not be applicable and, with respect to clause (b) of
the immediately preceding sentence, such pledge shall be limited to 65% of the
voting power of all classes of capital Stock of such Subsidiary entitled to
vote; provided, that immediately upon any amendment of the IRC that would allow
the pledge of a greater percentage of the voting power of capital Stock in such
Subsidiary without adverse tax consequences, such pledge shall include such
greater percentage of capital Stock of such Subsidiary from that time forward.
 
5.17  ERISA Compliance.
 
(a)  Each Credit Party shall do, and shall cause each of their respective
Subsidiaries and ERISA Affiliates to do, each of the following: (i) maintain
each Plan in compliance with the applicable provisions of ERISA, the IRC and
each other applicable federal or state law, except as would not reasonably be
expected to result in a material liability to any Credit Party or Subsidiary of
a Credit Party; (ii) cause each Qualified Plan to maintain its qualified status
under Section 401(a) of the IRC, except as would not reasonably be expected to
result in a material liability to any Credit Party or Subsidiary of a Credit
Party; (iii) make all required contributions to each Plan, except as would not
reasonably be expected to result in a material liability to any Credit Party or
Subsidiary of a Credit Party; (iv) not become a party to any Multiemployer Plan,
except as would not reasonably be expected to result in a material liability to
any Credit Party or Subsidiary of a Credit Party; (v) ensure that all
liabilities under each Plan are (A) funded to at least the minimum level
required by law or, if higher, to the level required by the terms governing such
Plan; (B) insured with a reputable insurance company; or (C) provided for or
recognized in the financial statements most recently delivered to Agent under
Section 5.3 (to the extent required by GAAP); and (vi) ensure that the
contributions or premium payments to or in respect of each Plan are and continue
to be promptly paid at no less than the rates required under the rules of such
Plan and in accordance with the most recent actuarial advice received in
relation to such Plan and applicable law.
 
(b)  Deliver to Agent such certifications or other evidence of compliance with
the provisions of Section 4.13 as Agent may from time to time reasonably
request, in each case within ten (10) days of such request.
 
(c)  Promptly notify Agent of each of the following events affecting any Credit
Party, any of their respective Subsidiaries or any ERISA Affiliates (but in no
event more than ten (10) days after such Credit Party becomes aware of such
event), together with a copy of each notice with respect to such event that may
be required to be filed with a Governmental Authority and each notice delivered
by a Governmental Authority to any Credit Party, any of their respective
Subsidiaries or any ERISA Affiliates with respect to such event:
 
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(i)  an ERISA Event;
 
(ii)  the adoption of any new Pension Plan by any Credit Party, any of their
respective Subsidiaries or any ERISA Affiliates;
 
(iii)  the adoption of any amendment to a Pension Plan, if such amendment will
result in a material increase in benefits or unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA); or
 
(iv)  the commencement of contributions by any Credit Party, any of their
respective Subsidiaries or any ERISA Affiliate to any Plan that is subject to
Title IV of ERISA or section 412 of the IRC;
 
(d)  Promptly, but in any event within ten (10) days of the filing or sending
thereof or the making of such request (as applicable), deliver to Agent copies
of the following documents, to the extent applicable; (i) any Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by any
Credit Party, any of their respective Subsidiaries or any ERISA Affiliates with
the Internal Revenue Service with respect to any Pension Plan; (ii) all notices
received by any Credit Party, any of their respective Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning
an ERISA Event; and (iii) such other documents or governmental reports or
filings relating to any Plan as Agent shall reasonably request.
 
5.18  Note Documents. 
 
(a)  Contemporaneously with the initial extensions of credit hereunder: (i)
cause all transactions contemplated by the Note Documents to be consummated; and
(ii) furnish to Agent evidence thereof in form and content satisfactory to
Agent, as well as certified (as of the Closing Date) true and complete copies of
the Note Documents which shall be in compliance with all applicable laws and all
necessary approvals shall have been obtained in connection therewith.
 
(b)  Promptly provide Agent with true and complete copies of any and all
material documents delivered to any Person pursuant to, or in connection with,
the Note Documents.
 
5.19  Further Assurances. Take such action and execute, acknowledge and deliver,
and cause each of its Subsidiaries to take such action and execute, acknowledge
and deliver, at its sole cost and expense, such agreements, instruments or other
documents as are necessary, or as Agent may reasonably request, from time to
time in order (a) to carry out more effectively the purposes of this Agreement
and the other Loan Documents, (b) to subject to valid and perfected first
priority Liens (subject only to Permitted Liens) any of the Collateral or any
other property of any Credit Party and its domestic Subsidiaries now or by
agreement of the parties hereafter intended to be subject to Agent’s Liens under
this Agreement or any other Loan Document, (c) to establish and maintain the
validity and effectiveness of any of the Loan Documents and the validity,
perfection and priority of the Liens now or by agreement of the parties
hereafter intended to be created thereby, and (d) to better assure, convey,
grant, assign, transfer and confirm unto Agent and each Lender the rights now or
by agreement of the parties hereafter intended to be granted to it under this
Agreement or any other Loan Document.
 
5.20  Post-Closing Conditions. 
 
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(a)  Use their commercially reasonable efforts to deliver to Agent, within 5
Business Days after the Closing Date, evidence of either (i) the termination, as
of record, of UCC financing statement number 22979957 filed November 16, 2002
with the Delaware Secretary of State by Congress Financial Corporation (now
known as Wachovia Capital Finance Corporation) as secured party against Hometown
Threads LLC as debtor (the “Congress UCC”) or (ii) the amendment, as of record,
of the Congress UCC such that the debtor listed therein is not Hometown Threads
LLC.
 
(b)  Within 10 Business Days after the Closing Date, deliver to Agent
consolidated and consolidating financial statements of Parent Guarantor and its
Subsidiaries for their fiscal year ended January 30, 2005, audited by
independent certified public accountants reasonably acceptable to Agent and
certified, without any qualifications (including any (i) “going concern” or like
qualification or exception, (ii) qualification or exception as to the scope of
such audit, or (iii) qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 6.16), by
such accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants’ letter to management).
 
(c)  Within 10 Business Days after the Closing Date, deliver to Agent the Life
Insurance Assignments, each in form and substance satisfactory to Agent in its
Permitted Discretion, together with such documentation in respect thereof as
Agent may request to effectuate the transactions contemplated thereby,
including, without limitation, evidence of the filing thereof with the issuers
of all life insurance policies referred to therein and copies of all life
insurance policies referred to therein (or, if necessary for Agent to collect
any proceeds of such policies, the original life insurance policies referred to
therein).
 
(d)  Within 10 Business Days after the Closing Date, deliver to Agent a
Collateral Access Agreement, in form and substance satisfactory to Agent in its
Permitted Discretion, with respect to the Credit Parties’ location at Lakemont
West, Building IV, 13321 Carowinds Blvd., Charlotte, NC 28273.
 
(e)  Within 10 Business Days after the Closing Date, deliver to Agent all
certificates representing the shares of Stock pledged under the Security
Agreement along with Stock powers with respect thereto endorsed in blank.
 
(f)  Within 20 days after the Closing Date, deliver to Agent a Control
Agreement, each in form and substance satisfactory to Agent in its Permitted
Discretion, with respect to the Credit Parties’ Deposit Accounts and Securities
Accounts (if any) maintained with Bank of America, N.A., Scotiabank and Banco
Popular.
 
(g)  Within 20 days after the Closing Date, deliver to Agent a Credit Card
Agreement, each in form and substance satisfactory to Agent in its Permitted
Discretion, with respect to the Credit Parties’ credit card processing
arrangements with each of NOVA Information Systems, Inc. and Paymentech.
 
(h)  Except as otherwise required pursuant to Schedule 3.1 within 30 days after
the Closing Date, deliver certified copies of all insurance policies required to
be maintained by the Credit Parties pursuant to Section 5.8 to Agent with an
endorsement naming Agent as a loss payee (under a lender’s loss payable
endorsement satisfactory to Agent in its Permitted Discretion) or additional
insured, as appropriate.
 
(i)  Within thirty (30) days after the Closing Date, deliver to Agent, in form
satisfactory to Agent in its Permitted Discretion, the unaudited financial
statements, including consolidated balance sheet, income statement, and
statement of cash flow, covering Parent Guarantor’s and its Subsidiaries’
operations during each of their fiscal months ended in June 5, 2005 and July 3,
2005.
 
(j)  Within 60 days after the Closing Date, deliver to Agent (i) appraisals of
the Real Property Collateral satisfactory to Agent in its Permitted Discretion,
(ii) mortgagee title insurance policies (or marked commitments to issue the
same) for the Real Property Collateral issued by a title insurance company
satisfactory to Agent in its Permitted Discretion (each a “Mortgage Policy” and,
collectively, the “Mortgage Policies”) in amounts satisfactory to Agent in its
Permitted Discretion assuring Agent that the Mortgages on such Real Property
Collateral are valid and enforceable first priority mortgage Liens on such Real
Property Collateral free and clear of all defects and encumbrances except
Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance satisfactory to Agent in its Permitted Discretion, (iii) a phase-I
environmental report and a real estate survey with respect to each parcel
composing the Real Property Collateral, with the environmental consultants and
surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof being acceptable to Agent in its Permitted
Discretion.
 
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6.  NEGATIVE COVENANTS.
 
Each Credit Party covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, such Credit Party will not
and will not permit any of its Subsidiaries to do any of the following:
 
6.1  Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except, in each case to the extent also permitted under the terms
of any document or agreement governing or giving rise to any Specified
Indebtedness which is then outstanding:
 
(a)  Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit,
 
(b)  Indebtedness set forth on Schedule 4.19,
 
(c)  Permitted Purchase Money Indebtedness, 
 
(d)  refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 6.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of,
or interest rate by more than 2 percentage points with respect to, the
Indebtedness so refinanced, renewed, or extended or add one or more Credit
Parties as liable with respect thereto if such additional Credit Parties were
not liable with respect to the original Indebtedness, (ii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to any Credit Party, (iii) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness, (iv) the Indebtedness that is
refinanced, renewed, or extended is not recourse to any Person that is liable on
account of the Obligations other than those Persons which were obligated with
respect to the Indebtedness that was refinanced, renewed, or extended, and (v)
such refinancing, renewal or extension is permitted under the terms of any
document or agreement governing or giving rise to any Specified Indebtedness to
the extent such Specified Indebtedness will remain outstanding after giving
effect to such refinancing, renewal or extension hereunder,
 
(e)  endorsement of instruments or other payment items for deposit,
 
(f)  Indebtedness comprising Permitted Investments,
 
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(g)  to the extent subject to the Note Subordination Agreement and not exceeding
$50,000,000 in the aggregate principal amount outstanding at any time, the
Indebtedness arising under the Note Documents,
 
(h)  to the extent subject to the Agfa Subordination Agreement and subject to
Section 6.7, Indebtedness owing to Agfa,
 
(i)  Indebtedness arising in connection with (i) surety bonds, (ii) unsecured
indemnities and (iii) maintenance of Deposit Accounts,
 
(j)  to the extent subject to the Intercompany Subordination Agreement,
Indebtedness owing by a Credit Party or one of its Subsidiaries to another
Credit Party or Subsidiary of a Credit Party,
 
(k)  Indebtedness and obligations of the Borrowers in respect of Hedging
Agreements entered into in the ordinary course of business to manage existing or
anticipated risks and not for speculative purposes, and
 
(l)  obligations of a Credit Party to repay any purchase price adjustment,
upfront payment or rebate payment received pursuant to a supply contract or
other contract (each such supply contract or other contract to be in form and
substance acceptable to the Agent).
 
6.2  Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for, in each
case to the extent also permitted under the terms of any document or agreement
governing or giving rise to any Specified Indebtedness which is then
outstanding, Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 6.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
 
6.3  Restrictions on Fundamental Changes.
 
(a)  Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock; provided, however, that, so long as no Event of Default
would be directly or indirectly caused as a result thereof, and in each case to
the extent also permitted under the terms of any document or agreement governing
or giving rise to any Specified Indebtedness which is then outstanding, a Credit
Party (other than the Parent Guarantor) or any Subsidiary of any Credit Party
may merge or consolidate with another Credit Party (other than the Parent
Guarantor), provided, that (i) if the Borrower is a party thereto, the Borrower
shall be the surviving corporation and (ii) if one of the parties thereto is a
Credit Party, such Credit Party shall be the surviving corporation,
 
(b)  Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution); provided, however, in each case to the extent also permitted under
the terms of any document or agreement governing or giving rise to any Specified
Indebtedness which is then outstanding, a wholly-owned Subsidiary of a Credit
Party (other than a Borrower) may liquidate or dissolve so long as all proceeds
thereof and assets of such Subsidiary are received by such Credit Party;
and provided, further, in each case to the extent also permitted under the terms
of any document or agreement governing or giving rise to any Specified
Indebtedness which is then outstanding, any Borrower may liquidate or dissolve
so long as all proceeds thereof and assets of such Borrower are received by
another Borrower,
 
(c)  Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
assets; provided, however, in each case to the extent also permitted under the
terms of any document or agreement governing or giving rise to any Specified
Indebtedness which is then outstanding, a wholly-owned Subsidiary of a Credit
Party (other than a Borrower) may convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets so long as all such
assets are received by such Credit Party; and provided, further, in each case to
the extent also permitted under the terms of any document or agreement governing
or giving rise to any Specified Indebtedness which is then outstanding, any
Borrower may convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets so long as all such assets are received by
another Borrower, or
 
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(d)  Suspend or go out of a substantial portion of its or their business.
 
6.4  Disposal of Assets. Other than Permitted Dispositions which are permitted
to be made pursuant to the agreements and documents governing or giving rise to
any Specified Indebtedness which is then outstanding, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of the assets of any
Credit Party or any Subsidiary of a Credit Party.
 
6.5  Change Name. Change any Credit Party’s or any of its Subsidiaries’ name,
organizational identification number, state of organization, or organizational
identity; provided, however, that a Credit Party or a Subsidiary of a Credit
Party may change its name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as (a) at the time
of such written notification, such Credit Party or such Subsidiary, as
applicable, provides any financing statements necessary to perfect and continue
perfected the Agent’s Liens and (b) immediately after such name change, such
Credit Party or such Subsidiary, as applicable, provides Agent with evidence of
such name change (including copies of any related public filings).
 
6.6  Nature of Business. Make any change in the principal nature of their
business from that conducted on the Closing Date and any business similar,
ancillary or related thereto or any reasonable extension thereof.
 
6.7  Payments and Amendments. Except in connection with a refinancing permitted
by Section 6.1(d),
 
(a)  optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Credit Party or any Subsidiary of a Credit Party, other than
(i) the Obligations in accordance with this Agreement and (ii) pursuant to the
deposit of no more than $10,000,000 with The Bank of New York Trust Company,
N.A. in escrow for payment of interest due August 1, 2005 with respect to the
Notes (the “Interest Escrow”),
 
(b)  make any payment on account of the Subordinated Indebtedness if such
payment is not permitted at such time under this Agreement or the Subordination
Agreement applicable to such Indebtedness,
 
(c)  directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any of the Subordinated Indebtedness or any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Section 6.1(b); provided, however, terms
and conditions of any of the Subordinated Indebtedness or agreements related
thereto may be amended if expressly permitted under the Subordination Agreement
related thereto,
 
(d)  make any payment on account of any Specified Indebtedness other than (i)
with respect to Indebtedness arising under the Goldman Holdco Notes, payments of
interest made in kind and (ii) with respect to all other Specified Indebtedness
regularly scheduled interest payments, or
 
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(e)  make any payment with respect to any Qualified Vendor Payables unless such
Qualified Vendor Payable is replaced by another Qualified Vendor Payable so that
in no event will the aggregate amount of Qualified Vendor Payables be less than
$20,000,000, as reduced from time to time in accordance with the following
provision. The Borrowers shall be permitted to reduce their outstanding
Qualified Vendor Payables; provided, however, that during any twelve month
period the aggregate reductions of Qualified Vendor Payables shall not exceed
$5,000,000 and before making any such payment (i) no Default or Event of Default
has occurred and is continuing or would occur after giving effect to such
payment, (ii) the Credit Parties’“Consolidated EBITDA” (as defined in the
Indenture) for the most recent Four-Quarter Period is at least $50,000,000, and
(iii) Excess Availability is at least $5,000,000 before and after giving effect
to such payment.
 
6.8  Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.
 
6.9  Consignments. Consign any of their Inventory or sell any of their Inventory
on bill and hold, sale or return, sale on approval, or other conditional terms
of sale.
 
6.10  Distributions. Other than Permitted Distributions which are permitted to
be made pursuant to the agreements and documents governing or giving rise to any
Specified Indebtedness which is then outstanding, make any distribution or
declare or pay any dividends (in cash or other property, other than Stock) on,
or purchase, acquire, redeem, or retire any of any Credit Party’s Stock, of any
class, whether now or hereafter outstanding.
 
6.11  Accounting Methods. Modify or change their fiscal year or their method of
accounting (other than as may be required by any Governmental Authority or to
conform to GAAP) or enter into, modify, or terminate any agreement currently
existing, or at any time hereafter entered into with any third party accounting
firm or service bureau for the preparation or storage of any Credit Party’s or
its Subsidiaries’ accounting records without said accounting firm or service
bureau agreeing to provide Agent, to the same extent previously available to
Agent, information regarding such Credit Party’s and its Subsidiaries’ financial
condition.
 
6.12  Investments. Except for Permitted Investments which are permitted to be
made pursuant to the agreements and documents governing or giving rise to any
Specified Indebtedness which is then outstanding, directly or indirectly, make
or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment unless such liabilities
are permitted or not prohibited pursuant to Section 6.1; provided, however, that
(a) no Credit Party or any of its domestic Subsidiaries shall have cash, Cash
Equivalents and other Permitted Investments (other than in the Cash Management
Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in
excess of $10,000 at any one time unless such Credit Party or such Subsidiary,
as applicable, and the applicable securities intermediary or bank have entered
into Control Agreements governing such cash, Cash Equivalents and other
Permitted Investments in order to perfect (and further establish) the Agent’s
Liens therein and (b) no foreign Subsidiary of any Credit Party shall have cash,
Cash Equivalents and other Permitted Investments in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $100,000 at any one
time; provided, further, however, so long as any Deposit Account of a Credit
Party is utilized solely for payment of payroll expenses, such Deposit Account
shall not be required to be subject to a Control Agreement. Subject to the
foregoing proviso, the Credit Parties shall not and shall not permit their
respective Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control Agreement in
respect of such Deposit Account or Securities Account.
 
6.13  Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of any Credit Party except for, in
each case to the extent also permitted under the terms of any document or
agreement governing or giving rise to any Specified Indebtedness which is then
outstanding: (a) transactions that (i) are upon fair and reasonable terms,
(ii) if they involve one or more payments by any Credit Party or any of its
Subsidiaries in excess of $250,000, are fully disclosed to Agent, and (iii) are
no less favorable to such Credit Party or its Subsidiaries, as applicable, than
would be obtained in an arm’s length transaction with a non-Affiliate, and (b)
making payments for which Permitted Distributions are permitted to be made or
otherwise constituting transactions that are expressly permitted by this
Agreement and the agreements and documents governing or giving rise to any
Specified Indebtedness which is then outstanding; provided, that,
notwithstanding the foregoing, this Section 6.13 shall not prohibit or otherwise
limit customary agreements or arrangements between any Credit Party or any of
its Subsidiaries, on the one hand, and any of its employees, officers or
directors, on the other hand, relating to compensation or benefits, stock
options, warrants or other equity-based compensation plans, fee and expense
reimbursements, indemnification or insurance.
 
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6.14  Use of Proceeds. Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay in full the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, and
(ii) to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents and the transactions contemplated
hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted general corporate purposes.
 
6.15  Inventory and Equipment with Bailees. Except for Inventory and Equipment
having a book value of less than $250,000 in the aggregate for all Credit
Parties and their respective Subsidiaries (inclusive of Inventory and Equipment
permitted to be located at facilities not listed on Schedule 4.5), store the
Inventory or Equipment of any Credit Party or its Subsidiaries at any time now
or hereafter with a bailee, warehouseman, or similar party.
 
6.16  Financial Covenants. Fail to maintain a Fixed Charge Coverage Ratio equal
to or greater than the ratio set forth in the table below when measured as of
the date set forth opposite thereto:
 
 
Applicable Ratio
 
 
Measurement Date
 
 
0.30:1.00
 
 
October 30, 2005
 
 
0.40:1.00
 
 
January 29, 2006
 
 
0.35:1.00
 
 
April 30, 2006
 
 
0.45:1.00
 
 
July 30, 2006
 
 
0.55:1.00
 
 
October 29, 2006
 
 
0.70:1.00
 
 
January 28, 2007
 
 
0.75:1.00
 
 
April 29, 2007
 
 
0.75:1.00
 
 
July 29, 2007
 
 
0.80:1.00
 
 
October 28, 2007
 
 
0.80:1.00
 
 
February 3, 2008
 
 
0.85:1.00
 
 
May 4, 2008
 
 
0.85:1.00
 
 
August 3, 2008
 
 
0.85:1.00
 
 
November 2, 2008
 
 
0.95:1.00
 
 
February 1, 2009 and the last day
 
 
of each fiscal quarter thereafter
 

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6.17  ERISA. Terminate or permit any of their ERISA Affiliates to, (a) terminate
any Pension Plan so as to result in any material liability to any Credit Party
or Subsidiary of a Credit Party, (b) permit to exist any ERISA Event, or any
other event or condition, which presents the risk of a material liability to any
Credit Party or Subsidiary of a Credit Party, (c) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan so as to result in any material liability to any Credit Party or any
Subsidiary of a Credit Party, (d) enter into any new Plan or modify any existing
Plan so as to increase its obligations thereunder which could result in any
material liability to Credit Party or Subsidiary of a Credit Party, (e) permit
the present value of all nonforfeitable accrued benefits under any Pension Plan
(using the actuarial assumptions utilized by the PBGC upon termination of a
Pension Plan) materially to exceed the fair market value of Pension Plan assets
allocable to such benefits, all determined as of the most recent valuation date
for each such Pension Plan, or (f) engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Agent or any Lender of any of their rights under this Agreement or the other
Loan Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA or Section 4975 of the IRC, which
would reasonably be expected to result in a material liability to any Credit
Party or Subsidiary of a Credit Party.
 
6.18  Material Contracts. Directly or indirectly, replace, restate, amend,
modify, alter, increase, or change any of the terms or conditions of any
Material Contract in any manner materially adverse to any Credit Party or the
Lender Group; provided, however, that (a) no such restatement, amendment,
modification, alteration, increase, or change shall be permitted with respect to
the Note Documents unless expressly permitted under the Note Subordination
Agreement and (b) no Material Contract which contains provisions for a Lien on
any assets of the Credit Parties or their respective Subsidiaries which is
subject to any Subordination Agreement may be replaced if such replacement
contract also provides for a Lien on any assets of the Credit Parties or their
respective Subsidiaries and such Lien is not also subordinated in favor of Agent
pursuant to a Subordination Agreement substantially identical to such existing
Subordination Agreement relating to such Material Contract or otherwise in form
and substance satisfactory to Agent in its Permitted Discretion.
 
7.  EVENTS OF DEFAULT.
 
Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:
 
7.1  If any Borrower fails to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of interest, fees,
or charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations);
 
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7.2  If any Credit Party or any Subsidiary of any Credit Party:
 
(a)  fails to perform or observe any covenant or other agreement contained in
any of Sections 2.7, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.13, 5.14, 5.16, 5.17, 5.20
and 6.1 through Error! Reference source not found. of this Agreement, Sections
6, 8 or 10 of the Security Agreement or Sections 4, 6 or 9.01 of the Mortgages;
 
(b)  fails to perform or observe any covenant or other agreement contained in
any of Sections 5.6, 5.7, 5.9, 5.10, 5.11, 5.15, 5.18 and 5.19 of this Agreement
or Sections 2, 3, 5, 7, 9.02 or 9.03 of the Mortgages and such failure continues
for a period of 10 days after the earlier of (i) the date on which such failure
shall first become known to any officer of the applicable Credit Party or
Subsidiary or (ii) written notice thereof is given to Administrative Borrower by
Agent; or
 
(c)  fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents to which such Credit Party
is a party (subject to applicable grace or cure periods, if any); in each case,
other than any such covenant or agreement that is the subject of another
provision of this Section 7 (in which event such other provision of this
Section 7 shall govern), and such failure continues for a period of 20 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of such Credit Party or (ii) written notice thereof is given to
Administrative Borrower by Agent;
 
7.3  If any material portion of any Credit Party’s or any of its Subsidiaries’
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person and the same is
not discharged before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture
by such Credit Party or the applicable Subsidiary;
 
7.4  If an Insolvency Proceeding is commenced by any Credit Party or any
Subsidiary of a Credit Party;
 
7.5  If an Insolvency Proceeding is commenced against any Credit Party or any
Subsidiary of a Credit Party, and any of the following events occur: (a) the
applicable Credit Party or Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, any Credit Party or any
Subsidiary of a Credit Party, or (e) an order for relief shall have been issued
or entered therein;
 
7.6  If any Credit Party or any Subsidiary of a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
 
7.7  If one or more judgments, orders, or awards involving an aggregate amount
of $1,000,000, or more (except to the extent paid or fully covered by insurance
pursuant to which the insurer has accepted liability therefor in writing) shall
be entered or filed against any Credit Party or any Subsidiary of any Credit
Party or with respect to any of their respective assets, and the same is not
released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such asset is subject to being forfeited by the applicable Credit Party or
the applicable Subsidiary;
 
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7.8  If (a) any Subordinated Indebtedness or Existing Indenture Indebtedness
shall be required to be prepaid or redeemed (other than by a regularly scheduled
required prepayment or redemption permitted to be made under the terms of the
Loan Documents), prior to the stated maturity thereof; or (b) with respect to
any other Indebtedness of any Credit Party or Subsidiary of any Credit Party
involving an aggregate amount of $1,000,000 or more, (i) there is a default in
one or more agreements to which any Credit Party or any Subsidiary of a Credit
Party is a party with one or more third Persons relative to such Indebtedness,
and such default (A) occurs at the final maturity of the obligations thereunder,
or (B) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of the applicable Credit Party’s or
Subsidiary’s obligations thereunder or (ii) any such Indebtedness shall be
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption permitted to be made under the terms of the Loan
Documents), prior to the stated maturity thereof;
 
7.9  If any warranty, representation, statement, or Record made herein or in any
other Loan Document or delivered to Agent or any Lender in connection with this
Agreement or any other Loan Document proves to be untrue in any respect as of
the date of issuance or making or deemed making thereof;
 
7.10  If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor;
 
7.11  If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and,
except to the extent permitted by the terms hereof or thereof, perfected and
first priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement; or
 
7.12  Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by any Credit Party or any Subsidiary of a Credit Party, or a
proceeding shall be commenced by any Credit Party or any Subsidiary of a Credit
Party, or by any Governmental Authority having jurisdiction over any Credit
Party or any Subsidiary of a Credit Party, seeking to establish the invalidity
or unenforceability thereof, or any Credit Party or any Subsidiary of a Credit
Party shall deny that it has any liability or obligation purported to be created
under any Loan Document.
 
7.13  If there occurs one or more ERISA Events which individually or in the
aggregate results in or otherwise is associated with liability of any Credit
Party, any of its Subsidiaries, or any of their respective ERISA Affiliates in
excess of $1,000,000 during the term of this Agreement; or there exists, an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities) which exceeds $1,000,000.
 
7.14  If (a) any default or event of default occurs under or with respect to any
Material Contract (or replacement thereof entered into in accordance with the
terms of this Agreement) set forth on Schedule 7.14 hereto which is not cured or
waived upon such occurrence or within any cure period provided therunder after
such occurrence or (b) any Material Contract is terminated without establishment
of a reasonable (in the business judgment of the Credit Parties) replacement
therefor.
 
7.15  If any bank at which any Cash Management Account is maintained or any bank
at which any Deposit Account of any Credit Party containing deposits in excess
of $10,000 is maintained shall fail to comply with any of the material terms of
any Cash Management Agreement or Control Agreement to which such bank is a party
or any securities intermediary, commodity intermediary or other financial
institution at any time in custody, control or possession of any investment
property of any Credit Party in excess of $10,000 shall fail to comply with any
of the material terms of any Control Agreement to which such Person is a party
and, in each case, the applicable Credit Party has not closed such Cash
Management Accounts, Deposit Accounts or Securities Accounts and established
replacements therefor subject to satisfactory (as determined by Agent in its
Permitted Discretion) Cash Management Agreements or other Control Agreements
within 30 days of such failure.
 
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7.16  If (a) there shall occur and be continuing any "Event of Default" (or any
comparable term) by any Credit Party under, and as defined in any document
evidencing or governing any Subordinated Indebtedness, (b) the Obligations
arising with respect to the Advances and Letters of Credit for any reason shall
cease to be "Senior Indebtedness" or "Designated Senior Indebtedness" (or any
comparable terms) under, and as defined in any document evidencing or governing
any Subordinated Indebtedness, (c) any Indebtedness other than the Obligations
arising with respect to the Advances and Letters of Credit and the Indebtedness
arising under the Notes shall constitute "Designated Senior Indebtedness" (or
any comparable term) under, and as defined in, any document evidencing or
governing any Subordinated Indebtedness, (d) any holder of any Subordinated
Indebtedness shall fail to perform or comply with any of the subordination
provisions of the documents evidencing or governing such Indebtedness (if any)
or with the provisions of any applicable Subordination Agreement, or (e) the
subordination provisions (if any) of any document evidencing or governing any
Subordinated Indebtedness shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable against any
holder of such Indebtedness.
 
8.  THE LENDER GROUP’S RIGHTS AND REMEDIES.
 
8.1  Rights and Remedies. Upon the occurrence, and during the continuation, of
an Event of Default, the Required Lenders (at their election but without notice
of their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf of
the Lender Group), all of which are authorized by each Credit Party:
 
(a)  Declare all or any portion of the Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
 
(b)  Cease advancing money or extending credit to or for the benefit of
Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
 
(c)  Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent’s Liens in the Collateral and without affecting the Obligations; and
 
(d)  The Lender Group shall have all other rights and remedies available at law
or in equity or pursuant to any other Loan Document.
 
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 7.4 or Section 7.5, in addition to the remedies
set forth above, without any notice to any Credit Party or any other Person or
any act by the Lender Group, the Commitments shall automatically terminate and
the Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by each Credit Party.
 
8.2  Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
 
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9.  TAXES AND EXPENSES.
 
If any Credit Party or any of their respective Subsidiaries fails to pay any
monies (whether taxes, assessments, insurance premiums, or, in the case of
leased properties or assets, rents or other amounts payable under such leases)
due to third Persons, or fails to make any deposits or furnish any required
proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to any such Credit
Party or Subsidiary, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves against the Availability as
Agent deems necessary to protect the Lender Group from the exposure created by
such failure, or (c) in the case of the failure to comply with Section 5.8
hereof, obtain and maintain insurance policies of the type described in
Section 5.8 and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses
and any such payments shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
 
10.  WAIVERS; INDEMNIFICATION.
 
10.1  Demand; Protest; etc. Each Credit Party waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guaranties at any time held by the
Lender Group on which any such Credit Party may in any way be liable.
 
10.2  The Lender Group’s Liability for Collateral. Each Credit Party hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code or other applicable law, the Lender Group shall not in any way or
manner be liable or responsible for: (i) the safekeeping of the Collateral,
(ii) any loss or damage thereto occurring or arising in any manner or fashion
from any cause, (iii) any diminution in the value thereof, or (iv) any act or
default of any carrier, warehouseman, bailee, forwarding agency, or other
Person, and (b) all risk of loss, damage, or destruction of the Collateral shall
be borne by the Credit Parties.
 
10.3  Indemnification. Each Credit Party shall jointly and severally pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons, and each Participant (each, an “Indemnified Person”) harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of any Credit Party’s or its Subsidiaries’ compliance with the terms
of the Loan Documents, (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto and (c) in connection with or arising
out of any presence or release of Hazardous Materials at, on, under, to or from
any assets or properties owned, leased or operated by any Credit Party or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities and
Costs or Remedial Actions related in any way to any such assets or properties of
any Credit Party or any of its Subsidiaries (all the foregoing, collectively,
the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding,
the Credit Parties shall have no obligation to any Indemnified Person under this
Section 10.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which the Credit Parties were required
to indemnify the Indemnified Person receiving such payment, the Indemnified
Person making such payment is entitled to be indemnified and reimbursed by the
Credit Parties with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
WHICH IN ANY WAY OR TO ANY EXTENT IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON
OR UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY.
 
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10.4  Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, no Credit Party shall assert, and each Credit Party hereby
waives, any claim against any Indemnified Person, 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 Advance, Letter of
Credit or LC Facility Letter of Credit or the use of the proceeds thereof. No
Indemnified Person shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
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.
 
11.  NOTICES.
 
Unless otherwise provided in this Agreement, all notices or demands by any
Credit Party or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
 
If to any Credit Party, in care of
Administrative Borrower at:
PCA LLC
815 Matthews-Mint Hill Road
Matthews, NC 28105
Attn: Donald Norsworthy, CFO
Fax No.: 704.847.8010
with copies to:
 
JUPITER PARTNERS II L.P.
12 East 49th Street, 36th Floor
New York, NY 10017
Attn: John F. Klein
Fax No.: 212.300.1001
and to:
PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
Attn: Richard Borisoff
Fax No.: 212.757.3990
If to Agent:
WELLS FARGO FOOTHILL, INC.
400 Northpark Town Center
1000 Abernathy Road, Suite 1450
Atlanta, GA 30328
Attn: Business Finance Division Manager
Fax No.: 770.508.1374
with copies to:
MORRISON & FOERSTER LLP
555 West Fifth Street
Los Angeles, CA 90013
Attn: Sandra L. Montgomery
Fax No.: 213.892.5454

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Agent and the Credit Parties may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other parties. All notices or demands sent in accordance with this Section 11,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Credit Party acknowledges and agrees that notices sent
by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
 
12.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
 
(a)  THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
 
(b)  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS
LOCATED IN THE BOROUGH OF MANHATTAN, COUNTY OF NEW YORK, STATE OF NEW YORK,
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH CREDIT PARTY AND EACH MEMBER OF THE LENDER
GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).
 
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(c)  EACH CREDIT PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH CREDIT PARTY AND EACH MEMBER OF THE
LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
 
13.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
 
13.1  Assignments and Participations.
 
(a)  Any Lender may assign and delegate to one or more assignees (each an
“Assignee”) that are Eligible Transferees all, or any ratable part of all, of
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the
assigning Lender or Assignee has paid to Agent for Agent’s separate account a
processing fee in the amount of $3,500. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.
 
(b)  From and after the date that Agent notifies the assigning Lender (with a
copy to Administrative Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, provided that, other than as a result of any change in law or other
event occurring thereafter which is not in the control of such Assignee, no
Assignee (including an Assignee that is already a Lender hereunder at the time
of such assignment) shall be entitled to receive any greater amount pursuant to
Section 15.11 than that to which the Assigning Lender would have been entitled
to receive had no such assignment occurred, and (ii) the assigning Lender shall,
to the extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (except with respect to Section 10.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrowers and the Assignee; provided,
however, that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender’s obligations under Article 16 and Section 16.7 of this
Agreement.
 
(c)  By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
its Subsidiaries or the performance or observance by any Credit Party or its
Subsidiaries of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement and the Subordination Agreements, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement,
(5) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to Agent, by the terms hereof, together with such powers as are
reasonably incidental thereto, (6) such Assignee agrees that it will perform all
of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender, and (7) such Assignee expressly assumes all rights
and obligations of such assigning Lender under the Subordination Agreements and
agrees to be bound by the terms thereof.
 
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(d)  Immediately upon Agent’s receipt of the required processing fee payment and
the fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
 
(e)  The Agent shall, on behalf of the Borrowers, maintain at its address a copy
of each Assignment and Acceptance delivered to it and a register (the
“Register”) for the recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Obligations owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrowers, Agent and the Lenders shall treat
each Person whose name is recorded in the Register as the owner of the
Obligations and any notes evidencing such Obligations recorded therein for all
purposes of this Agreement. Any assignment of any portion of the Obligations,
whether or not evidenced by a note, shall be effective only upon appropriate
entries with respect thereto being made in the Register (and each note shall
expressly so provide). Any assignment or transfer of all or part of the
Obligations evidenced by a note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the note evidencing such
Obligations, accompanied by a duly executed Assignment and Acceptance; thereupon
one or more new notes in the same aggregate principal amount shall be issued to
the designated assignee, and the old notes shall be returned by the Agent to the
Administrative Borrower marked “canceled.” The Register shall be available for
inspection by the Borrowers and each Lender (with respect to any entry relating
to such Lender’s portion of the Obligations) at any reasonable time and from
time to time upon reasonable prior notice.
 
(f)  Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the “Originating Lender”) hereunder and under the other Loan Documents;
provided, however, that (i) the Originating Lender shall remain a “Lender” for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a “Lender” hereunder or under the other Loan Documents and the
Originating Lender’s obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
 
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(g)  In connection with any such assignment or participation or proposed
assignment or participation, a Lender may, subject to the provisions of
Section 16.7, disclose all documents and information which it now or hereafter
may have relating to the Credit Parties and their respective Subsidiaries and
their respective businesses.
 
(h)  Any other provision in this Agreement notwithstanding, any Lender may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
 
13.2  Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that no Credit Party may assign this Agreement or any of its rights or duties
hereunder without the Lenders’ prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Credit Party from its obligations hereunder or under
any other Loan Document. A Lender may assign this Agreement and the other Loan
Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 hereof and, except as expressly required pursuant to Section 13.1
hereof, no consent or approval by any Credit Party is required in connection
with any such assignment.
 
14.  AMENDMENTS; WAIVERS.
 
14.1  Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements), and
no consent with respect to any departure by any Credit Party or a Subsidiary of
a Credit Party therefrom, shall be effective unless the same shall be in writing
and signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and then any such waiver or consent shall be effective, but
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all of the Lenders affected thereby, do any of the
following:
 
(a)  increase or extend any Commitment of any Lender,
 
(b)  postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
 
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(c)  reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
 
(d)  change the Pro Rata Share that is required to take any action hereunder,
 
(e)  amend or modify this Section or any provision of this Agreement providing
for consent or other action by all Lenders,
 
(f)  other than as permitted by Section 15.12, release Agent’s Lien in and to
all or any substantial portion of the Collateral,
 
(g)  change the definition of Required Lenders or Pro Rata Share,
 
(h)  contractually subordinate any of the Agent’s Liens,
 
(i)  release any Credit Party from any obligation for the payment of money,
 
(j)  change the definition of Maximum Credit Amount, Maximum Revolver Amount, or
change Section 2.1(b), or
 
(k)  amend any of the provisions of Section 14.
 
provided further, however, that no amendment, waiver or consent shall, unless in
writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable,
affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as
applicable, under this Agreement or any other Loan Document; and provided
further, however, any amendment or modification that directly affects or alters
the express rights or obligations of any Credit Party shall also require the
consent or agreement of such Credit Party (which, in the case of any Borrower,
may be given by the Administrative Borrower). The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of any Credit Party, shall not require
consent by or the agreement of any Credit Party.
 
14.2  Replacement of Holdout Lender.
 
(a)  If any action to be taken by the Lender Group or Agent hereunder requires
the unanimous consent, authorization, or agreement of all Lenders, and a Lender
(“Holdout Lender”) fails to give its consent, authorization, or agreement, then
Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout
Lender, may permanently replace the Holdout Lender with one or more substitute
Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no
right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall
not be later than 15 Business Days after the date such notice is given.
 
(b)  Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever.
If the Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance prior to the effective date of such replacement, the
Holdout Lender shall be deemed to have executed and delivered such Assignment
and Acceptance. The replacement of any Holdout Lender shall be made in
accordance with the terms of Section 13.1. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit and LC Facility Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit and such
LC Facility Letter of Credit.
 
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14.3  No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by the Credit Parties
of any provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
 
15.  AGENT; THE LENDER GROUP.
 
15.1  Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 15. The
provisions of this Section 15 (other than the proviso to Section 15.11(a)) are
solely for the benefit of Agent and the Lenders, and the Credit Parties and
their respective Subsidiaries shall have no rights as third party beneficiaries
of any of the provisions contained herein. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word “Agent” is for
convenience only, that WFF is merely the representative of the Lenders, and only
has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Borrowers and their Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to the Credit Parties, the Obligations, the Collateral, the Collections of
Borrowers and their Subsidiaries, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.
 
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15.2  Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
 
15.3  Liability of Agent. None of the Agent Related Persons shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Credit Party or any Subsidiary
or Affiliate of any Credit Party, or any officer or director thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Credit Party or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of any Credit Party
or its Subsidiaries or Affiliates.
 
15.4  Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to any Credit Party or counsel to
any Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
 
15.5  Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
 
15.6  Credit Decision. Each Lender acknowledges that none of the Agent Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of any Credit Party or
its Subsidiaries or Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of any
Credit Party or any other Person party to a Loan Document, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to Borrowers.
Each Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of any Credit Party or any other Person
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of any Credit Party or any
other Person party to a Loan Document that may come into the possession of any
of the Agent Related Persons.
 
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15.7  Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not any Credit Party is obligated to reimburse Agent
or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of any Credit Party and their Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses from the Collections of Borrowers and their Subsidiaries
received by Agent, each Lender hereby agrees that it is and shall be obligated
to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share
thereof. Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent Related Persons (to the extent
not reimbursed by or on behalf of any Credit Party and without limiting the
obligation of any Credit Party to do so), according to their Pro Rata Shares,
from and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs
or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
any Credit Party. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of Agent.
 
15.8  Agent in Individual Capacity. WFF and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with any Credit Party or its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding the Credit Parties or their
respective Affiliates and any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of such Credit Parties,
Affiliates or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms “Lender” and “Lenders” include WFF in its individual capacity.
 
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15.9  Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
 
15.10  Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with any Credit Party
or its Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though such Lender were not a Lender hereunder without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding a Credit Party or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of such Credit Party or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver such Lender will use its
reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them. With respect to the Swing Loans
and Protective Advances, Swing Lender shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the sub-agent of Agent.
 
15.11  Withholding Taxes.
 
(a)  All payments made by any Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, each Borrower shall comply with
the penultimate sentence of this Section 15.11(a). “Taxes” shall mean, any
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such
payments, and all interest, penalties or similar liabilities with respect
thereto, but excluding (A) any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein measured by or
based on the net income or net profits of Lender, or franchise taxes (imposed in
lieu of net income taxes) and backup withholding taxes, (B) any branch profits
taxes imposed by the United States or any similar tax imposed by any other
jurisdiction described in clause (A) above, (C) any taxes that are attributable
to such Lender’s failure to comply with the requirements of Section 15.11(c) or
Section 15.11(d), or (D) any taxes that are imposed as a result of any event
occurring after the Lender becomes a Lender other than a change in law or
regulation or the introduction of any law or regulation or a change in
interpretation or administration of any law. If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement, any note, or Loan Document, including any amount paid
pursuant to this Section 15.11(a) after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrowers shall not be required to increase any such
amounts if the increase in such amount payable results from Agent’s or such
Lender’s own willful misconduct or gross negligence (as finally determined by a
court of competent jurisdiction). Each Borrower will furnish to Lender as
promptly as possible after the date the payment of any Tax is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by any
Borrower.
 
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(b)  Each Non-U.S. Lender agrees with and in favor of Agent and any Borrower, to
deliver to Administrative Borrower and Agent:
 
(i)  if such Non-U.S. Lender claims an exemption from United States withholding
tax pursuant to its portfolio interest exception, (A) a statement of such
Non-U.S. Lender, signed under penalty of perjury, that it is not a (I) a “bank”
as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any
Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a
controlled foreign corporation related to any Borrower within the meaning of
Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form
W-8BEN, before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
 
(ii)  if such Non-U.S. Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two copies of properly
completed and executed IRS Form W-8BEN before receiving its first payment under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
 
(iii)  if such Non-U.S. Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Non-U.S. Lender, two properly
completed and executed copies of IRS Form W-8ECI before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or Administrative Borrower; or
 
(iv)  such other form or forms, including IRS Form W-9, as may be required under
the IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower. Each Non-U.S. Lender
agrees promptly to notify Agent and Administrative Borrower of any change in
circumstances which would modify or render invalid or obsolete any claimed
exemption or reduction.
 
(c)  If a Non-U.S. Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, such Non-U.S. Lender agrees with and
in favor of Agent and Borrowers, to deliver to Agent any such form or forms, as
may be required under the laws of such jurisdiction as a condition to exemption
from, or reduction of, foreign withholding or backup withholding tax before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower. Each Non-U.S. Lender
agrees promptly to notify Agent and Administrative Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
 
(d)  If any Non-U.S. Lender claims exemption from, or reduction of, withholding
tax and such Non-U.S. Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Non-U.S.
Lender, such Non-U.S. Lender agrees to notify Agent and Administrative Borrower
of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrowers owing to such Non-U.S. Lender. To the extent of
such percentage amount, Agent and Borrowers will treat such Non-U.S. Lender’s
documentation provided pursuant to Sections 15.11(b) or 15.11(c) as no longer
valid. With respect to such percentage amount, such Non-U.S. Lender may provide
new documentation, pursuant to Sections 15.11(b) or 15.11(c), if applicable.
 
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(e)  If any Non-U.S. Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Non-U.S.
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (b) or (c) of this Section 15.11 are not delivered to Agent, then
Agent may withhold from any interest payment to such Non-U.S. Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
 
(f)  If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender due to a failure on the part of
the Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section 15.11,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.
 
(g)  Each Lender agrees that, upon the occurrence of any event giving rise to
the operation of Section 15.11 with respect to such Lender, it will, if
requested by the Administrative Borrower, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Obligations affected by such event with the object of avoiding
the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section 15.11(g) shall affect or postpone any of
the obligations of the Borrowers or the rights of any Lender pursuant to Section
15.11.
 
15.12  Collateral Matters.
 
(a)  The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full of all Obligations,
(ii) constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower certifies to
Agent that the sale or disposition is permitted under Section 6.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in which
no Credit Party or its Subsidiaries owned any interest at the time the Agent’s
Lien was granted nor at any time thereafter, or (iv) constituting property
leased to a Credit Party or its Subsidiaries under a lease that has expired or
is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or
(z) otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 15.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent’s opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of any Credit Party in respect
of) all interests retained by the applicable Credit Party, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
 
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(b)  Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by any Credit Party or any of its
Subsidiaries or is cared for, protected, or insured or has been encumbered, or
that the Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
 
15.13  Restrictions on Actions by Lenders; Sharing of Payments.
 
(a)  Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to any Credit Party or any of its Subsidiaries or
any deposit accounts of such Credit Party or Subsidiary now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so in writing by Agent, take or cause
to be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
 
(b)  If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
 
15.14  Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent’s instructions.
 
15.15  Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.
 
15.16  Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
 
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15.17  Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
 
(a)  is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report (each a
“Report” and collectively, “Reports”) prepared by or at the request of Agent,
and Agent shall so furnish each Lender with such Reports,
 
(b)  expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
 
(c)  expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding a Credit Party and
will rely significantly upon the books and records of the Credit Parties and
their respective Subsidiaries, as well as on representations of such Person’s
personnel,
 
(d)  agrees to keep all Reports and other material, non-public information
regarding the Credit Parties and their respective Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 16.7, and
 
(e)  without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
 
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Credit Party to Agent that has not been
contemporaneously provided by such Credit Party to such Lender, and, upon
receipt of such request, Agent promptly shall provide a copy of same to such
Lender, (y) to the extent that Agent is entitled, under any provision of the
Loan Documents, to request additional reports or information from any Credit
Party or its Subsidiaries, any Lender may, from time to time, reasonably request
Agent to exercise such right as specified in such Lender’s notice to Agent,
whereupon Agent promptly shall request of Administrative Borrower the additional
reports or information reasonably specified by such Lender, and, upon receipt
thereof from Administrative Borrower, Agent promptly shall provide a copy of
same to such Lender, and (z) any time that Agent renders to Administrative
Borrower a statement regarding the Loan Account, Agent shall send a copy of such
statement to each Lender.
 
15.18  Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 15.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to any Credit Party or any other Person for any failure by any
other Lender to fulfill its obligations to make credit available hereunder, nor
to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
 
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15.19  Bank Product Providers. Each Bank Product Provider shall be deemed a
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
 
16.  GENERAL PROVISIONS.
 
16.1  Effectiveness. This Agreement shall be binding and deemed effective when
executed by the Credit Parties, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
 
16.2  Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
 
16.3  Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or the Credit Parties,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
 
16.4  Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
 
16.5  Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
 
16.6  Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Credit Party or the transfer to the Lender Group of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of all Credit
Parties automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.
 
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16.7  Confidentiality. Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding the
Credit Parties and their respective Subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (a) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group provided that any such Person shall have agreed to
receive such information hereunder subject to the terms of this Section 16.7,
(b) to Subsidiaries and Affiliates of any member of the Lender Group (including
the Bank Product Providers), provided that any such Subsidiary or Affiliate
shall have agreed to receive such information hereunder subject to the terms of
this Section 16.7, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (d) as may be agreed to in advance by
such Person or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, (e) as to any such information that is
or becomes generally available to the public (other than as a result of
prohibited disclosure by Agent or the Lenders), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lender’s
interest under this Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section, and
(g) in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims
related to the rights or duties of such parties under this Agreement or the
other Loan Documents. The provisions of this Section 16.7 shall survive for 2
years after the payment in full of the Obligations. 
 
16.8  Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
 
16.9  PCA as Agent for Borrowers. Each Borrower hereby irrevocably appoints PCA
as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances, Letters of Credit and LC Facility Letters
of Credit obtained for the benefit of any Borrower and all other notices and
instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances,
Letters of Credit and LC Facility Letters of Credit and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loan Account and Collateral
of Borrowers in a combined fashion, as more fully set forth herein, is done
solely as an accommodation to Borrowers in order to utilize the collective
borrowing powers of Borrowers in the most efficient and economical manner and at
their request, and that no member of the Lender Group shall (unless arising out
of the willful misconduct or gross negligence of such member of the Lender
Group) incur liability to any Borrower or any other Credit Party as a result
hereof . Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided, (b) the Lender
Group’s relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Lender Group hereunder or under the other Loan
Documents, except that Borrowers will have no liability to the relevant
Agent-Related Person or Lender-Related Person under this Section 16.9 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.
 
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16.10  Public Disclosure. Each Credit Party agrees that neither it nor any of
its Affiliates will issue any press release or other public disclosure using the
name of Agent, any Lender or any of their respective Affiliates or referring to
this Agreement or any other Loan Document without the prior written consent of
Agent and such Lender, except to the extent that such Credit Party or such
Affiliate is required to do so under applicable law or a material contractual
obligation of such Credit Party or Affiliate (in which event, such Credit Party
or such Affiliate, as applicable, will consult with Agent and such Lender before
issuing such press release or other public disclosure). Each Credit Party hereby
authorizes Agent and each Lender, after consultation with Administrative
Borrower, to advertise the closing of the transactions contemplated by this
Agreement, and to make appropriate announcements of the financial arrangements
entered into among the parties hereto, as Agent and the Lenders shall deem
appropriate, including announcements commonly known as tombstones, in such trade
publications, business journals, newspapers of general circulation and to such
selected parties as Agent or such Lender shall deem appropriate.
 
[Signature pages follow.]
 

61

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.
 
 
PARENT GUARANTOR:
 
PORTRAIT CORPORATION OF AMERICA, INC.,
a Delaware corporation
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
BORROWERS:
 
PCA LLC,
a Delaware limited liability company
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
 
AMERICAN STUDIOS, INC.,
a North Carolina corporation
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
 
PCA PHOTO CORPORATION OF CANADA, INC.,
a North Carolina corporation
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
 
PCA NATIONAL LLC,
a Delaware limited liability company
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
 
HOMETOWN THREADS LLC,
a Delaware limited liability company
 
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
 
PCA NATIONAL OF TEXAS L.P.,
a Texas limited partnership
 
By:PCA NATIONAL LLC,
a Delaware limited liability company
Its:General Partner
 
By: /s/ Donald Norsworthy
Its: Executive Vice President and
 Chief Financial Officer
 
AGENT AND A LENDER:
 
WELLS FARGO FOOTHILL, INC.,
a California corporation
 
 
By: /s/ Cheri MacDonald
Its: Vice President

 

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                                            Table of Contents
 

   
Page
1
DEFINITIONS AND CONSTRUCTION
1
1.1
Definitions
1
1.2
Accounting Terms
1
1.3
Code
1
1.4
Construction
1
1.5
Schedules and Exhibits
2
2
LOAN AND TERMS OF PAYMENT
2
2.1
Revolver Advances
2
2.2
LC Facility Letters of Credit
2
2.3
Borrowing Procedures and Settlements
5
2.4
Payments
9
2.5
Overadvances
11
2.6
Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations
12
2.7
Cash Management
13
2.8
Crediting Payments
15
2.9
Designated Account
15
2.1
Maintenance of Loan Account; Statements of Obligations
15
2.11
Fees
15
2.12
Letters of Credit
15
2.13
LIBOR Option
18
2.14
Capital Requirements
20
2.15
Joint and Several Liability of Borrowers
20
3
CONDITIONS; TERM OF AGREEMENT
23
3.1
Conditions Precedent to the Initial Extension of Credit
23
3.2
Conditions Precedent to all Extensions of Credit
23
3.3
Term
23
3.4
Effect of Termination
23
3.5
Early Termination by Borrowers
24
4
REPRESENTATIONS AND WARRANTIES
24
4.1
No Encumbrances
24
4.2
Accounts
24
4.3
Inventory
24
4.4
Equipment
24
4.5
Location of Inventory and Equipment
24
4.6
Inventory Records
25
4.7
State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims
25
4.8
Due Organization and Qualification; Subsidiaries
25
4.9
Due Authorization; No Conflict
25
4.1
Litigation
26
4.11
No Material Adverse Change
26
4.12
Fraudulent Transfer
26
4.13
Employee Benefits
27
4.14
Environmental Condition
27
4.15
Intellectual Property
27
4.16
Leases
28
4.17
Deposit Accounts and Securities Accounts
28
4.18
Complete Disclosure
28
4.19
Indebtedness
28
4.2
Material Contracts
28
4.21
Note Documents
28
5
AFFIRMATIVE COVENANTS
29
5.1
Accounting System
29
5.2
Collateral Reporting
29
5.3
Financial Statements, Reports, Certificates
29
5.4
Credit Party Reports
29
5.5
Inspection
29
5.6
Maintenance of Properties
29
5.7
Taxes
29
5.8
Insurance
30
5.9
Location of Inventory and Equipment
30
5.1
Compliance with Laws
31
5.11
Leases
31
5.12
Existence
31
5.13
Environmental
31
5.14
Disclosure Updates
31
5.15
Control Agreements
31
5.16
Formation of Subsidiaries
32
5.17
ERISA Compliance
32
5.18
Note Documents
33
5.19
Further Assurances
33
5.2
Post-Closing Conditions
33
6
NEGATIVE COVENANTS
35
6.1
Indebtedness
35
6.2
Liens
36
6.3
Restrictions on Fundamental Changes
36
6.4
Disposal of Assets
37
6.5
Change Name
37
6.6
Nature of Business
37
6.7
Payments and Amendments
37
6.8
Change of Control
38
6.9
Consignments
38
6.1
Distributions
38
6.11
Accounting Methods
38
6.12
Investments
38
6.13
Transactions with Affiliates
38
6.14
Use of Proceeds
39
6.15
Inventory and Equipment with Bailees
39
6.16
Financial Covenants
39
6.17
ERISA
40
6.18
Material Contracts
40
7
EVENTS OF DEFAULT
40
8
THE LENDER GROUP’S RIGHTS AND REMEDIES
43
8.1
Rights and Remedies
43
8.2
Remedies Cumulative
43
9
TAXES AND EXPENSES
44
10
WAIVERS; INDEMNIFICATION
44
10.1
Demand; Protest; etc
44
10.2
The Lender Group’s Liability for Collateral
44
10.3
Indemnification
44
10.4
Waiver of Consequential Damages, Etc
45
11
NOTICES
45
12
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
46
13
ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS
47
13.1
Assignments and Participations
47
13.2
Successors
49
14
AMENDMENTS; WAIVERS
49
14.1
Amendments and Waivers
49
14.2
Replacement of Holdout Lender
50
14.3
No Waivers; Cumulative Remedies
50
15
AGENT; THE LENDER GROUP
51
15.1
Appointment and Authorization of Agent
51
15.2
Delegation of Duties
51
15.3
Liability of Agent
51
15.4
Reliance by Agent
52
15.5
Notice of Default or Event of Default
52
15.6
Credit Decision
52
15.7
Costs and Expenses; Indemnification
53
15.8
Agent in Individual Capacity
53
15.9
Successor Agent
53
15.1
Lender in Individual Capacity
54
15.11
Withholding Taxes
54
15.12
Collateral Matters
56
15.13
Restrictions on Actions by Lenders; Sharing of Payments
57
15.14
Agency for Perfection
57
15.15
Payments by Agent to the Lenders
57
15.16
Concerning the Collateral and Related Loan Documents
57
15.17
Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information
57
15.18
Several Obligations; No Liability
58
15.19
Bank Product Providers
59
16
GENERAL PROVISIONS
59
16.1
Effectiveness
59
16.2
Section Headings
59
16.3
Interpretation
59
16.4
Severability of Provisions
59
16.5
Counterparts; Electronic Execution
59
16.6
Revival and Reinstatement of Obligations
59
16.7
Confidentiality
59
16.8
Integration
60
16.9
PCA as Agent for Borrowers
60
16.1
Public Disclosure
60

 
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TABLE OF CONTENTS(continued)

EXHIBITS AND SCHEDULES
 
Exhibit A-1
Form of Assignment and Acceptance
Exhibit C-1
Form of Compliance Certificate
Exhibit L-1
Form of LIBOR Notice
Exhibit L-2
Form of Loan Limit Certificate
Exhibit S-1
Form of Solvency Certificate
   
Schedule A-1
Agent’s Account
Schedule C-1
Commitments
Schedule D-1
Designated Account
Schedule P-1
Permitted Liens
Schedule P-2
Permitted Investments
Schedule R-1
Real Property Collateral
Schedule 1.1
Definitions
Schedule 2.7(a)
Cash Management Banks
Schedule 3.1
Conditions Precedent
Schedule 4.5
Locations of Inventory and Equipment
Schedule 4.7(a)
States of Organization
Schedule 4.7(b)
Chief Executive Offices
Schedule 4.7(c)
Organizational Identification Numbers
Schedule 4.7(d)
Commercial Tort Claims
Schedule 4.8
Capitalization of Credit Parties and Subsidiaries
Schedule 4.10
Litigation
Schedule 4.13(a)
Certain Employee Pension Benefit Plans
Schedule 4.13(d)
Certain Employee Health Benefit Plans
Schedule 4.14
Environmental Matters
Schedule 4.15
Intellectual Property
Schedule 4.17
Deposit Accounts and Securities Accounts
Schedule 4.19
Permitted Indebtedness
Schedule 4.20
Material Contracts
Schedule 5.2
Collateral Reporting
Schedule 5.3
Financial Statements, Reports, Certificates
Schedule 5.8(b)
Excluded Insurance Claims
Schedule 7.14
Certain Material Contracts