Exhibit 10.1

 

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[Published CUSIP NO.             ]

 

CREDIT AGREEMENT

 

Dated as of November 10, 2004

 

among

 

COST PLUS, INC.,

 

as the Borrower,

 

BANK OF AMERICA, N.A.,

as Administrative Agent and L/C Issuer,

 

and

 

The Other Lenders Party Hereto

 

BANC OF AMERICA SECURITIES LLC,

 

as Sole Lead Arranger and Sole Book Manager

 

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TABLE OF CONTENTS

 

Section

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   Page

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ARTICLE I.  

DEFINITIONS AND ACCOUNTING TERMS

   1     1.01   Defined Terms    1     1.02   Other Interpretive Provisions.   
18     1.03   Accounting Terms.    19     1.04   Rounding    19     1.05  
References to Agreements and Laws    19     1.06   Times of Day    20     1.07  
Letter of Credit Amounts    20 ARTICLE II.  

THE COMMITMENTS AND CREDIT EXTENSIONS

   20     2.01   Loans    20     2.02   Borrowings, Conversions and
Continuations of Loans.    20     2.03   Letters of Credit.    22     2.04  
Prepayments.    29     2.05   Change in Commitments.    30     2.06   Repayment
of Loans.    31     2.07   Interest.    31     2.08   Fees    31     2.09  
Computation of Interest and Fees.    32     2.10   Evidence of Debt.    32    
2.11   Payments Generally.    32     2.12   Sharing of Payments.    35     2.13
  Increase in Commitments.    35 ARTICLE III.  

TAXES, YIELD PROTECTION AND ILLEGALITY

   36     3.01   Taxes.    36     3.02   Illegality.    38     3.03   Inability
to Determine Rates.    38     3.04   Increased Cost and Reduced Return; Capital
Adequacy.    38     3.05   Funding Losses    39     3.06   Matters Applicable to
all Requests for Compensation.    39     3.07   Survival    40 ARTICLE IV.  

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

   40     4.01   Conditions of Initial Credit Extension    40     4.02  
Conditions to all Credit Extensions    41 ARTICLE V.  

REPRESENTATIONS AND WARRANTIES

   42     5.01   Existence, Qualification and Power; Compliance with Laws    42
    5.02   Authorization; No Contravention    42     5.03   Governmental
Authorization; Other Consents    42     5.04   Binding Effect    42

 

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TABLE OF CONTENTS

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Section

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    5.05   Financial Statements; No Material Adverse Effect.    43     5.06  
Litigation    43     5.07   No Default    43     5.08   Ownership of Property;
Liens    43     5.09   Environmental Compliance    43     5.10   Taxes    43    
5.11   ERISA Compliance.    44     5.12   Subsidiaries    44     5.13   Margin
Regulations; Investment Company Act; Public Utility Holding Company Act.    45  
  5.14   Compliance with Laws    45     5.15   Intellectual Property; Licenses,
Etc.    45     5.16   Disclosure    45 ARTICLE VI.  

AFFIRMATIVE COVENANTS

   46     6.01   Financial Statements    46     6.02   Certificates; Other
Information    47     6.03   Notices    48     6.04   Payment of Obligations.   
49     6.05   Preservation of Existence, Etc.    49     6.06   Maintenance of
Properties.    49     6.07   Maintenance of Insurance.    49     6.08  
Compliance with Laws.    49     6.09   Books and Records.    50     6.10  
Inspection Rights    50     6.11   Use of Proceeds    50     6.12   Material
Subsidiaries    50     6.13   Clean-Up Requirement    50 ARTICLE VII.  

NEGATIVE COVENANTS

   51     7.01   Liens    51     7.02   Investments.    53     7.03  
Indebtedness.    54     7.04   Fundamental Changes.    55     7.05  
Dispositions.    56     7.06   Restricted Payments.    57     7.07   Change in
Nature of Business    57     7.08   Transactions with Affiliates    57     7.09
  Use of Proceeds    58     7.10   Minimum Consolidated Tangible Net Worth    58
    7.11   Capital Expenditures    58 ARTICLE VIII.  

EVENTS OF DEFAULT AND REMEDIES

   59     8.01   Events of Default    59     8.02   Remedies Upon Event of
Default    61

 

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TABLE OF CONTENTS

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Section

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     8.03    Application of Funds    61 ARTICLE IX.   

ADMINISTRATIVE AGENT

   62      9.01    Appointment and Authority    62      9.02    Rights as a
Lender.    62      9.03    Exculpatory Provisions.    63      9.04    Reliance
by Administrative Agent.    63      9.05    Delegation of Duties    64      9.06
   Resignation of Administrative Agent    64      9.07    Non-Reliance on
Administrative Agent and Other Lenders    65      9.08    No Other Duties, Etc.
   65      9.09    Administrative Agent May File Proofs of Claim    65      9.10
   Guaranty Matters    66 ARTICLE X.   

MISCELLANEOUS

   66      10.01    Amendments, Etc.    66      10.02    Notices and Other
Communications; Facsimile Copies.    67      10.03    No Waiver; Cumulative
Remedies.    68      10.04    Attorney Costs, Expenses and Taxes.    68     
10.05    Indemnification by the Borrower.    69      10.06    Payments Set
Aside.    70      10.07    Successors and Assigns.    70      10.08   
Confidentiality.    73      10.09    Set-off.    74      10.10    Interest Rate
Limitation.    74      10.11    Counterparts.    74      10.12    Integration.
   74      10.13    Survival of Representations and Warranties.    75      10.14
   Severability.    75      10.15    Tax Forms.    75      10.16    Replacement
of Lenders.    77      10.17    Governing Law.    77      10.18    Waiver of
Right to Trial by Jury.    78      10.19    Time of the Essence.    78     
10.20    USA PATRIOT Act Notice.    78      SIGNATURES    S-1

 

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TABLE OF CONTENTS

(continued)

 

SCHEDULES

 

1.01(e)   Existing Letters of Credit 2.01   Commitments and Pro Rata Shares
10.02   Administrative Agent’s Office, Certain Addresses for Notices

 

EXHIBITS

 

Form of

 

A Loan Notice

B Note

C Compliance Certificate

D Assignment and Assumption

E Guaranty

F Opinion Matters

 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of November 10, 2004
among COST PLUS, INC., a California corporation (the “Borrower”), each lender
from time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.

 

The Borrower has requested that the Lenders provide a revolving credit facility
and the Lenders are willing to do so on the terms and conditions set forth
herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

 

“Adjusted Total Outstandings” means, as of any date of determination, the sum of
(a) the aggregate Outstanding Amount of all Loans on such date plus (b) the
aggregate of all Unreimbursed Amounts existing on such day.

 

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify the Borrower
and the Lenders.

 

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

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

 

“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

 

“Aggregate Commitments” means the Commitments of all the Lenders, as in effect
from time to time, subject to adjustment pursuant to Sections 2.05 and 2.13.

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“Agreement” means this Credit Agreement.

 

“Applicable Rate” means the following percentages per annum, based upon the
Consolidated Adjusted Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 6.02(a):

 

Applicable Rate

 

Pricing
Level

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Consolidated

Adjusted

Leverage Ratio

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Commitment

Fee

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Eurodollar

Rate +

Letters of

Credit

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    Base Rate

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1

  £ 2.75   0.125 %   1.000 %   0.000 %

2

  >2.75 and
< 3.25   0.150 %   1.125 %   0.000 %

3

  ³ 3.25   0.175 %   1.375 %   0.000 %

 

Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Adjusted Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(a); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, then
Pricing Level 3 shall apply as of the first Business Day after the date on which
such Compliance Certificate was required to have been delivered. Subject to the
foregoing, the Applicable Rate in effect from the Closing Date through the date
of delivery of the Compliance Certificate in respect of the Borrower’s fiscal
quarter ending on or about January 29, 2005 shall be determined based upon
Pricing Level 2.

 

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit D.

 

“Attorney Costs” means and includes all fees, expenses and disbursements of any
law firm or other external counsel and, without duplication, the allocated cost
of internal legal services and all expenses and disbursements of internal
counsel.

 

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

 

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“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended on or about January
31, 2004, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year of the Borrower and its
Subsidiaries, including the notes thereto.

 

“Availability Period” means the period from the Closing Date to the earliest of
(a) the Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.05, and (c) the date of termination of the commitment of
each Lender to make Loans and of the obligation of the of the L/C Issuer to make
L/C Credit Extensions pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Billed Amount” has the meaning set forth in Section 2.11(b).

 

“Borrower” has the meaning set forth in the introductory paragraph hereto.

 

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type
and, in the case of Eurodollar Rate Loans, having the same Interest Period made
by each of the Lenders pursuant to Section 2.01.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the offshore
dollar interbank market.

 

“Cash Collateralize” and “Cash Collateral” have the meanings set forth in
Section 2.03(g).

 

“Change of Control” means, with respect to any Person, an event or series of
events by which:

 

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial

 

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owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 30% or more of
the equity securities of such Person entitled to vote for members of the board
of directors or equivalent governing body of such Person on a fully-diluted
basis (and taking into account all such securities that such person or group has
the right to acquire pursuant to any option right); or

 

(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of such Person cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of a quorum of that board or
equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of a quorum of that board or equivalent governing
body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors).

 

“Closing Date” means the first date all of the conditions precedent in Section
4.01 are satisfied or waived in accordance with such sections (or, in the case
of Section 4.01(b), waived by the Person entitled to receive the applicable
payment).

 

“Code” means the Internal Revenue Code of 1986.

 

“Commitment” means, as to each Lender, its obligation to (a) make Loans to the
Borrower pursuant to Section 2.01, and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

 

“Consolidated Adjusted EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for Federal, state, local and foreign income taxes payable by
the Borrower and its Subsidiaries for such period, (iii) depreciation and
amortization expense, and (iv) other non-recurring expenses of the Borrower and
its Subsidiaries reducing such Consolidated Net Income which do not represent a

 

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cash item in such period or any future period, minus (b) the following to the
extent included in calculating such Consolidated Net Income: (i) Federal, state,
local and foreign income tax credits of the Borrower and its Subsidiaries for
such period and (ii) all non-cash items increasing Consolidated Net Income for
such period, plus (c) Consolidated Rent Expense for such period.

 

“Consolidated Adjusted Funded Debt” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including the outstanding amount of the Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all purchase money Indebtedness,
(c) all non-contingent obligations arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments, (d) all obligations in respect of the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business), (e) Attributable Indebtedness in respect of capital leases
and Synthetic Lease Obligations, (f) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a)
through (e) above of Persons other than the Borrower or any Subsidiary, (g) all
Indebtedness of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Subsidiary
is a general partner or joint venturer, except to the extent such Indebtedness
is expressly made non-recourse to the Borrower or such Subsidiary, and (h) six
times (6x) Consolidated Rent Expense for the four fiscal quarters most recently
ended.

 

“Consolidated Adjusted Leverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated Adjusted Funded Debt as of such date to (b)
Consolidated Adjusted EBITDA for the period of the four fiscal quarters most
recently ended.

 

“Consolidated Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Borrower and
its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, and (b) the
portion of rent expense of the Borrower and its Subsidiaries with respect to
such period under capital leases that is treated as interest in accordance with
GAAP.

 

“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period.

 

“Consolidated Rent Expense” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of rental expense paid by such
Persons in respect of leases of real or personal property, other than capital
leases or leases in respect of Synthetic Lease Obligations.

 

“Consolidated Tangible Net Worth” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, Shareholders’ Equity
as at such date less the Intangible Assets of the Borrower and its Subsidiaries
as at such date.

 

5

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“Consolidating Asset Report” means a financial report prepared by the Borrower,
in form and substance satisfactory to the Administrative Agent, setting forth,
with respect to each Subsidiary of the Borrower, the aggregate book value of the
respective assets owned by each such Subsidiary as of any date of determination.

 

“Consolidating Revenue Report” means a financial report prepared by the
Borrower, in form and substance satisfactory to the Administrative Agent,
setting forth, with respect to each Guarantor of the Borrower, the aggregate
amount of periodic revenues generated by each such Guarantor during a period
ending as of any date of determination.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control” has the meaning set forth in the definition of “Affiliate.”

 

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

 

“Debited Amount” has the meaning set forth in Section 2.11(b).

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the
fullest extent permitted by applicable Laws.

 

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

 

“Designated Account” has the meaning set forth in Section 2.11(b).

 

“Disclosure Letter” means the Disclosure Letter, dated on or about the Closing
Date, delivered by the Borrower to the Administrative Agent pursuant to Section
4.01(a).

 

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“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Due Date” has the meaning set forth in Section 2.11(b).

 

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; and (c)
any other Person (other than a natural Person) approved by (i) the
Administrative Agent and the L/C Issuer, and (ii) unless an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include the Borrower or any of the Borrower’s
Affiliates or Subsidiaries.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses or restrictions by or in
respect of any Governmental Authority, relating to pollution and the protection
of the environment or the release of any materials into the environment,
including those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Equity Interest” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate.

 

“Eurodollar Base Rate” has the meaning set forth in the definition of Eurodollar
Rate.

 

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan, a rate per annum determined by the Administrative Agent pursuant to
the following formula:

 

Eurodollar Rate    =     

                    Eurodollar Base Rate

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            1.00 minus Eurodollar Reserve Percentage

 

Where,

 

“Eurodollar Base Rate” “Eurodollar Base Rate” means, for such Interest Period,
the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, for Dollar deposits (for delivery
on the first day of such Interest Period) with a term equivalent to such
Interest Period. If such rate is not available at such time for any reason, then
the Eurodollar Base Rate for such Interest Period shall be the rate per annum
determined by the Administrative Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period; and

 

“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the FRB for determining the maximum

 

8

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reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred to
as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding
Eurodollar Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of Default” has the meaning set forth in Section 8.01.

 

“Existing Credit Agreement” means that Credit Agreement dated as of May 30,
2002, as amended by amendments dated as of February 12, 2003, April 20, 2004 and
August 5, 2004, among Bank of America, N.A. as Administrative Agent, certain
lenders and the Borrower as borrower.

 

“Existing Letters of Credit” means each letter of credit issued and outstanding
under the Existing Credit Agreement as of the Closing Date and listed on
Schedule 1.01(e).

 

“Existing Windsor Facility” means the Borrower’s distribution facility and
related assets commonly known as Building 1 in Windsor, Virginia.

 

“Existing Windsor Facility Lease” means that certain Lease Agreement relating to
the Existing Windsor Facility entered into by and between the Borrower and
G.E.M. Big Bethel LLC dated as of November 1, 2001, as amended.

 

“Facility Properties” means, collectively, those properties acquired by the
Borrower and its Subsidiaries (a) prior to the Closing Date in connection with
the build out of the Existing Windsor Facility and (b) after the Closing Date
(and in accordance with the terms of this Agreement) in connection with the
build out of the Proposed New Stockton Facility.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated July 15, 2004, among the
Borrower, the Administrative Agent and the Arranger.

 

“Foreign Lender” has the meaning set forth in Section 10.15(a)(i)

 

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“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantors” means Cost Plus Management Services, Inc., Cost Plus Marketing
Services, Inc. and any other Person that executes and delivers a Guaranty
hereunder.

 

“Guaranty” means any Guaranty made by a Guarantor in favor of the Administrative
Agent on behalf of the Lenders, pursuant to this Agreement, in substantially the
form of Exhibit E.

 

“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term “Guarantee” as a verb has a corresponding meaning.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

10

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“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

 

(c) net obligations of such Person under any Swap Contract;

 

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

 

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

 

(f) capital leases and Synthetic Lease Obligations;

 

(g) to the extent such obligations may, on a contingent or other basis, mature
or become fixed on or before the Maturity Date, all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person or any other Person, valued, in the case of a
redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and

 

(h) all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Indebtedness
is expressly made non-recourse to such Person. The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

 

“Indemnified Liabilities” has the meaning set forth in Section 10.05.

 

“Indemnitees” has the meaning set forth in Section 10.05.

 

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“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount, capitalized research and development costs and monies
due from Affiliates, officers, directors, employees and shareholders.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; and (b) as to any Base Rate Loan, the last Business Day of each March,
June, September and December and the Maturity Date.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two or three months
thereafter, as selected by the Borrower in its Loan Notice; provided that:

 

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

 

(ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

(iii) no Interest Period shall extend beyond the Maturity Date.

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

 

“IP Rights” has the meaning set forth in Section 5.15.

 

“IRS” means the United States Internal Revenue Service.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

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“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

 

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

 

“Lender” has the meaning set forth in the introductory paragraph hereto and, as
the context requires, includes the L/C Issuer.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in Schedule 10.02, or such other office or offices as a Lender
may from time to time notify the Borrower and the Administrative Agent.

 

“Letter of Credit” means any letter of credit issued hereunder and shall include
the Existing Letters of Credit. A Letter of Credit may be a commercial letter of
credit or a standby letter of credit.

 

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

 

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).

 

“Loan” has the meaning set forth in Section 2.01.

 

“Loan Documents” means this Agreement, each Note, the Disclosure Letter, the Fee
Letter, each Request for Credit Extension, each Compliance Certificate, and each
Guaranty.

 

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“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from
one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant
to Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of Borrower and
its Subsidiaries taken as a whole; (b) a material impairment of the ability of
any Loan Party to perform its obligations under any Loan Document to which it is
a party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party of any Loan Document to which it
is a party.

 

“Material Subsidiary” means any Subsidiary now or hereafter existing, that (a)
is designated a “Material Subsidiary” by the Borrower pursuant to Section 6.12,
(b) is acquired, created or otherwise becomes a “Material Subsidiary” as a
result of a Permitted Acquisition permitted by Section 7.02(g), or (c) directly
or through a Subsidiary, either (i) owns assets with an aggregate book value
exceeding 10% of the aggregate book value of the consolidated total assets of
the Borrower and its consolidated Subsidiaries taken as a whole, as measured as
of the last day of the most recently completed fiscal quarter or year for which
financial statements have been delivered pursuant to Section 4.01(a)(ix) or
Section 6.01(a) or (b), or (ii) has recognized revenue during the most
recently-completed four fiscal quarter period exceeding 10% of the aggregate
consolidated revenue generated by the Borrower and its consolidated Subsidiaries
during such four fiscal quarter period, as measured as of the last day of the
most recently completed fiscal quarter or year for which financial statements
have been delivered pursuant to Section 4.01(a)(ix) or Section 6.01(a) or (b).

 

“Maturity Date” means (a) November 10 2009, or (b) such earlier date upon which
the Aggregate Commitments may be terminated in accordance with the terms hereof.

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

“New Windsor Facility” means the distribution facility and related assets to be
constructed and completed on or before November 15, 2005 in Windsor, Virginia,
adjacent to the Existing Windsor Facility.

 

“Note” means a promissory note made by the Borrower in favor of a Lender,
evidencing Loans made by such Lender, substantially in the form of Exhibit B.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any

 

14

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Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.

 

“Participant” has the meaning set forth in Section 10.07(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Permitted Acquisition” has the meaning set forth in Section 7.02(g).

 

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

 

“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by the Borrower or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“PP&E” means property, plant and equipment, as determined in accordance with
GAAP.

 

“Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the

 

15

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Commitment of such Lender at such time and the denominator of which is the
amount of the Aggregate Commitments at such time; provided that if the
commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02, then
the Pro Rata Share of each Lender shall be determined based on the Pro Rata
Share of such Lender immediately prior to such termination and after giving
effect to any subsequent assignments made pursuant to the terms hereof. The
initial Pro Rata Share of each Lender is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable.

 

“Proposed New Stockton Facility” means the Borrower’s distribution center and
related assets to be constructed and completed in Stockton, California.

 

“Reduced Commitment Period” means any period from December 31 through June 30 of
any year.

 

“Register” has the meaning set forth in Section 10.07(c).

 

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

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30-day notice period has been waived.

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Loans, a Loan Notice, and (b) with respect to an L/C Credit
Extension, a Letter of Credit Application.

 

“Required Lenders” means, as of any date of determination, at least two Lenders
having more than 50% of the Aggregate Commitments on such date or, if the
commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02, at
least two Lenders holding in the aggregate more than 50% of the Total
Outstandings on such date (with the aggregate amount of each Lender’s risk
participation and funded participation in L/C Obligations being deemed “held” by
such Lender for purposes of this definition); provided that the Commitment of,
and the portion of the Total Outstandings held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.

 

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

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other equity
interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property),

 

16

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including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
capital stock or other equity interest or of any option, warrant or other right
to acquire any such capital stock or other equity interest (other than, in
respect of the Borrower, cash payments in lieu of fractional shares).

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Shareholders’ Equity” means, as of any date of determination, the sum of (a)
consolidated shareholders’ equity of the Borrower and its Subsidiaries as of
such date as determined in accordance with GAAP plus (b) the aggregate principal
amount of Subordinated Indebtedness outstanding as at such date in respect of
the Borrower and its Subsidiaries on a consolidated basis.

 

“Stated Commitment Amount” means $125,000,000 or, if the Borrower has exercised
its right to increase the Aggregate Commitments under Section 2.13, the sum of
$125,000,000 and the amount of such increase.

 

“Subordinated Indebtedness” means indebtedness of the Borrower and its
Subsidiaries subordinated to the Obligations and having payment, tenor and
subordination terms satisfactory to the Required Lenders.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

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“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Threshold Amount” means $15,000,000.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

“United States” and “U.S.” mean the United States of America.

 

“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

 

“Voluntary Commitment Reduction Amount” means, as of any date of determination,
the aggregate amount by which the Borrower has voluntarily and permanently
reduced the Aggregate Commitments below the Stated Commitment Amount pursuant to
Section 2.05(a) on or prior to such date.

 

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

 

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(ii) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

 

(iii) The term “including” is by way of example and not limitation.

 

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

 

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

 

1.03 Accounting Terms. (a) All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

 

(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

1.05 References to Agreements and Laws. Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

 

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

 

1.07 Letter of Credit Amounts. Unless otherwise specified, all references herein
to the amount of a Letter of Credit at any time shall be deemed to mean the
maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the Letter of Credit
Application therefor, whether or not such maximum face amount is in effect at
such time.

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01 Loans. Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Loan”) to the Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect to any
Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any
Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations, shall not exceed such Lender’s Commitment. Within the limits of
each Lender’s Commitment, and subject to the other terms and conditions hereof,
the Borrower may borrow under this Section 2.01, prepay under Section 2.04, and
reborrow under this Section 2.01. Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.

 

2.02 Borrowings, Conversions and Continuations of Loans.

 

(a) Each Borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. (i) two Business Days prior to the requested date of any Borrowing
of, conversion to or continuation of Eurodollar Rate Loans or of any conversion
of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of
any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion
to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$2,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Section 2.03(c), each Borrowing of or conversion to Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Each Loan Notice (whether telephonic or written) shall specify
(A) whether the Borrower is requesting a Borrowing, a conversion of Loans from
one Type to the other, or a continuation of Eurodollar Rate Loans, (B) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (C) the principal amount of Loans to be
borrowed, converted or continued, (D) the Type of Loans to be borrowed or to
which existing Loans are to be

 

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converted, and (E) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower fails to specify a Type of Loan in a Loan
Notice or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Loans shall be made as, or converted to,
Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing
of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

 

(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable Loans,
and if no timely notice of a conversion or continuation is provided by the
Borrower, the Administrative Agent shall notify each Lender of the details of
any automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of a Borrowing, each Lender shall make the amount of its
Loan available to the Administrative Agent in immediately available funds at the
Administrative Agent’s Office not later than 12:00 noon on the Business Day
specified in the applicable Loan Notice. Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the initial
Credit Extension, Section 4.01), the Administrative Agent shall make all funds
so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date the Loan Notice with respect to such Borrowing is
given by the Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Borrowing shall be applied, first, to the payment in full of any such
L/C Borrowings, and second, to the Borrower as provided above.

 

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of a Default, no Loans may be requested as, converted
to or continued as Eurodollar Rate Loans without the consent of the Required
Lenders.

 

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders
of the interest rate applicable to any Interest Period for Eurodollar Rate Loans
upon determination of such interest rate. The determination of the Eurodollar
Rate by the Administrative Agent shall be conclusive in the absence of manifest
error. At any time that Base Rate Loans are outstanding, the Administrative
Agent shall notify the Borrower and the Lenders of any change in Bank of
America’s prime rate used in determining the Base Rate promptly following the
public announcement of such change.

 

(e) After giving effect to all Borrowings, all conversions of Loans from one
Type to the other, and all continuations of Loans as the same Type, there shall
not be more than seven Interest Periods in effect with respect to Loans.

 

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2.03 Letters of Credit.

 

(a) The Letter of Credit Commitment.

 

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.03, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2) to
honor drafts under the Letters of Credit; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of the Borrower;
provided that the L/C Issuer shall not be obligated to make any L/C Credit
Extension with respect to any Letter of Credit, and no Lender shall be obligated
to participate in any Letter of Credit if as of the date of such L/C Credit
Extension, (x) the Total Outstandings would exceed the Aggregate Commitments, or
(y) the aggregate Outstanding Amount of the Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations would
exceed such Lender’s Commitment. Within the foregoing limits, and subject to the
terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed. All Existing Letters of Credit
shall be deemed to have been issued pursuant hereto, and from and after the
Closing Date shall be subject to and governed by the terms and conditions
hereof.

 

(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit
if:

 

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;

 

(B) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;

 

(C) the expiry date of such requested Letter of Credit would occur (1) in the
case of a commercial Letter of Credit, after the date occurring 90 days after
the Letter of Credit Expiration Date, and (2) in the case of a standby Letter of
Credit, after the date occurring 12 months after the Letter of Credit Expiration
Date; in each case, unless all the Lenders have approved such expiry date;

 

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(D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer; or

 

(E) such Letter of Credit is in an initial amount less than $1,000, in the case
of a commercial Letter of Credit, or $500,000, in the case of a standby Letter
of Credit, or is to be denominated in a currency other than Dollars.

 

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit.

 

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower;
provided that the Borrower shall be permitted to deliver Letter of Credit
Applications requesting the issuance or amendment of commercial Letters of
Credit by means of any automated application system maintained by the L/C Issuer
with respect to such commercial Letters of Credit (no guaranty of the
availability of any such automated application system being implied herein).
Such Letter of Credit Application must be received by the L/C Issuer and the
Administrative Agent, (x) with respect to any such application requesting an
issuance of, or an amendment to, a commercial Letter of Credit, as the case may
be, not later than (1) 9:00 a.m. on the proposed issuance date or date of
amendment, as the case may be (which issuance or amendment date shall be a
Business Day), if such application is delivered by the Borrower to the L/C
Issuer electronically by means of any automated application system maintained by
the L/C Issuer with respect to such commercial Letters of Credit, or (2) 11:00
a.m. at least two Business Days (or such later date and time as the L/C Issuer
may agree in a particular instance in its sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be, if such application is
delivered by the Borrower to the L/C Issuer by any other means; and (y) with
respect to any such application requesting an issuance of, or an amendment to, a
standby Letter of Credit, as the case may be, not later than 11:00 a.m. at least
two Business Days (or such later date and time as the L/C Issuer may agree in a
particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the L/C Issuer: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the L/C Issuer may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter

 

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of Credit to be amended; (B) the proposed date of amendment thereof (which shall
be a Business Day); (C) the nature of the proposed amendment; and (D) such other
matters as the L/C Issuer may require.

 

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
the Administrative Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the Borrower or enter into the applicable amendment, as the
case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s Pro
Rata Share times the amount of such Letter of Credit.

 

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic renewal provisions (each, an
“Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of
Credit must permit the L/C Issuer to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the Borrower shall not be required to make a specific request to
the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the renewal of such Letter of Credit at any
time to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the L/C Issuer shall not permit any such renewal if (A)
the L/C Issuer has determined that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by
reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has
received notice (which may be by telephone or in writing) on or before the day
that is two Business Days before the Nonrenewal Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to permit such
renewal or (2) from the Administrative Agent, any Lender or the Borrower that
one or more of the applicable conditions specified in Section 4.02 is not then
satisfied.

 

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrower and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

 

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(c) Drawings and Reimbursements; Funding of Participations.

 

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower
and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of
any payment by the L/C Issuer under a Letter of Credit (each such date, an
“Honor Date”), the Borrower shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing. If the
Borrower fails to so reimburse the L/C Issuer by such time, the Administrative
Agent shall promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to
have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in Section 2.02 for the principal amount of Base Rate Loans,
but subject to the amount of the unutilized portion of the Aggregate Commitments
and the conditions set forth in Section 4.02 (other than the delivery of a Loan
Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant
to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

 

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any
notice pursuant to Section 2.03(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative Agent’s Office in
an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than
12:00 noon on the Business Day specified in such notice by the Administrative
Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender
that so makes funds available shall be deemed to have made a Base Rate Loan to
the Borrower in such amount. The Administrative Agent shall remit the funds so
received to the L/C Issuer.

 

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender’s payment to the Administrative Agent
for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.

 

(iv) Until each Lender funds its Loan or L/C Advance pursuant to this Section
2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall
be solely for the account of the L/C Issuer.

 

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(v) Each Lender’s obligation to make Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.03(c), shall be absolute and unconditional and shall not be affected
by any circumstance, including (A) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the L/C Issuer, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Loans pursuant to this Section 2.03(c) is subject to
the conditions set forth in Section 4.02 (other than delivery by the Borrower of
a Loan Notice). No such making of an L/C Advance shall relieve or otherwise
impair the obligation of the Borrower to reimburse the L/C Issuer for the amount
of any payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.

 

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.03(c) by the time specified in
Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (vi)
shall be conclusive absent manifest error.

 

  (d) Repayment of Participations.

 

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from the Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by the
Administrative Agent), the Administrative Agent will distribute to such Lender
its Pro Rata Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s L/C Advance
was outstanding) in the same funds as those received by the Administrative
Agent.

 

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any
of the circumstances described in Section 10.06 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Lender shall
pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata
Share thereof on demand of the Administrative Agent, plus interest thereon from
the date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.

 

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(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:

 

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

 

(ii) the existence of any claim, counterclaim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of such Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

 

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

 

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower;

 

provided, however, that, notwithstanding anything to the contrary set forth in
this subsection (e), the Borrower may have a claim against the L/C Issuer, and
the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence.

 

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

 

(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter

 

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of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document. None of the L/C Issuer or, its Related Parties nor any of the
respective correspondents, participants or assignees of the L/C Issuer shall be
liable to any Lender for (i) any action taken or omitted in connection herewith
at the request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Letter of Credit Application. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrower’s pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. None of the L/C Issuer or, its Related Parties nor any of the
respective correspondents, participants or assignees of the L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

 

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the
Letter of Credit Expiration Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, the Borrower shall immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations (in an amount
equal to such Outstanding Amount determined as of the date of such L/C Borrowing
or the Letter of Credit Expiration Date, as the case may be). For purposes
hereof, “Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
the L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term have corresponding meanings. The Borrower hereby grants
to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders,
a security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing. Cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.

 

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C
Issuer and the Borrower when a Letter of Credit is issued (including any such
agreement

 

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applicable to an Existing Letter of Credit), (i) the rules of the “International
Standby Practices 1998” published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance) shall apply to each standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce (the “ICC”) at the time of
issuance (including the ICC decision published by the Commission on Banking
Technique and Practice on April 6, 1998 regarding the European single currency
(euro)) shall apply to each commercial Letter of Credit.

 

(i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share (i) a
Letter of Credit fee for each commercial Letter of Credit equal to 1/8 of 1% per
annum times the maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit), and (ii) a Letter of Credit fee for each standby Letter of Credit equal
to the Applicable Rate times the daily maximum amount available to be drawn
under such Letter of Credit (whether or not such maximum amount is then in
effect under such Letter of Credit). Such letter of credit fees shall be
computed on a quarterly basis in arrears and shall be due and payable on the
first Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Rate during any quarter, the daily maximum
amount of each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.

 

(j) Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall
pay directly to the L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of the L/C Issuer relating to letters of credit as from time to time in
effect. Such customary fees and standard costs and charges are due and payable
on demand and are nonrefundable.

 

(k) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application
(including any electronic Letter of Credit Application of the type described in
Section 2.03(b)(i)(x)(1)), the terms hereof shall control.

 

2.04 Prepayments.

 

(a) The Borrower may, upon notice to the Administrative Agent, at any time or
from time to time voluntarily prepay Loans in whole or in part without premium
or penalty; provided that (i) such notice must be received by the Administrative
Agent not later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base
Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof; and
(iii) any prepayment of Base Rate Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if
less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of Loans to
be prepaid. The Administrative Agent will promptly notify each

 

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Lender of its receipt of each such notice, and of the amount of such Lender’s
Pro Rata Share of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment of
a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
together with any additional amounts required pursuant to Section 3.05. Each
such prepayment shall be applied to the Loans of the Lenders in accordance with
their respective Pro Rata Shares.

 

(b) If for any reason the Total Outstandings at any time exceed the Aggregate
Commitments then in effect (including during or as a result of the commencement
of any Reduced Commitment Period), the Borrower shall immediately prepay Loans,
together with any additional amounts required pursuant to Section 3.05, and/or
Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that the Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless after
the prepayment in full of the Loans the Total Outstandings exceed the Aggregate
Commitments then in effect.

 

(c) The Borrower shall from time to time prepay outstanding Loans in accordance
with Section 6.13, together with any additional amounts required pursuant to
Section 3.05.

 

2.05 Change in Commitments.

 

(a) Voluntary Termination or Reduction in Commitments. The Borrower may, upon
notice to the Administrative Agent, terminate the Aggregate Commitments, or from
time to time permanently reduce the Aggregate Commitments; provided that (i) any
such notice shall be received by the Administrative Agent not later than 8:00
a.m. five Business Days prior to the date of termination or permanent reduction,
(ii) any such partial permanent reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof, and (iii) the
Borrower shall not terminate or permanently reduce the Aggregate Commitments if,
after giving effect thereto and to any concurrent prepayments hereunder, the
Total Outstandings would exceed the Aggregate Commitments. The Administrative
Agent will promptly notify the Lenders of any such notice of termination or
permanent reduction of the Aggregate Commitments. Any such permanent reduction
of the Aggregate Commitments shall be applied to the Commitment of each Lender
according to its Pro Rata Share. All commitment fees accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

 

(b) Mandatory Changes in Commitments. The Aggregate Commitments in effect on any
date of determination shall be equal to the sum of (a) the Stated Commitment
Amount less (b) the Voluntary Commitment Reduction Amount as at such date;
provided that the Aggregate Commitments in effect on any date occurring during
any Reduced Commitment Period shall be equal to the lesser of (i) the sum of the
Stated Commitment Amount less the Voluntary Commitment Reduction Amount as at
such date, and (ii) $50,000,000. The amount of the Commitments shall
automatically (and without notice to or from the Borrower) be deemed to ratably
(x) decrease as of the first day of each Reduced Commitment Period, and (y)
increase as of the last day of each Reduced Commitment Period; in each case (x)
and (y), to the extent necessary to comply with the preceding sentence.

 

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2.06 Repayment of Loans. The Borrower shall repay to the Lenders on the Maturity
Date the aggregate principal amount of Loans outstanding on such date.

 

2.07 Interest.

 

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

 

(b) If any amount payable by the Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
while any Event of Default exists, the Borrower shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.

 

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

2.08 Fees. In addition to certain fees described in subsections (i) and (j) of
Section 2.03:

 

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Pro Rata Share, a commitment fee
equal to the Applicable Rate times the actual daily amount by which the
Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Loans and
(ii) the Outstanding Amount of L/C Obligations. The commitment fee shall accrue
at all times during the Availability Period, including at any time during which
one or more of the conditions in Article IV is not met and at all times during
any periods of time specified in Section 6.13, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Rate during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect.

 

(b) Lenders’ Upfront Fee. On the Closing Date, the Borrower shall pay to the
Administrative Agent, for the account of the Lenders in accordance with their
respective Pro Rata Shares, an upfront fee in the amount set forth in the Fee
Letter. Such upfront fees are for the credit facilities committed by the Lenders
under this Agreement, are fully earned on the date paid and shall not be
refundable for any reason whatsoever.

 

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(c) Annual Agency Fee. The Borrower shall pay an annual agency fee to the
Administrative Agent for the Administrative Agent’s own account, in the amounts
and at the times specified in the Fee Letter. Such fees shall be fully earned
when paid and shall not be refundable for any reason whatsoever.

 

2.09 Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by Bank of America’s “prime rate”
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
fees or interest, as applicable, being paid than if computed on the basis of a
365-day year). Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.11(a), bear
interest for one day.

 

2.10 Evidence of Debt.

 

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender’s
Loans in addition to such accounts or records. Each Lender may attach schedules
to its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto.

 

(b) In addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

 

2.11 Payments Generally.

 

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly

 

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provided herein, all payments by the Borrower hereunder shall be made to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the Administrative Agent’s Office in Dollars and in
immediately available funds not later than 12:00 noon on the date specified
herein. The Administrative Agent will promptly distribute to each Lender its Pro
Rata Share (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office. All
payments received by the Administrative Agent after 12:00 noon shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.

 

(b) The Borrower hereby irrevocably authorizes the Administrative Agent to debit
the account maintained by the Borrower with the Administrative Agent as of the
Closing Date (or such other account maintained by the Borrower with the
Administrative Agent as shall be designated in writing by the Borrower from time
to time) (the “Designated Account”) on each date (including each Interest
Payment Date) on which a payment of interest, fees, costs or expenses is due
hereunder (each, a “Due Date”). Not later than two Business Days prior to each
such Due Date, the Administrative Agent shall deliver to the Borrower a
statement of the amount that will be due and payable in respect of any such
interest, fees, costs and expenses having accrued hereunder (the “Billed
Amount”); provided that any such Billed Amount shall be calculated by the
Administrative Agent under the assumption that no new Borrowings or payments of
principal, interest, fees, costs or expenses will be made by the Borrower, and
that no changes in the Applicable Rates then applicable to each outstanding Loan
and Letter of Credit will occur, during the period commencing on the date such
statement is issued and ending on the Due Date related thereto. On the Due Date,
the Administrative Agent may debit the Designated Account for the actual amount
of accrued interest, fees, costs and expenses due on such Due Date (each, a
“Debited Amount”), and shall promptly notify the Borrower as to any difference
(positive or negative) between such Billed Amount and Debited Amount. The
Borrower shall at all times maintain sufficient funds in the Designated Account
to pay all Debited Amounts debited therefrom. To the extent that, on any Due
Date, there are insufficient funds in the Designated Account to pay the Debited
Amount related to such Due Date, the Borrower shall pay to the Administrative an
amount equal to such Debited Amount in accordance with this Section 2.11.
Interest, fees, costs and expenses payable hereunder shall continue to accrue in
the manner provided hereunder, regardless of whether such interest, fees, costs
and expenses are paid by the Borrower by means of a debit to the Designated
Account or otherwise, and regardless of any differences between any Billed
Amount and the Debited Amount related thereto. No failure by the Administrative
Agent to issue any statement or notice, or failure or inability on the part of
the Administrative Agent to debit the Designated Account on any Due Date for any
amount then due (whether as a result of insufficient funds in the Designated
Account on such Due Date or otherwise), shall in any way excuse or in any way
affect any obligation of the Borrower to pay any such interest, fees, costs and
expenses in accordance with the terms and provisions of this Agreement.

 

(c) If any payment to be made by the Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

 

(d) Unless the Borrower or any Lender has notified the Administrative Agent,
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that the

 

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Borrower or such Lender, as the case may be, will not make such payment, the
Administrative Agent may assume that the Borrower or such Lender, as the case
may be, has timely made such payment and may (but shall not be so required to),
in reliance thereon, make available a corresponding amount to the Person
entitled thereto. If and to the extent that such payment was not in fact made to
the Administrative Agent in immediately available funds, then:

 

(i) if the Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Lender to the date
such amount is repaid to the Administrative Agent in immediately available funds
at the Federal Funds Rate from time to time in effect; and

 

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in the applicable
Borrowing. If such Lender does not pay such amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the Compensation Period
at a rate per annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this subsection (d) shall be conclusive, absent
manifest error.

 

(e) If any Lender makes available to the Administrative Agent funds for any Loan
to be made by such Lender as provided in the foregoing provisions of this
Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension
set forth in Article IV are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.

 

(f) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit are several and not joint. The failure of
any Lender to make any Loan or to fund any such participation on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.

 

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(g) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

 

2.12 Sharing of Payments. If, other than as expressly provided elsewhere herein,
any Lender shall obtain on account of the Loans made by it, or the
participations in L/C Obligations held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify the Administrative Agent of such fact,
and (b) purchase from the other Lenders such participations in the Loans made by
them and/or such subparticipations in the participations in L/C Obligations held
by them, as the case may be, as shall be necessary to cause such purchasing
Lender to share the excess payment in respect of such Loans or such
participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described in
Section 10.06 (including pursuant to any settlement entered into by the
purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments. Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

 

2.13 Increase in Commitments.

 

(a) Request for Increase. Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Lenders) delivered at any
time prior to May 10, 2009, the Borrower may on a one-time basis, request an
increase in the Aggregate Commitments by an amount not exceeding $25,000,000. At
the time of sending such notice, the Borrower (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be neither less than ten Business
Days nor more than 30 days from the date of delivery of such notice to the
Lenders).

 

(b) Lender Elections to Increase. Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less than
its Pro Rata Share of such requested increase. Any Lender not responding within
such time period shall be deemed to have declined to increase its Commitment.

 

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(c) Notification by Administrative Agent; Additional Lenders. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders’ responses to
each request made hereunder. To achieve the full amount of a requested increase
and subject to the approval of the Administrative Agent and the L/C Issuer
(which approvals shall not be unreasonably withheld), the Borrower may also
invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its
counsel.

 

(d) Effective Date and Allocations. If the Aggregate Commitments are increased
in accordance with this Section, the Administrative Agent and the Borrower shall
determine the effective date (the “Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Borrower and the Lenders of the final allocation of such increase and the
Increase Effective Date.

 

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate
of each Loan Party dated as of the Increase Effective Date (in sufficient copies
for each Lender) signed by a Responsible Officer of such Loan Party (i)
certifying and attaching the resolutions adopted by such Loan Party approving or
consenting to such increase, and (ii) in the case of the Borrower, certifying
that, before and after giving effect to such increase, (A) the representations
and warranties contained in Article V and the other Loan Documents are true and
correct on and as of the Extension Effective Date, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date, and except that
for purposes of this Section 2.13, the representations and warranties contained
in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (B) no Default exists. The Borrower shall prepay any Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep the
outstanding Loans ratable with any revised Pro Rata Shares arising from any
nonratable increase in the Commitments under this Section.

 

(f) Conflicting Provisions. This Section shall supersede any provisions in
Sections 2.12 or 10.01 to the contrary.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes.

 

(a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its
overall

 

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net income, and franchise taxes imposed on it (in lieu of net income taxes), by
the jurisdiction (or any political subdivision thereof) under the Laws of which
the Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to the Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), each of the Administrative Agent and such Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the Borrower shall furnish to the Administrative Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.

 

(b) In addition, the Borrower agrees to pay any and all present or future stamp,
court or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under any Loan Document or from
the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document (hereinafter referred to as “Other
Taxes”).

 

(c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent or to such Lender, as the case may be, at the time interest
is paid, such additional amount that the Administrative Agent or such Lender
specifies is necessary to preserve the after-tax yield (after factoring in all
taxes, including taxes imposed on or measured by net income) that the
Administrative Agent or such Lender would have received if such Taxes or Other
Taxes had not been imposed.

 

(d) The Borrower agrees to indemnify the Administrative Agent and each Lender
for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section) paid by the Administrative Agent and such Lender, (ii) amounts payable
under Section 3.01(c) and (iii) any liability (including additions to tax,
penalties, interest and expenses) arising therefrom or with respect thereto, in
each case whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided that (A)
the Borrower shall not be obligated to indemnify the Administrative Agent or any
Lender for any penalties described in clause (iii) above to the extent the
Administrative Agent or such Lender (1) had actual knowledge of the existence of
the tax, interest, or expense, the non-payment of which gave rise to such
penalties, and (2) failed to give the Borrower notice of such tax, interest or
expense within ten Business Days after the Administrative Agent or such Lender
received actual knowledge of the existence thereof; and (B) nothing contained in
this subsection (d) shall be deemed to imply any obligation on the part of the
Administrative Agent or any Lender to provide the Borrower with notice of any
such tax, penalty, interest or expense. Payment under this subsection (d) shall
be made within 30 days after the date the Lender or the Administrative Agent
makes a demand therefor.

 

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3.02 Illegality. If any Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable Lending Office to make, maintain or fund Eurodollar Rate
Loans, or to determine or charge interest rates based upon the Eurodollar Rate,
then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrower shall also pay accrued
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.

 

3.03 Inability to Determine Rates. If the Required Lenders determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan, or that the Eurodollar Base Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
the Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.

 

3.04 Increased Cost and Reduced Return; Capital Adequacy.

 

(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law occurring after the Closing Date,
or such Lender’s compliance therewith, there shall be any increase in the cost
to such Lender of agreeing to make or making, funding or maintaining Eurodollar
Rate Loans or (as the case may be) issuing or participating in Letters of
Credit, or a reduction in the amount received or receivable by such Lender in
connection with any of the foregoing (excluding for purposes of this subsection
(a) any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis
of taxation of overall net income or overall gross income by the United States
or any foreign jurisdiction or any political subdivision of either thereof under
the Laws of which such Lender is organized or has its Lending Office, and (iii)
reserve requirements utilized in the determination of the Eurodollar Rate), then
from time to time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such increased cost or reduction.

 

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(b) If any Lender determines that the introduction of any Law occurring after
the Closing Date regarding capital adequacy, or any change therein or in the
interpretation thereof occurring after the Closing Date, or compliance by such
Lender (or its Lending Office) therewith after the Closing Date, has the effect
of reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender’s obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender’s desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

 

3.05 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

 

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower; or

 

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of
the Interest Period therefor as a result of (i) the joinder of a new Lender to
this Agreement at any time after the Closing Date, and (ii) any assignment of a
Eurodollar Rate Loan on a day other than the last day of the Interest Period
therefore as a result of a request by the Borrower pursuant to Section 10.16;

 

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
offshore dollar interbank market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06 Matters Applicable to all Requests for Compensation.

 

(a) The Administrative Agent or any Lender claiming compensation under this
Article III shall deliver to the Borrower a certificate setting forth in
reasonable detail the additional amount or amounts to be paid to it hereunder.
Such certificate shall be conclusive in the absence of manifest error. In
determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods; provided, however, that the
Borrower shall not be liable for any such amount to the extent attributable to
any period occurring more than 180 days prior to the date of such certificate.

 

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(b) Upon any Lender’s making a claim for compensation under Section 3.01 or
3.04, the Borrower may replace such Lender in accordance with Section 10.16.

 

3.07 Survival. All of the Borrower’s obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder; provided, however, that the obligation of the Borrower to
make any payment under this Article III is contingent upon the receipt by the
Borrower of the certificate described in Section 3.06(a) within 180 days after
the later of the repayment of all Loans, the termination of all Letters of
Credit and the termination of the Commitments.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01 Conditions of Initial Credit Extension. The obligation of each Lender to
make its initial Credit Extension is subject to satisfaction of the following
conditions precedent:

 

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and its legal counsel:

 

(i) executed counterparts of this Agreement, the Disclosure Letter and the
Guaranty made by Cost Plus Management Services, Inc. and Cost Plus Marketing
Services, Inc., sufficient in number for distribution to the Administrative
Agent, each Lender and the Borrower;

 

(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

 

(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of the Secretary or Assistant Secretary of each Loan
Party as the Administrative Agent may require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

 

(iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed,
and that each of the Borrower and each Guarantor existing as of the Closing Date
is validly existing, in good standing and qualified to engage in business in
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect;

 

(v) a favorable opinion or opinions of counsel to the Loan Parties, addressed to
the Administrative Agent and each Lender, as to the matters set forth in Exhibit
F and such other matters concerning the Loan Parties and the Loan Documents as
the Required Lenders may reasonably request;

 

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(vi) a certificate of a Responsible Officer of each Loan Party either (A)
attaching copies of all consents, licenses and approvals required in connection
with the execution, delivery and performance by such Loan Party and the validity
against such Loan Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and effect, or (B)
stating that no such consents, licenses or approvals are so required;

 

(vii) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since July 31,
2004 that has had or could be reasonably expected to have, either individually
or in the aggregate, a Material Adverse Effect;

 

(viii) evidence that the Existing Credit Agreement has been or concurrently with
the Closing Date is being terminated and all Liens securing obligations under
the Existing Credit Agreement have been or concurrently with the Closing Date
are being released;

 

(ix) (A) a Consolidating Asset Report dated as of January 31, 2004, and (B) a
Consolidating Revenue Report in respect of the four fiscal quarter period of the
Borrower ended on or about January 31, 2004; and

 

(x) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer or the Required Lenders reasonably may
require.

 

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

 

(c) Unless waived by the Administrative Agent, the Borrower shall have paid all
Attorney Costs of the Administrative Agent to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).

 

(d) The Closing Date shall have occurred on or before November 18, 2004.

 

4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor
any Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type, or a continuation of Eurodollar Rate
Loans) is subject to the following conditions precedent:

 

(a) The representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith,
shall be true and correct on and as of the date of such Credit Extension, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date, and except that for purposes of this Section 4.02, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01.

 

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(b) No Default shall exist, or would result from such proposed Credit Extension.

 

(c) The Administrative Agent and, if applicable, the L/C Issuer shall have
received a Request for Credit Extension in accordance with the requirements
hereof.

 

Each Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate
Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

 

5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party
(a) is a corporation, partnership or limited liability company duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals
to (i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws; except in each case referred to in clause (b)(i), (c)
or (d), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, (i) any Contractual
Obligation to which such Person is a party or (ii) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (c) violate any Law.

 

5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required by or on
behalf of any Loan Party in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or any
other Loan Document.

 

5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms.

 

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5.05 Financial Statements; No Material Adverse Effect.

 

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Borrower and its Subsidiaries as
of the date thereof, including liabilities for taxes, material commitments and
Indebtedness, in each case, that are required to be disclosed therein (in
footnotes or otherwise) in accordance with GAAP.

 

(b) Since the date of the Audited Financial Statements, there has been no event
or circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect.

 

5.06 Litigation. Except as specifically disclosed in Schedule 5.06 to the
Disclosure Letter, there are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower, threatened in writing, at law, in
equity, in arbitration or before any Governmental Authority, by or against the
Borrower or any of its Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby, or (b) either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

5.07 No Default. Neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation that could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

 

5.08 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The property of the
Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted
by Section 7.01.

 

5.09 Environmental Compliance. The Borrower and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 5.09 to the Disclosure Letter, such
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state and other

 

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material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP and except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect. There is no proposed
tax assessment against the Borrower or any Subsidiary that would, if made, have
a Material Adverse Effect.

 

5.11 ERISA Compliance.

 

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto (or there is remaining
a period of time under applicable Treasury regulations or IRS pronouncements in
which to apply for such a letter and make amendments necessary to obtain a
favorable determination letter) and, to the best knowledge of the Borrower,
nothing has occurred which would prevent, or cause the loss of, such
qualification. The Borrower and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code and except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

 

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

5.12 Subsidiaries. As of the Closing Date, the Borrower (a) has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.12 of the
Disclosure Letter, (b) has no equity investments in any other corporation or
entity other than those specifically disclosed in Part(b) of Schedule 5.12 of
the Disclosure Letter and (c) has no Material Subsidiaries other than Cost Plus
Management Services, Inc. and Cost Plus Marketing Services, Inc.

 

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5.13 Margin Regulations; Investment Company Act; Public Utility Holding Company
Act.

 

(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock. Following the application of
the proceeds of each Borrowing or drawing under each Letter of Credit, not more
than 25% of the value of the assets (either of the Borrower only or of the
Borrower and its Subsidiaries on a consolidated basis) subject to the provisions
of Section 7.01 or Section 7.05 or subject to any restriction contained in any
agreement or instrument between the Borrower and any Lender or any Affiliate of
any Lender relating to Indebtedness and within the scope of Section 8.01(e) will
be margin stock.

 

(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary
(i) is a “holding company,” or a “subsidiary company” of a “holding company,” or
an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

 

5.14 Compliance with Laws. Each of the Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

5.15 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, and, except where
the existence of such conflict could not reasonably be expected to have a
Material Adverse Effect, the Borrower and its Subsidiaries own or possess such
IP Rights without conflict with the rights of any other Person. To the best
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person, except where any such infringement could
not reasonably be expected to have a Material Adverse Effect. No claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of the Borrower, threatened in writing, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.16 Disclosure. The Borrower has disclosed to the Administrative Agent and the
Lenders (such disclosures being deemed to include the Borrower’s periodic
filings with the SEC) all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on

 

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behalf of any Loan Party to the Administrative Agent or any Lender in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or delivered hereunder (as modified or supplemented by other information so
furnished), when taken together with the Borrower’s periodic filings with the
SEC, contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder (other than, solely for this purpose, inchoate indemnity
obligations which survive the termination of this Agreement) shall remain unpaid
or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower
shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:

 

6.01 Financial Statements. Deliver to the Administrative Agent (with enough
copies for distribution to each Lender), in form and detail satisfactory to the
Administrative Agent and the Required Lenders:

 

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit;

 

(b) as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of the Borrower’s fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of the Borrower
as fairly presenting in all material respects the financial condition, results
of operations, shareholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;

 

(c) as soon as available, but in any event within 60 days after the end of each
fiscal year of the Borrower, a pro forma budget forecasting the financial
condition, results of

 

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operations, shareholders’ equity and cash flows of the Borrower and its
Subsidiaries over the immediately succeeding fiscal year of the Borrower and
setting forth in comparative form the corresponding information for the previous
fiscal year, all in reasonable detail; and

 

(d) as soon as available, but in any event not later than September 30th of each
year, a summary of the new site lease commitments the Borrower expects the
Borrower and its Subsidiaries to enter into during the next succeeding fiscal
year of the Borrower.

 

As to any information contained in materials furnished pursuant to Section
6.02(c), the Borrower shall not be separately required to furnish such
information under clause (a) above; provided that the delivery by the Borrower
of any such Section 6.02(c) deliverables shall not be in derogation of the
obligation of the Borrower to furnish all other information and materials
described in subsection (a) above at the times specified therein.

 

6.02 Certificates; Other Information. Deliver to the Administrative Agent, in
form and detail satisfactory to the Administrative Agent and the Required
Lenders:

 

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;

 

(b) promptly after the same are available, copies of each material control
weakness letter delivered to the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any
audit of any of them;

 

(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Borrower, and copies of all annual, regular, periodic and special reports
and registration statements which the Borrower may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
and not otherwise required to be delivered to the Administrative Agent pursuant
hereto; and

 

(d) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Administrative Agent or any Lender may from
time to time reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section
6.02(c) (to the extent any such documents are included in materials otherwise
filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date (i) on which the Borrower posts
such documents, or provides a link thereto on the Borrower’s website on the
Internet at the website address listed on Schedule 10.02; or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or
another relevant website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any Lender
that requests the Borrower to deliver such paper copies until a written request
to cease delivering paper copies is given by the Administrative Agent or such

 

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Lender and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Administrative Agent and each Lender of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. Notwithstanding
anything contained herein, in every instance the Borrower shall be required to
provide paper copies of the Compliance Certificates required by Section 6.02(a)
to the Administrative Agent and each of the Lenders. Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

 

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders and the L/C Issuer materials and/or
information provided by or on behalf of the Borrower hereunder (collectively,
“Borrower Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”), and (b) certain of the Lenders may
be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Arranger, the L/C Issuer and the Lenders to treat such
Borrower Materials as either publicly available information or not material
information (although it may be sensitive and proprietary) with respect to the
Borrower or its securities for purposes of United States, Federal and state
securities law; (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated “Public Investor,”
and (z) the Administrative Agent and the Arranger shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”

 

6.03 Notices. Promptly notify the Administrative Agent and each Lender:

 

(a) of the occurrence of any Default;

 

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including (to the extent any of the following could
reasonably be expected to result in a Material Adverse Effect), (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;

 

(c) of the occurrence of any ERISA Event; and

 

(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.

 

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Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04 Payment of Obligations. Except where the failure to do so could reasonably
be expected to have a Material Adverse Effect, pay and discharge as the same
shall become due and payable, all its obligations and liabilities, including (a)
all tax liabilities, assessments and governmental charges or levies upon it or
its properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary; (b) all
lawful claims which, if unpaid, would by law become a Lien upon its property;
and (c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

 

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization, except (i) where the failure to maintain such
legal existence or good standing, as the case may be, occurs upon the
consummation of a transaction expressly permitted by Section 7.04 or 7.05, or
(ii) where the failure to maintain such good standing could not reasonably be
expected to have a Material Adverse Effect; (b) take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or
desirable in the normal conduct of its business, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (c) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

 

6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition (ordinary wear and tear excepted), except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect; (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) use the standard of care
typical in the industry in the operation and maintenance of its facilities.

 

6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrower, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons.

 

6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

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6.09 Books and Records. (a) Maintain proper books of record and account, in
which entries that are accurate in all material respects, and that conform with
GAAP consistently applied, are made of all financial transactions and matters
involving the assets and business of the Borrower or such Subsidiary, as the
case may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over the Borrower or such Subsidiary, as the case may
be.

 

6.10 Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and undertake reasonable
inspections of any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and
independent public accountants, and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

 

6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for general
corporate purposes not in contravention of any Law or of any Loan Document.

 

6.12 Material Subsidiaries. Cause each Material Subsidiary created, acquired or
arising after the Closing Date (including Subsidiaries existing as of the
Closing Date which become Material Subsidiaries after the Closing Date, whether
pursuant to the consummation of a Permitted Acquisition or otherwise) to execute
and deliver a Guaranty within 30 days after each such Material Subsidiary is
acquired, created or otherwise becomes a Material Subsidiary, together with such
other certificates, documents, instruments and opinions as the Administrative
Agent may reasonably request in connection therewith.

 

6.13 Clean-Up Requirement. Pay or prepay any Loans then outstanding, and
reimburse the L/C Issuer for any Unreimbursed Amounts then existing, such that,
after giving effect to all such repayments, prepayments and reimbursements, the
Adjusted Total Outstandings do not exceed $30,000,000 for not less than 30
consecutive days during the period from January 1 through March 31 of each year.

 

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ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder (other than, solely for this purpose, inchoate indemnity
obligations which survive the termination of this Agreement) shall remain unpaid
or unsatisfied, or any Letter of

 

Credit shall remain outstanding, the Borrower shall not, nor shall it permit any
Subsidiary to, directly or indirectly:

 

7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

 

(i) Liens pursuant to any Loan Document;

 

(ii) Liens existing on the Closing Date and listed on Schedule 7.01 to the
Disclosure Letter and any renewals or extensions thereof, provided that the
property covered thereby is not increased and any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 7.03(b);

 

(iii) Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

 

(iv) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlord’s or other like Liens arising by operation of law in the ordinary
course of business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of the applicable Person;

 

(v) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

 

(vi) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds and other obligations of
a like nature incurred in the ordinary course of business;

 

(vii) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

 

(viii) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 8.01(h) or securing appeal or other surety bonds
related to such judgments;

 

(ix) Liens securing capital leases and Synthetic Lease Obligations, and purchase
money security interests on any property acquired or held by the Borrower or its
Subsidiaries in the ordinary course of business securing Indebtedness incurred
or assumed for the purpose of financing all or any part of the cost of acquiring
or constructing such property to the extent permitted under Section 7.03;
provided, however, that (i) any such Lien attaches to such property concurrently
with or within 120 days after the acquisition or completion of construction
thereof, (ii) any such Lien attaches solely to the property so acquired or
constructed in such transaction, and (iii) the principal amount of the debt
secured thereby does not exceed 100% of the cost of the acquisition or
construction of such property;

 

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(x) Liens securing Indebtedness permitted by Section 7.03(e); provided that (i)
such Liens existed on the date of the Permitted Acquisition of the entity or
business that is subject to such Indebtedness, (ii) such Liens do not at any
time encumber any property other than the property of such acquired entity or
business and (iii) such Liens were not created, assumed or incurred in
anticipation or contemplation of such Permitted Acquisition;

 

(xi) Liens in favor of any Governmental Authority constituting a customs and
revenue authority which secure payment of customs duties in connection with the
Borrower’s or its Subsidiaries’ importation of goods in the ordinary course of
business;

 

(xii) Liens arising solely by virtue of any statutory, common law or contractual
provision relating to banker’s liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (A) such deposit account is not a
dedicated cash collateral account and is not subject to any control agreement or
any restriction against access by the Borrower or such Subsidiary that is more
stringent than those set forth in regulations promulgated by the FRB, and (B)
such deposit account is not intended by the Borrower or such Subsidiary to
provide collateral to such depository institution;

 

(xiii) Liens (not otherwise permitted by this Section 7.01) securing obligations
of the Borrower and its Subsidiaries; provided that the aggregate amount of all
such obligations secured by all such Liens does not exceed $1,000,000 at any
time;

 

(xiv) Liens on the Existing Windsor Facility securing Indebtedness permitted by
Section 7.03(i), or (j);

 

(xv) Liens on the Existing Windsor Facility and the New Windsor Facility
securing Indebtedness permitted by Section 7.03(d), to the extent such
Indebtedness is incurred in order to hedge interest rate risk relating to
Indebtedness permitted by Section 7.03(i), or (j);

 

(xvi) Liens on the New Windsor Facility securing Indebtedness permitted by
Section 7.03(j); and

 

(xvii) Liens on the Proposed New Stockton Facility securing Indebtedness
permitted by Section 7.03(k).

 

(b) Enter into or suffer to exist any agreement (other than pursuant to any Loan
Document) prohibiting or conditioning the creation or assumption of any Lien
upon any of its properties, revenues or assets, whether now owned or hereafter
acquired; provided, however, that this subsection shall not prohibit any such
agreement (i) incurred or provided in favor of any holder of Indebtedness
secured by a Lien permitted by subsections (a)(ix), (xiv), (xvi) or (xvii) of
this Section, with respect to property secured by such Lien, or (ii) to the
extent (A) incurred or provided in favor of a lessor solely with respect to the
Borrower’s or such Subsidiary’s rights and interests in an operating lease
agreement entered into with such lessor and (B) such provision is ineffective
pursuant to (and after full application of) section 9407 or section 9408 of
Division 9 of the California Commercial Code in effect on the Closing Date.

 

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7.02 Investments. Make any Investments, except:

 

(a) Investments existing on the Closing Date and listed on Schedule 7.02 to the
Disclosure Letter;

 

(b) Investments held by the Borrower or such Subsidiary in the form of cash
equivalents or short-term marketable securities;

 

(c) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $5,000,000 at any time
outstanding, for travel, entertainment, relocation, and other personal or
business purposes;

 

(d) Investments of the Borrower in any Subsidiary and Investments of any
Subsidiary in the Borrower or in another wholly-owned Subsidiary;

 

(e) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors;

 

(f) Guarantees permitted by subsections (c) through (h) of Section 7.03;

 

(g) acquisitions of all or substantially all of the capital stock, assets or
business of any Person (each, a “Permitted Acquisition”), in each case not
otherwise permitted by subsections (a) through (e) or (g) or (h) of this Section
7.02; provided that (i) the total consideration paid or agreed to be paid by the
Borrower and its Subsidiaries directly in connection with all such Permitted
Acquisitions, including for this purpose any debt (contingent or otherwise)
assumed or acquired directly in connection with all such Permitted Acquisitions
(or series of related transactions constituting, in the reasonable opinion of
the Administrative Agent, a Permitted Acquisition), shall not exceed $60,000,000
in the aggregate at any time for all such consideration taken together from and
after the Closing Date (exclusive of any payments in connection therewith that
are contingent upon future performance or revenues and regardless of whether the
entire amount of such cash consideration is actually paid at the time of such
Permitted Acquisitions); (ii) any such Permitted Acquisition is consummated in
compliance with Section 7.07; (iii) if any such Permitted Acquisition is
consummated pursuant to a merger with the Borrower or a Guarantor, the Borrower
or Guarantor, as the case may be, shall be the surviving entity, (iv) any
Subsidiary created or surviving as a result of any such Permitted Acquisition
which, on a pro forma basis (assuming for this purpose that such Permitted
Acquisition was consummated on the last day of the fiscal quarter for which
financial statements were most recently delivered under Sections 6.01(a) or
(b)), constitutes a Material Subsidiary, shall comply with Section 6.12; (v) no
Default or Event of Default would result from the consummation of any such
Permitted Acquisition; and (vii) prior to the commencement of any such Permitted
Acquisition, or attempted Permitted Acquisition, the board of directors or other
governing body of the Person acquired or the Person owning the assets acquired
pursuant to any such Permitted Acquisition shall have approved the terms of such
Permitted Acquisition; and

 

(h) Investments in (i) partnerships of which the Borrower is a partner, (ii)
joint ventures of which the Borrower is a member, and (iii) limited liability
companies of which the

 

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Borrower is a member; in each case (i), (ii) and (iii), provided that the
aggregate amount of all capital contributions and debt (contingent or otherwise)
paid or agreed to be paid by the Borrower and its Subsidiaries directly in
connection with all such Investments after July 31, 2004, shall not exceed
$15,000,000.

 

7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:

 

(a) Indebtedness under the Loan Documents;

 

(b) Indebtedness outstanding on the Closing Date and listed on Schedule 7.03 to
the Disclosure Letter and any refinancings, refundings, renewals or extensions
thereof; provided that the amount of such Indebtedness is not increased at the
time of such refinancing, refunding, renewal or extension except by an amount
equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an
amount equal to any existing commitments unutilized thereunder;

 

(c) Guarantees of the Borrower or any Guarantor in respect of Indebtedness
otherwise permitted hereunder of the Borrower or any other Guarantor;

 

(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(e) Indebtedness not otherwise permitted hereunder of any entity or business
acquired pursuant to a Permitted Acquisition consummated in accordance with
Section 7.02(g); provided that (i) such Indebtedness existed on the date of such
Permitted Acquisition, and (ii) such Indebtedness was not created, assumed or
incurred in anticipation or contemplation of such Permitted Acquisition;

 

(f) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for PP&E; provided, however, that the aggregate
amount of all such Indebtedness at any one time outstanding (excluding any
capital leases, Synthetic Lease Obligations and purchase money obligations for
PP&E set forth in Schedule 7.03 (and for which the Lien relating to each shall
be deemed a Permitted Lien under Section 7.01(a)(ix) without regard to Section
7.11)) shall not exceed the amount set forth in Section 7.11;

 

(g) Guarantees of the Borrower and its Subsidiaries, and other contingent
Indebtedness of the Borrower and its Subsidiaries (other than obligations
arising under any Swap Contract), in each case, not otherwise permitted under
this Section 7.03; provided that the aggregate amount of all such Guarantees and
other contingent Indebtedness shall not exceed $1,000,000 at any time for all
such Guarantees and Indebtedness taken together;

 

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(h) unsecured Indebtedness of the Borrower and its Subsidiaries arising in the
ordinary course of business in an aggregate amount not to exceed $25,000,000 at
any time for all such Indebtedness taken together, provided that no agreement or
instrument evidencing such Indebtedness shall contain any representation,
warranty, covenant, or event of default that is not included in this Agreement
or that is more restrictive or burdensome to the Borrower or its Subsidiaries
than the equivalent provision in this Agreement;

 

(i) Indebtedness consisting of loans incurred in connection with the acquisition
of the Existing Windsor Facility, including any financed amounts relating to the
termination of the Existing Windsor Facility Lease, together with any
refinancings, refundings, renewals or extensions thereof, provided that the
amount of such Indebtedness is not thereby increased except by an amount equal
to a reasonable premium paid, and fees and expenses reasonably incurred, in
connection with such refinancing, and provided further that the aggregate amount
of all such Indebtedness at any time outstanding shall not exceed $20,000,000;

 

(j) Indebtedness consisting of loans incurred in connection with the acquisition
and construction of the New Windsor Facility, and any refinancings, refundings,
renewals or extensions thereof, provided that the amount of such Indebtedness is
not thereby increased except by an amount equal to a reasonable premium paid,
and fees and expenses reasonably incurred, in connection with such refinancing,
and provided further that the aggregate principal amount of all such
Indebtedness at any time outstanding shall not exceed $20,000,000; and

 

(k) Indebtedness consisting of loans and Swap Contracts incurred for purposes of
hedging interest rate exposure relating to such loans, entered into in
connection with the acquisition and construction of the Proposed New Stockton
Facility, and any refinancings, refundings, renewals or extensions thereof,
provided that the amount of such Indebtedness is not thereby increased except by
an amount equal to a reasonable premium paid, and fees and expenses reasonably
incurred, in connection with such refinancing, and provided further that the
aggregate principal amount of all such Indebtedness at any time outstanding
(other than in respect of such Swap Contracts) shall not exceed $45,000,000.

 

7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

 

(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower
shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary which is not a Guarantor, the Guarantor shall be the continuing or
surviving Person;

 

(b) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary,
provided that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Borrower or a Guarantor; and

 

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(c) the Borrower or any Subsidiary may merge or consolidate with another Person,
provided that (i) such merger or consolidation is undertaken as part of a
Permitted Acquisition, and (ii) with respect to any such merger involving the
Borrower or a Guarantor, the Borrower or such Guarantor is the surviving entity.

 

7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:

 

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

 

(b) Dispositions of inventory in the ordinary course of business;

 

(c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property, (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property, and (iii)
such equipment or real property is no longer needed by the Borrower or such
Subsidiary to conduct its respective business operations;

 

(d) Dispositions of property (i) by any Subsidiary to the Borrower or to a
Guarantor, and (ii) by the Borrower to any Guarantor;

 

(e) Dispositions expressly permitted by Section 7.04;

 

(f) Dispositions by the Borrower and its Subsidiaries of PP&E pursuant to
sale-leaseback transactions resulting solely in operating lease obligations,
provided that the aggregate fair market value of all PP&E so Disposed of in any
fiscal year of the Borrower (commencing as of February 1, 2004) shall not exceed
$10,000,000;

 

(g) non-exclusive licenses of IP Rights in the ordinary course of business and,
provided that substantially all of the value of the applicable IP Right is not
disposed of as a result of the grant thereof, exclusive licenses of IP Rights
for particular fields of use or geographic areas in the ordinary course of
business;

 

(h) Dispositions constituting the assignment by the Borrower or such Subsidiary
of rents which are payable in respect of Facility Properties;

 

(i) Dispositions constituting the liquidation of Investments permitted to be
made under clause (b) of Section 7.02; and

 

(j) Dispositions not otherwise permitted by subsections (a) through (i) of this
Section 7.05; provided that the aggregate fair market value of all property so
Disposed of in any fiscal year of the Borrower shall not exceed $5,000,000;

 

provided, however, that any Disposition pursuant to clauses (a) through (i)
shall be for fair market value.

 

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7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:

 

(a) each Subsidiary may make Restricted Payments to the Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to the Borrower and any Subsidiary and to each
other owner of capital stock or other equity interests of such Subsidiary on a
pro rata basis based on their relative ownership interests);

 

(b) the Borrower and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common equity
interests of such Person;

 

(c) the Borrower may purchase, redeem or otherwise acquire shares of its common
stock or other common equity interests or warrants or options to acquire any
such shares; provided that (i) no Default exists immediately before, or would
result from such purchase redemption or other acquisition and (ii) the aggregate
amount of all consideration paid for all such shares, warrants and options
purchased, redeemed or otherwise acquired, as the case may be, shall not,
without the prior written consent of the Required Lenders, exceed (A)
$18,000,000 during the fiscal year of the Borrower ending 2005, (B) $18,000,000
during the fiscal year of the Borrower ending 2006, (C) $18,000,000 during the
fiscal year of the Borrower ending 2007, and (D) $20,000,000 during any fiscal
year of the Borrower ending 2008 or thereafter (each of the amounts specified in
clauses (A), (B), (C) and (D) a “Repurchase Allowance”); and provided further
that (x) the Borrower may, in any one (but only one) of the fiscal years
specified above, pay an aggregate amount of up to $20,000,000 of additional
consideration directly in connection with the purchase, redemption or other
acquisition of such shares, warrants or options (the aggregate amount of such
additional consideration paid in such fiscal year, the “Additional
Consideration”), provided, however, that if the Borrower pays such Additional
Consideration in one of the fiscal years of the Borrower specified above, the
Repurchase Allowance specified above in respect of each of the two immediately
succeeding fiscal years of the Borrower shall be reduced by an amount equal to
50% of such Additional Consideration and (y) any portion of any such Repurchase
Allowance that is not utilized in the correlative fiscal year specified above
(including for this purpose any unutilized portion of the Additional
Consideration contemplated by clause (x)) may be carried forward and utilized
solely in the immediately succeeding fiscal year; and

 

(d) the Borrower and each Subsidiary may repurchase equity interests or rights
to acquire equity interests pursuant to, and in accordance with the terms and
provisions of, any employee stock or employee stock option compensation plan or
agreement that has been duly authorized by the board of directors of the
Borrower or such Subsidiary, as applicable.

 

7.07 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and its Subsidiaries on the date hereof or substantially related or incidental
thereto.

 

7.08 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
the Borrower or such Subsidiary as would be

 

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obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s
length transaction with a Person other than an Affiliate; provided that the
foregoing restriction shall not apply to transactions between or among the
Borrower and any of its wholly-owned Subsidiaries or between or among any
wholly-owned Subsidiaries.

 

7.09 Use of Proceeds. Without prior notice to the Administrative Agent and the
provision of such information as the Administrative Agent or any Lender may
request to facilitate completion of a Form U, use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.

 

(b) Suffer or permit the aggregate amount of margin stock owned by it and its
Subsidiaries to exceed 15% of total consolidated assets of the Borrower and its
Subsidiaries.

 

7.10 Minimum Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth at any time to be less than the sum of (i) $227,791,500, (ii) an amount
equal to 75% of the Consolidated Net Income earned in each full fiscal quarter
ending after August 1, 2004 (with no deduction for a net loss in any such fiscal
quarter) and (iii) an amount equal to 100% of the aggregate increases in
Shareholders’ Equity of the Borrower and its Subsidiaries after the date hereof
by reason of the issuance and sale of Equity Interests of the Borrower or any
Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary),
including upon any conversion of debt securities of the Borrower into such
Equity Interests.

 

7.11 Capital Expenditures. Make or become legally obligated to make any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations), not exceeding, in the aggregate for the Borrower
and it Subsidiaries during each fiscal year set forth below, the amount set
forth opposite such fiscal year:

 

Fiscal Year Ending

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

   Amount

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

2005

   $ 80,000,000

2006

   $ 50,000,000

2007

   $ 50,000,000

2008

   $ 55,000,000

2009

   $ 63,000,000

2010

   $ 72,000,000

 

provided that the Borrower and its Subsidiaries may make or become obligated to
make an additional $55,000,000 of capital expenditures over the term of this
Agreement so long as such additional capital expenditures relate directly to the
construction or acquisition of the Proposed New Stockton Facility.

 

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ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01 Events of Default. Any of the following shall constitute an “Event of
Default”:

 

(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within three days after the same becomes due, any interest
on any Loan or on any L/C Obligation, or any commitment or other fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

 

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01(a) or (b), 6.02(a),
6.03(a), 6.05, 6.10, 6.11, 6.12, 6.13 or Article VII; or

 

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

 

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect when made or deemed made; or

 

(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than the Threshold Amount, or (B) fails to observe or
perform any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, such Indebtedness to be demanded or to become due or to
be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or
an offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity; or (ii) there occurs under any Swap Contract an
Early Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which the Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

 

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(f) Insolvency Proceedings, Etc. Any Loan Party or any Material Subsidiary
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes a general assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

 

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Material
Subsidiary admits in writing its inability or fails generally to pay its debts
as they become due, or (ii) any writ or warrant of attachment or execution or
similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

 

(h) Judgments. There is entered against the Borrower or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage as to
all or substantially all of the amount of such judgment or order), or (ii) any
one or more non-monetary final judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, (B) there is a period of 30 consecutive days during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or (C) such judgment or order is not satisfied by
the Borrower within 30 days after the entry thereof; or

 

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or will result in liability of the
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of the Threshold Amount; or

 

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or

 

(k) Change of Control. There occurs any Change of Control with respect to the
Borrower.

 

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8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a) declare the commitment of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;

 

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

 

(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

 

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

 

8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders and the L/C Issuer (including fees, charges and disbursements of counsel
to the respective Lenders and the L/C Issuer (including fees and time charges
for attorneys who may be employees of any Lender or the L/C Issuer) and amounts
payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;

 

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Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, L/C Borrowings and other Obligations, ratably
among the Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them;

 

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit; and

 

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

 

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower
nor any other Loan Party shall have rights as a third party beneficiary of any
of such provisions.

 

9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

 

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9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Administrative
Agent:

 

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

 

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

 

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or the L/C Issuer.

 

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

9.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the L/C Issuer unless the Administrative Agent shall have received
notice to the contrary from

 

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such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

 

9.05 Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

 

9.06 Resignation of Administrative Agent. The Administrative Agent may at any
time give notice of its resignation to the Lenders, the L/C Issuer and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor,
which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative Agent shall
notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the
Loan Documents, the retiring Administrative Agent shall continue to hold such
collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or
to each Lender and the L/C Issuer directly, until such time as the Required
Lenders appoint a successor Administrative Agent as provided for above in this
Section. Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder, such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 10.04 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.

 

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Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as L/C Issuer. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents, and (c) the successor L/C Issuer shall issue letters
of credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangement satisfactory to the retiring
L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit.

 

9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the
L/C Issuer acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
the L/C Issuer also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.

 

9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, no
Bookrunner or Arranger listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or the L/C Issuer hereunder.

 

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

 

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuer and the Administrative Agent
under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial
proceeding; and

 

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

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09
and 10.04.

 

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

 

9.10 Guaranty Matters. The Lenders and the L/C Issuer irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any
Guarantor from its obligations under the Guaranty if such Person ceases to be a
Subsidiary as a result of a transaction permitted hereunder. Upon request by the
Administrative Agent at any time, the Required Lenders will confirm in writing
the Administrative Agent’s authority to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 9.10.

 

ARTICLE X.

MISCELLANEOUS

 

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Required Lenders and the Borrower or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

 

(a) waive any condition set forth in Section 4.01(a) without the written consent
of each Lender;

 

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;

 

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

 

(d) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or any fees or other amounts payable hereunder or under
any other Loan Document without the written consent of each Lender directly
affected thereby; provided, however, that only the consent of the Required
Lenders shall be necessary (i) to amend the definition of

 

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“Default Rate” or to waive any obligation of the Borrower to pay interest at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined
term used therein) even if the effect of such amendment would be to reduce the
rate of interest on any Loan or L/C Borrowing or to reduce any fee payable
hereunder;

 

(e) change Section 2.12 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender;

 

(f) change any provision of this Section or the definition of “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; or

 

(g) subject to Section 9.10, release any Guarantor from any Guaranty without the
written consent of each Lender;

 

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; and (ii) no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender.

 

10.02 Notices and Other Communications; Facsimile Copies.

 

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

 

(i) if to the Borrower, the Administrative Agent or the L/C Issuer, to the
address, facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 10.02 or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by such party
in a notice to the other parties; and

 

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower, the
Administrative Agent and the L/C Issuer.

 

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All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of subsection (c)
below), when delivered; provided, however, that notices and other communications
to the Administrative Agent and the L/C Issuer pursuant to Article II shall not
be effective until actually received by such Person. In no event shall a
voicemail message be effective as a notice, communication or confirmation
hereunder.

 

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on all Loan Parties, the
Administrative Agent and the Lenders. The Administrative Agent may also require
that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

 

(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, to
distribute Loan Documents for execution by the parties thereto, to submit Letter
of Credit Applications in respect of Letters of Credit as described in Section
2.03(b)(i), and may not be used for any other purpose.

 

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Loan Notices) purportedly given by or on behalf of the Borrower even
if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify the Administrative Agent and
each Lender and their respective Related Parties from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices
to and other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

10.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all costs and expenses incurred in
connection with (i) the

 

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development, preparation, negotiation and execution of this Agreement and the
other Loan Documents (subject to the agreements between the Borrower and the
Administrative Agent set forth in the Fee Letter and whether or not the
transactions contemplated hereby or thereby are consummated), (ii) any
amendment, waiver, consent or other modification of the provisions hereof and
thereof, and (iii) the consummation and administration of the transactions
contemplated hereby and thereby; in each case (i), (ii) and (iii), including all
reasonable Attorney Costs; and (b) to pay or reimburse the Administrative Agent
and each Lender for all costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or the other Loan Documents (including all such costs and
expenses incurred during any “workout” or restructuring in respect of the
Obligations and during any legal proceeding, including any proceeding under any
Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by the Administrative Agent and the cost of independent public
accountants and other outside experts retained by the Administrative Agent or
any Lender. All amounts due under this Section 10.04 shall be payable within ten
Business Days after demand therefor. The agreements in this Section shall
survive the termination of the Aggregate Commitments and repayment of all other
Obligations.

 

10.05 Indemnification by the Borrower. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Related
Parties (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, and all third-party
claims, demands, actions, judgments, suits, and all costs, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (a)
the execution, delivery, enforcement, performance or administration of any Loan
Document or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), or (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Borrower, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the “Indemnified Liabilities”); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this

 

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Agreement, nor shall any Indemnitee have any liability for any indirect or
consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date). All amounts due under this Section 10.05
shall be payable within ten Business Days after demand therefor. The agreements
in this Section shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

10.06 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

 

10.07 Successors and Assigns.

 

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance
with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this subsection (b), participations in L/C Obligations) at the
time owing to it); provided that

 

(i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an

 

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assignment to a Lender or an Affiliate of a Lender with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 unless each of the Administrative Agent
and, so long as no Event of Default has occurred and is continuing, the Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed);

 

(ii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loans or the Commitment assigned;

 

(iii) any assignment of a Commitment must be approved by the Administrative
Agent and the L/C Issuer unless the Person that is the proposed assignee is
itself a Lender (whether or not the proposed assignee would otherwise qualify as
an Eligible Assignee); and

 

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

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

 

(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the

 

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Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by each of the Borrower and the L/C Issuer at any reasonable time and
from time to time upon reasonable prior notice. In addition, at any time that a
request for a consent for a material or substantive change to the Loan Documents
is pending, any Lender wishing to consult with other Lenders in connection
therewith may request and receive from the Administrative Agent a copy of the
Register.

 

(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations) owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Lenders
and the L/C Issuer shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender.

 

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(e) as though it were a Lender.

 

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

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(g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

(h) Resignation as L/C Issuer. Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days’
notice to the Borrower and the Lenders, resign as L/C Issuer. In the event of
any such resignation as L/C Issuer, the Borrower shall be entitled to appoint
from among the Lenders a successor L/C Issuer hereunder; provided, however, that
no failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer. If Bank of America resigns as L/C
Issuer, it shall retain all the rights and obligations of the L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).

 

10.08 Confidentiality. Each of the Administrative Agent and the Lenders agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel,
independent contractors and other advisors (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential); (b) to
the extent requested by any regulatory authority; (c) to the extent required by
applicable laws or regulations or (provided that, to the extent permitted and
practicable in the reasonable judgment of the recipient thereof, reasonably
prompt notice of the receipt thereof is given to the Borrower) to the extent
required by any subpoena or similar legal process; (d) to any other party to
this Agreement; (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of the Loan
Parties; (g) with the consent of the Borrower; (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization. In addition, the Administrative Agent and the Lenders may disclose
the existence of this Agreement and information about this Agreement to market
data collectors, similar service providers to the lending industry, and service
providers to the Administrative Agent and the Lenders in connection with the
administration and management of this Agreement, the other Loan Documents, the
Commitments, and the Credit Extensions. For the purposes of this Section,

 

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“Information” means all information received from any Loan Party relating to any
Loan Party or its business, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrower or any other Loan Party, any such notice being waived by
the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such Lender
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable deposit or indebtedness. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.

 

10.10 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

 

10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

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

 

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

 

10.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

10.14 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.15 Tax Forms. (a) (i) Each Lender that is not a “United States person” within
the meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”) shall
deliver to the Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or upon accepting an assignment of an interest
herein), two duly signed completed copies of either IRS Form W-8BEN or any
successor thereto (relating to such Foreign Lender and entitling it to an
exemption from withholding tax on all payments to be made to such Foreign Lender
by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or such other evidence satisfactory to the
Borrower and the Administrative Agent that such Foreign Lender is entitled to an
exemption from U.S. withholding tax, including any exemption pursuant to Section
881(c) of the Code. Thereafter and from time to time, each such Foreign Lender
shall (A) promptly submit to the Administrative Agent such additional duly
completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Borrower and
the Administrative Agent of any available exemption from United States
withholding taxes in respect of all payments to be made to such Foreign Lender
by the Borrower pursuant to this Agreement, (B) promptly notify the
Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption, and (C) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that the Borrower make any
deduction or withholding for taxes from amounts payable to such Foreign Lender.

 

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(ii) Each Foreign Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to U.S. withholding
tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

 

(iii) The Borrower shall not be required to pay any additional amount to any
Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates or statements
of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this
Section 10.15(a) or (B) if such Lender shall have failed to satisfy the
foregoing provisions of this Section 10.15(a); provided that if such Lender
shall have satisfied the requirement of this Section 10.15(a) on the date such
Lender became a Lender or ceased to act for its own account with respect to any
payment under any of the Loan Documents, nothing in this Section 10.15(a) shall
relieve the Borrower of its obligation to pay any amounts pursuant to Section
3.01 in the event that, as a result of any change in any applicable law, treaty
or governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the account of which
such Lender receives any sums payable under any of the Loan Documents is not
subject to withholding or is subject to withholding at a reduced rate.

 

(iv) The Administrative Agent may, without reduction, withhold any Taxes
required to be deducted and withheld from any payment under any of the Loan
Documents with respect to which the Borrower is not required to pay additional
amounts under this Section 10.15(a).

 

(b) Upon the request of the Administrative Agent, each Lender that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of IRS Form
W-9. If such Lender fails to deliver such forms, then the Administrative Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable back-up withholding tax imposed by the Code, without reduction.

 

(c) If any Governmental Authority asserts that the Administrative Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from

 

76

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payments made to or for the account of any Lender, such Lender shall indemnify
the Administrative Agent therefor, including all penalties and interest, any
taxes imposed by any jurisdiction on the amounts payable to the Administrative
Agent under this Section, and costs and expenses (including Attorney Costs) of
the Administrative Agent. The obligation of the Lenders under this Section shall
survive the termination of the Aggregate Commitments, repayment of all other
Obligations hereunder and the resignation of the Administrative Agent.

 

10.16 Replacement of Lenders. Under any circumstances set forth herein providing
that the Borrower shall have the right to replace a Lender as a party to this
Agreement, the Borrower may, upon notice to such Lender and the Administrative
Agent, replace such Lender by causing such Lender to assign its Commitment (with
the assignment fee to be paid by the Borrower in such instance) pursuant to
Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by
the Borrower, which replacement shall be effective as of the date the applicable
Lender being replaced ceases to be a Lender hereunder; provided, however, that
if the Borrower elects to exercise such right with respect to any Lender
pursuant to Section 3.06(b), it shall be obligated to replace all Lenders that
have made similar requests for compensation pursuant to Section 3.01 or 3.04.
The Borrower shall (x) pay in full all principal, interest, fees and other
amounts owing to any Lender through the date of replacement (including any
amounts payable pursuant to Section 3.05), (y) provide appropriate assurances
and indemnities (which may include letters of credit) to the L/C Issuer as it
may reasonably require with respect to any continuing obligation to fund
participation interests in any L/C Obligations then outstanding, and (z) release
such Lender from its obligations under the Loan Documents. Any Lender being
replaced shall execute and deliver an Assignment and Assumption with respect to
such Lender’s Commitment and outstanding Loans and participations in L/C
Obligations.

 

10.17 Governing Law.

 

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN
SAN FRANCISCO OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

77

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10.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.19 Time of the Essence. Time is of the essence of the Loan Documents.

 

10.20 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Act.

 

(Remainder of page intentionally left blank. Signature pages follow)

 

78

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

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

 

COST PLUS, INC., as the Borrower

By:

 

/s/ John J. Luttrell

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

Name:

 

John J. Luttrell

Title:

 

SVP, CFO

 

(Signature Page to Agreement)

 

S - 1

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

BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

/s/ Dora A. Brown

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

Name:

 

Dora A. Brown

Title:

 

Vice President

 

(Signature Page to Agreement)

 

S - 2

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

BANK OF AMERICA, N.A., as a Lender and

L/C Issuer

By:

 

/s/ Ronald J. Drobny

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

Name:

 

Ronald J. Drobny

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

Title:

 

Senior Vice President

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

 

(Signature Page to Agreement)

 

S - 3

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

UNION BANK OF CALIFORNIA, N.A., as a Lender

By:

 

/s/ Ginger Trimble

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

Name:

 

Ginger Trimble

Title:

 

Vice President

 

(Signature Page to Agreement)

 

S - 4

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

WELLS FARGO HSBC TRADE BANK, N.A.,

as a Lender

By:

 

/s/ Virginia Adams

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

Name:

 

Virginia Adams

Title:

 

Vice President

 

(Signature Page to Agreement)

 

S - 5

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

SCHEDULE 1.01(e)

 

EXISTING LETTERS OF CREDIT

 

U.S. ISSUED L/Cs

 

Type

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

  L/C No.

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

  Original
Balance

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

  Outstanding
Amount

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

  Expiration

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

 

Beneficiary

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

DLC

  1138639   423,640.00     67,280.00   12/30/04   In Trading PVT. Ltd.

DLC

  1138640   189,200.00     189,200.00   11/14/04   Wintex International Limited

DLC

  1138659   84,101.60     60,127.92   11/22/04   Li and Fung (Trading) Ltd.

DLC

  1138660   172,774.56     63,058.20   12/16/04  
Royal Porcelain Public Co., Ltd.

DLC

  1138664   39,616.50     3,339.60   12/09/04   PT. Outs of Asia

DLC

  1138665   297,067.90     84,790.18   12/04/04  
Stonehenge Ceramics Int’l H.K. Ltd.

DLC

  1138668   73,920.00     30,330.00   11/24/04   Habitex Corporation

DLC

  1138669   70,227.00     11,482.98   10/11/04   Kasalong Ceramics Co., Ltd.

DLC

  1138671   76,301.40     17,326.96   11/24/04   Jayland Products Company

DLC

  1138673   12,116,40     5,594.40   11/15/04   Paul-Yu Industrial Corp.

DLC

  1138677   83,732.28     17,874.20   12/13/04   Grand Bonanza Enterprise Inc.

DLC

  1138678   145,350.00     48,450.00   12/11/04   Star International Furniture,
Inc.

DLC

  1138687   2,561,517.18     75,879.20   11/09/04  
J.P. Products L.C./Exim Business Inc.

DLC

  1138689   222,295.00     206,208.00   12/10/04   PT Trimitra Mebelindo

DLC

  1138690   261,174.00     24,396.00   11/27/04  
Tectona Marketing Services PTE LTD

DLC

  1138692   2,717,894.81     1,828,679.95   01/06/05   J.P. Products L.C./Exim
Business Inc.

DLC

  1138695   15,724.80     15,724.80   12/04/04   Crown Ceramics Co., Ltd.

DLC

  1138696   39,252.96     39,252.96   12/04/04   Bosswin Industries Ltd.

SLC

  3043579   1,640,000.00     1,640,000.00   08/01/05  
Federal Insurance Company (CHUBB)

SLC

  3043580   1,300,000.00     1,300,000.00   08/01/05   Federal Insurance Company
(CHUBB)

SLC

  3050415   950,000.00     950,000.00   08/01/05   Federal Insurance Company

SLC

  3050851   1,195,000.00     1,195,000.00   08/01/05   Federal Insurance Company
        Sub-Total:   $ 7,873,995.35        

 

Schedule 1.01(e)

 

1

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

HONG KONG ISSUED L/Cs

 

Type

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

  L/C No.

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

  Original
Balance

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

  Outstanding
Amount

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

   Expiration

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

  Beneficiary

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

DLC

  TD605500052
501-4   16,512.00     16,512.00    11/28/04   Berwick Offray (Hong Kong) Ltd.

DLC

  TD605500052
502-4   136,720.00     166,610.00    12/25/04   In Trading PVT. Ltd.

DLC

  TD605500052
503-4   11,280.00     11,280.00    12/09/04   Banhat Rattan Bamboo Cooperative

DLC

  TD605500052
504-4   9,660.00     9,660.00    12/30/04   Thai Pottery Industry Co., Ltd.

DLC

  TD605500052
505-4   35,600.00     35,600.00    12/17/04   R and D Company Ltd. (Changchun)

DLC

  TD605500052
506-4   11,073.60     11,073.60    12/11/04   Signature Design (HK) Ltd.

DLC

  TD605500052
507-4   2,576,412,89     2,576,412.89    02/07/05  
J. P. Products L.C./Exim Business Inc.

DLC

  TD605500052
508-4   160,781.00     103,727.00    01/08/05   Tectona Marketing Services PTE
LTD

DLC

  TD605500052
509-4   3,794.40     3,794.40    12/12/04   Basari Tekstil San. Ve Tic. A.S.

DLC

  TD605500052
510-4   5,640.00     5,640.00    12/30/04   Banhat Rattan Bamboo Cooperative

DLC

  TD605500052
511-4   11,053.20     11,053.20    01/05/05   Grand Bonanza Enterprise Inc.

DLC

  TD605500052
517-4   13,230.00     13,230.00    01/19/05   Thien Thanh Co., Ltd.

DLC

  TD605500052
514-4   161,249.60     161,249.60    12/29/04   Penta Tekstil Sanayi Ve Tic As

DLC

  TD605500052
519-4   5,040.00     5,040.00    12/25/04   R and D Company Ltd. (Changchun)

DLC

  TD605500052
523-4   10,570.00     10,570.00    12/11/04   Ted and Sapota Enterprise LTD.    
Sub-Total       $ 3,141,452.69              Total       $ 11,015,448.04         

 

Schedule 1.01(e)

 

2

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

SCHEDULE 2.01

 

COMMITMENTS

AND PRO RATA SHARES

 

Subject to Section 2.05(b), at all times other than during a Reduced Commitment
Period:

 

Lender

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

   Commitment

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

   Pro Rata Share

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

 

Bank of America, N.A.

   $ 45,000,000    36.000000000 %

Union Bank of California, N.A.

   $ 40,000,000    32.000000000 %

Wells Fargo HSBC Trade Bank, N.A.

   $ 40,000,000    32.000000000 %

Total

   $ 125,000,000    100.000000000 %

 

Subject to Section 2.05(b), at all times during any Reduced Commitment Period:

 

Lender

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

   Commitment

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

   Pro Rata Share

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

 

Bank of America, N.A.

   $ 18,000,000    36.000000000 %

Union Bank of California, N.A.

   $ 16,000,000    32.000000000 %

Wells Fargo HSBC Trade Bank, N.A.

   $ 16,000,000    32.000000000 %

Total

   $ 50,000,000    100.000000000 %

 

Schedule 2.01

 

1

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

SCHEDULE 10.02

 

ADMINISTRATIVE AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

COST PLUS, INC.

200 4th Street

Oakland, CA 94607

 

Attention:    Mr. John Luttrell, Chief Financial Officer Telephone:    (510)
893-7300 *3119 Facsimile:    (510) 763-5564 Email:    john.lutrell@cpwm.com
Website:    www.costplus.com

 

ADMINISTRATIVE AGENT:

 

Administrative Agent’s Office: (for payments and Requests for Credit
Extensions):

 

BANK OF AMERICA, N.A.

Credit Services

Mail Code: CA4-706-05-09

1850 Gateway Boulevard

Concord, CA 94520

 

Attention:    Ms. Gardelyn O. Jayme Telephone:    (925) 675-7184 Facsimile:   
(888) 969-9232 Email:    gardelyn.o.jayme@bankofamerica.com Account No.:
            3750835479 Account Name:         Corporate FTA Ref:    Cost Plus,
Inc. ABA#:    111000012

 

Schedule 10.02

 

1

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

Other Notices as Administrative Agent:

 

BANK OF AMERICA, N.A.

Commercial Agency Management

Mail Code: WA1-501-37-20

800 5th Avenue, 37th Floor

Seattle, WA 98104-3185

 

Attention:    Ms. Dora Brown Telephone:    (206) 358-0101 Facsimile:    (206)
358-0971 Email:    dora.a.brown@bankofamerica.com

 

L/C ISSUER:

 

BANK OF AMERICA, N.A.

 

Bank of America, N.A.

Trade Operations-Los Angeles #22621

333 S. Beaudry Avenue, 19th Floor

Mail Code: CA9-703-19-23

Los Angeles, CA 90017-1466

 

Attention:    Sandra Leon, Vice President Telephone:    (213) 345-5231
Facsimile:    (213) 345-6694 Email:    sandra.leon@bankofamerica.com

 

Commercial Letters of Credit:

 

Bank of America, N.A.

Mail code 737-604-09-01

Devon House

979 Kings Rd, Quarry Bay

Hong Kong

 

Attention:    Jimmy (Ka-Wing) Tsang Telephone:    011-852-25972564 Facsimile:   
011-852-25972564 Email:    jimmy.kw.tsang@bankofamerica.com

 

Schedule 10.02

 

2

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

LENDERS:

 

BANK OF AMERICA, N.A.

 

Requests for Credit Extensions:

 

Bank of America, N.A.

Credit Services

Mail Code: CA4-706-05-09

1850 Gateway Boulevard

Concord, CA 94520

 

Attention:    Ms. Gardelyn O. Jayme Telephone:    (925) 675-7184 Facsimile:   
(888) 969-9232 Email:    gardelyn.o.jayme@bankofamerica.com

 

Notices (other than Requests for Credit Extensions):

 

Bank of America, N.A.

315 Montgomery Street

San Francisco, CA 94104

 

Attention:    Mr. Ronald Drobny Telephone:    (415) 953-9023 Facsimile:    (415)
622-1878 Email:    ronald.dronby@bankofamerica.com

 

UNION BANK OF CALIFORNIA, N.A.

 

Requests for Credit Extensions:

 

Union Bank of California, N.A.

CLSO, Commercial Loan Operations

601 Potrero Grande, 2nd Floor

Monterey Park, CA 91754

 

Attention:    Ms. Shirley Davis Telephone:    (323) 720-2870 Facsimile:    (323)
720-2252 Email:    shirley.davis@uboc.com

 

Schedule 10.02

 

3

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

Notices (other than Requests for Credit Extensions):

 

Union Bank of California, N.A.

350 California Street, 10th Floor

San Francisco, CA 94104

 

Attention:    Mr. Kevin Sullivan, Vice President/Senior Credit Executive
Telephone:    (415) 705-7385 Facsimile:    (415) 705-7111 Email:   
kevin.sullivan@uboc.com

 

WELLS FARGO HSBC TRADE BANK, N.A.

 

Requests for Credit Extensions:

 

Wells Fargo HSBC Trade Bank, N.A.

201 Third Street, 8th Floor

San Francisco, CA 94103

 

Attention:    Ms. Cynthia Dunn Telephone:    (415) 477-5431 Facsimile:    (415)
979-0675 Email:    cynthiad@wellsfargo.com

 

Notices (other than Requests for Credit Extensions):

 

Wells Fargo HSBC Trade Bank, N.A.

525 Market Street, 25th Floor

San Francisco, CA 94105

 

Attention:    Mr. Juan Sanchez      Vice President/Relationship Manager
Telephone:    (415) 396-1011 Facsimile:    (415) 541-0299 Email:   
sanchjj@wellsfargo.com

 

Schedule 10.02

 

4