EXHIBIT 10.1

 

LOGO [g46422image001.jpg]   LOGO [g46422image002.jpg]

 

Published Cusip Number: 69865XAD8

 

$355,000,000

 

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

 

among

 

THE PANTRY, INC.

as Borrower,

 

and

 

THE DOMESTIC SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTIES HERETO,

as Guarantors,

 

THE LENDERS PARTIES HERETO

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

 

REGIONS BANK and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Co-Syndication Agents

 

HARRIS N.A. and

COOPERATIEVE CENTRALE RAIFFEISEN-BORENLEENBANK, B.A. “RABOBANK

INTERNATIONAL”, NEW YORK BRANCH

as Co-Documentation Agents

 

Dated as of December 29, 2005

 

WACHOVIA CAPITAL MARKETS, LLC,

as Sole Lead Arranger and Sole Book Runner

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TABLE OF CONTENTS

 

             Page

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ARTICLE I DEFINITIONS    1    

Section 1.1

  Defined Terms.    1    

Section 1.2

  Other Definitional Provisions.    30    

Section 1.3

  Accounting Terms.    30    

Section 1.4

  Time References.    31 ARTICLE II THE LOANS; AMOUNT AND TERMS    31    

Section 2.1

  Revolving Loans.    31    

Section 2.2

  Term Loan Facility.    32    

Section 2.3

  Incremental Facilities.    34    

Section 2.4

  Letter of Credit Subfacility.    35    

Section 2.5

  Swingline Loan Subfacility.    39    

Section 2.6

  Fees.    40    

Section 2.7

  Commitment Reductions.    41    

Section 2.8

  Prepayments.    41    

Section 2.9

  Minimum Borrowing Amounts and Principal Amount of Tranches; Lending Offices.
   44    

Section 2.10

  Default Rate and Payment Dates.    45    

Section 2.11

  Conversion Options.    45    

Section 2.12

  Computation of Interest and Fees.    46    

Section 2.13

  Pro Rata Treatment and Payments.    47    

Section 2.14

  Non-Receipt of Funds by the Administrative Agent.    49    

Section 2.15

  Inability to Determine Interest Rate.    50    

Section 2.16

  Illegality.    50    

Section 2.17

  Requirements of Law.    51    

Section 2.18

  Indemnity.    52    

Section 2.19

  Taxes.    52    

Section 2.20

  Indemnification; Nature of Issuing Lender’s Duties.    54    

Section 2.21

  Replacement of Lenders.    55 ARTICLE III REPRESENTATIONS AND WARRANTIES    56
   

Section 3.1

  Organization; Qualification; Good Standing; Subsidiaries; Etc.    56    

Section 3.2

  Authorization of Borrowing, Etc.    57    

Section 3.3

  Financial Condition.    59    

Section 3.4

  No Material Adverse Change; No Restricted Junior Payments.    59    

Section 3.5

  Title to Properties; Collateral Locations.    59    

Section 3.6

  Litigation; Adverse Facts.    60    

Section 3.7

  Taxes.    60    

Section 3.8

  Contractual Obligations; Restrictive Agreements; Material Contracts.    61    

Section 3.9

  Governmental Regulation.    61    

Section 3.10

  Securities Activities.    61    

Section 3.11

  Employee Benefit Plans.    61    

Section 3.12

  Broker’s Fees.    62    

Section 3.13

  Environmental Protection.    62    

Section 3.14

  Employee Matters.    63

 

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Section 3.15

  Solvency.    63    

Section 3.16

  Matters Relating to Collateral.    63    

Section 3.17

  Related Agreements.    64    

Section 3.18

  Disclosure.    65    

Section 3.19

  Permits.    65    

Section 3.20

  Indebtedness.    66    

Section 3.21

  Intellectual Property.    66    

Section 3.22

  Investments.    66    

Section 3.23

  Insurance.    66    

Section 3.24

  Anti-Terrorism Laws.    66    

Section 3.25

  Compliance with OFAC Rules and Regulations.    67    

Section 3.26

  VoiceStream Wireless.    67 ARTICLE IV CONDITIONS PRECEDENT    67    

Section 4.1

  Conditions to Closing Date and Initial Loans.    67    

Section 4.2

  Conditions to All Extensions of Credit.    71 ARTICLE V AFFIRMATIVE COVENANTS
   72    

Section 5.1

  Financial Statements and Other Reports.    72    

Section 5.2

  Corporate Existence, Etc.    77    

Section 5.3

  Payment of Taxes, Claims and Other Obligations; Tax Consolidation.    77    

Section 5.4

  Maintenance of Properties; Insurance.    78    

Section 5.5

  Books and Records; Inspection Rights.    78    

Section 5.6

  Compliance with Laws, Etc.    79    

Section 5.7

  Environmental Review and Investigation, Disclosure, Etc.    79    

Section 5.8

  Hazardous Materials Activities; Environmental Claims/Violations.    81    

Section 5.9

  Additional Guarantors.    82    

Section 5.10

  Pledged Assets.    82    

Section 5.11

  Matters Relating to Additional Real Property Collateral.    82    

Section 5.12

  Use of Proceeds.    84    

Section 5.13

  Further Assurances.    85 ARTICLE VI NEGATIVE COVENANTS    85    

Section 6.1

  Indebtedness.    86    

Section 6.2

  Liens and Related Matters.    87    

Section 6.3

  Investments; Joint Ventures.    89    

Section 6.4

  Contingent Obligations.    90    

Section 6.5

  Restricted Junior Payments.    91    

Section 6.6

  Financial Covenants.    92    

Section 6.7

  Restriction on Fundamental Changes, Asset Sales and Acquisitions.    92    

Section 6.8

  Sales and Lease-Backs.    95    

Section 6.9

  Sale or Discount of Receivables.    96    

Section 6.10

  Transactions with Shareholders and Affiliates.    96    

Section 6.11

  Disposal of Subsidiary Capital Stock; Formation of New Subsidiaries.    97    

Section 6.12

  Conduct of Business.    97    

Section 6.13

  Restrictions on Certain Amendments; Senior Debt Status.    97    

Section 6.14

  Fiscal Year.    98    

Section 6.15

  Management Fees.    98    

Section 6.16

  Letters of Credit.    98

 

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ARTICLE VII EVENTS OF DEFAULT    99    

Section 7.1

  Events of Default.    99    

Section 7.2

  Acceleration; Remedies.    101 ARTICLE VIII THE AGENT    102    

Section 8.1

  Appointment.    102    

Section 8.2

  Delegation of Duties.    102    

Section 8.3

  Exculpatory Provisions.    103    

Section 8.4

  Reliance by Administrative Agent.    103    

Section 8.5

  Notice of Default.    103    

Section 8.6

  Non-Reliance on Administrative Agent and Other Lenders.    104    

Section 8.7

  Indemnification.    104    

Section 8.8

  Administrative Agent in Its Individual Capacity.    105    

Section 8.9

  Successor Administrative Agent.    105    

Section 8.10

  Nature of Duties.    105 ARTICLE IX MISCELLANEOUS    106    

Section 9.1

  Amendments, Waivers and Release of Collateral.    106    

Section 9.2

  Notices.    108    

Section 9.3

  No Waiver; Cumulative Remedies.    109    

Section 9.4

  Survival of Representations and Warranties.    109    

Section 9.5

  Payment of Expenses and Taxes.    110    

Section 9.6

  Successors and Assigns; Participations; Purchasing Lenders.    110    

Section 9.7

  Adjustments; Set-off.    113    

Section 9.8

  Table of Contents and Section Headings.    114    

Section 9.9

  Counterparts.    114    

Section 9.10

  Effectiveness.    115    

Section 9.11

  Severability.    115    

Section 9.12

  Integration.    115    

Section 9.13

  Governing Law.    115    

Section 9.14

  Consent to Jurisdiction and Service of Process.    115    

Section 9.15

  Confidentiality.    116    

Section 9.16

  Acknowledgments.    117    

Section 9.17

  Waivers of Jury Trial.    117    

Section 9.18

  USA Patriot Act Notice.    117 ARTICLE X GUARANTY    118    

Section 10.1

  The Guaranty.    118    

Section 10.2

  Bankruptcy.    118    

Section 10.3

  Nature of Liability.    118    

Section 10.4

  Independent Obligation.    119    

Section 10.5

  Authorization.    119    

Section 10.6

  Reliance.    119    

Section 10.7

  Waiver.    119    

Section 10.8

  Limitation on Enforcement.    121    

Section 10.9

  Confirmation of Payment.    121    

Section 10.10

  Release of Guarantor.    121

 

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Schedules

 

Schedule 1.1-1

  

Account Designation Letter

Schedule 1.1-2

  

Form of Mortgage

Schedule 1.1-3

  

Material Contracts

Schedule 1.1-4

  

Existing Letters of Credit

Schedule 1.1-5

  

Existing Hedging Agreements

Schedule 2.1(b)(i)

  

Form of Notice of Borrowing

Schedule 2.1(e)

  

Form of Revolving Note

Schedule 2.2(d)

  

Form of Term Note

Schedule 2.5(d)

  

Form of Swingline Note

Schedule 2.8(a)

  

Form of Notice of Prepayment

Schedule 2.11

  

Form of Notice of Conversion/Extension

Schedule 2.19

  

Section 2.19 Certificate

Schedule 3.1-1

  

Jurisdictions of Incorporation/Organization

Schedule 3.1-2

  

Subsidiaries; Capital Structure

Schedule 3.2(b)

  

Conflicts with Contractual Obligations; Consents

Schedule 3.5(b)

  

Real Properties

Schedule 3.5(c)

  

Locations of Collateral

Schedule 3.7

  

Tax Assessments

Schedule 3.11

  

ERISA

Schedule 3.13

  

Environmental Matters

Schedule 3.17

  

Related Agreements

Schedule 3.21

  

Intellectual Property

Schedule 3.23

  

Insurance

Schedule 4.1-1

  

Form of Secretary’s Certificate

Schedule 4.1-2

  

Mortgaged Properties

Schedule 4.1-3

  

Form of Solvency Certificate

Schedule 5.9

  

Form of Joinder Agreement

Schedule 6.1

  

Indebtedness

Schedule 6.2

  

Liens

Schedule 6.3

  

Investments

Schedule 6.4

  

Contingent Obligations

Schedule 6.8-1

  

Existing Sale and Lease-Back Transactions

Schedule 6.8-2

  

Permitted Sale and Lease-Back Properties

Schedule 9.6(c)

  

Form of Commitment Transfer Supplement

 

iv

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 29, 2005,
among THE PANTRY, INC., a Delaware corporation, (the “Borrower”), those Domestic
Subsidiaries of the Borrower identified as a “Guarantor” on the signature pages
hereto and such other Domestic Subsidiaries of the Borrower as may from time to
time become a party hereto (individually a “Guarantor” and collectively the
“Guarantors”), the several banks and other financial institutions as may from
time to time become parties to this Credit Agreement (individually a “Lender”
and collectively the “Lenders”), and WACHOVIA BANK, NATIONAL, ASSOCIATION, as
administrative agent for the Lenders hereunder (in such capacity, the
“Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the guarantors party thereto, the lenders party thereto
and Wachovia Bank National Association, as agent, are parties to that certain
Amended and Restated Credit Agreement dated as of March 12, 2004 (as amended and
modified, the “Existing Credit Agreement”);

 

WHEREAS, the Lenders have agreed to amend and restate the Existing Credit
Agreement on the terms and conditions hereinafter set forth;

 

WHEREAS, in connection with the refinancing of the Existing Credit Agreement in
accordance with the terms hereof, the Borrower has requested that the Lenders
make loans and other financial accommodations to the Borrower in the amount of
$355,000,000, as more particularly described herein; and

 

WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Defined Terms.

 

As used in this Credit Agreement, terms defined in the preamble to this Credit
Agreement have the meanings therein indicated, and the following terms have the
following meanings:

 

“Account Designation Letter” shall mean the Notice of Account Designation Letter
dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.

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“Additional Acquisition” shall have the meaning set forth in Section 6.7(d).

 

“Additional Credit Party” shall mean each Person that becomes a Guarantor by
execution of a Joinder Agreement in accordance with Section 5.9.

 

“Additional Loan” shall have the meaning set forth in Section 2.3.

 

“Additional Mortgage” shall have the meaning set forth in Section 5.11(a).

 

“Additional Mortgage Policy” shall have the meaning set forth in
Section 5.11(a).

 

“Additional Mortgaged Property” shall have the meaning set forth in
Section 5.11(a).

 

“Administrative Agent” shall have the meaning set forth in the first paragraph
of this Credit Agreement and any successors in such capacity.

 

“Affiliate” shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be “controlled by” a Person if such Person possesses,
directly or indirectly, power either (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or
(b) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Notwithstanding the foregoing, neither
the Administrative Agent nor any Lender shall be deemed an Affiliate of the
Borrower solely by reason of the relationship created by the Credit Documents.

 

“Affiliate Agreements” shall mean, collectively, all employment agreements,
consulting agreements, and any other agreements, documents or arrangements
between any Credit Party and any of its Affiliates, executive officers,
directors, shareholders or any Affiliates of any such officers, directors or
shareholders.

 

“Agreement” or “Credit Agreement” shall mean this Second Amended and Restated
Credit Agreement, as amended, modified or supplemented from time to time in
accordance with its terms.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: “Prime
Rate” shall mean, at any time, the rate of interest per annum publicly announced
from time to time by Wachovia at its principal office in Charlotte, North
Carolina as its prime rate. Each change in the Prime Rate shall be effective as
of the opening of business on the day such change in the Prime Rate occurs. The
parties hereto acknowledge that the rate announced publicly by Wachovia as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks; and “Federal Funds Effective
Rate” shall mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published on
the next succeeding Business Day, the

 

2

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average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive in the absence of manifest error) that
it is unable to ascertain the Federal Funds Effective Rate, for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
opening of business on the date of such change.

 

“Alternate Base Rate Loans” shall mean Loans that bear interest at an interest
rate based on the Alternate Base Rate.

 

“Applicable Margin” shall mean, for any day, the rate per annum set forth below
opposite the applicable Level then in effect, it being understood that the
Applicable Margin for (i) Revolving Loans that are Alternate Base Rate Loans
shall be the percentage set forth under the column “Alternate Base Rate Margin,”
(ii) Revolving Loans that are LIBOR Rate Loans and the Letter of Credit Fee
shall be the percentage set forth under the column “LIBOR Rate Margin/Letter of
Credit Fee”, (iii) the portion of the Term Loan consisting of Alternate Base
Rate Loans shall be 0.50%, (iv) the portion of the Term Loan consisting of LIBOR
Rate Loans shall be 1.75% and (v) the Commitment Fee shall be the percentage set
forth under the column “Commitment Fee”:

 

Level

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Consolidated

Leverage Ratio

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Alternate

Base Rate

Margin

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LIBOR Rate

Margin/ Letter

of Credit Fee

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    Commitment Fee

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I

   >= 3.00 to 1.00    0.50 %   1.75 %   0.50 %

II

   < 3.00 to 1.00    0.25 %   1.50 %   0.375 %

 

The Applicable Margin shall, in each case, be determined and adjusted quarterly
on the date five (5) Business Days after the date on which the Administrative
Agent has received from the Borrower the quarterly financial information and
certifications required to be delivered to the Administrative Agent and the
Lenders in accordance with the provisions of Sections 5.1(a) and (b) (each an
“Interest Determination Date”). Such Applicable Margin shall be effective from
such Interest Determination Date until the next Interest Determination Date. The
initial Applicable Margins shall be based on Level I until financial statements
are delivered for the first full fiscal quarter following the Closing Date. If
the Borrower shall fail to provide the financial information and certifications
in accordance with the provisions of Sections 5.1(a) and (b), the Applicable
Margin shall, on the date five (5) Business Days after the date by which the
Borrower was so required to provide such financial information and
certifications to the Administrative Agent and the Lenders, be based on Level I
until such time as such information and certifications are provided, whereupon
the Level shall be determined by the then current Consolidated Leverage Ratio.

 

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“Asset Disposition” shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of the Borrower or any of its
Subsidiaries whether by sale, lease, transfer or otherwise. The term “Asset
Disposition” shall not include (a) the sale, lease or transfer of assets
permitted by Sections 6.7(a), (b) and (e) or Section 6.8 (with respect to Real
Property Assets acquired after the Closing Date only) hereof, (b) any Recovery
Event or (c) any Equity Issuance.

 

“Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.

 

“Borrower” shall have the meaning set forth in the first paragraph of this
Credit Agreement.

 

“Borrowing Date” shall mean, in respect of any Loan, the date such Loan is made.

 

“Business Day” shall mean a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term “Business Day” shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.

 

“Capital Lease” shall mean any lease of property, real, personal or mixed, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

 

“Capital Stock” shall mean (a) in the case of a corporation, Capital Stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
Capital Stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

 

“Cash” shall mean money, currency or a credit balance in a Deposit Account.

 

“Cash Equivalents” shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition (“Government Obligations”),
(b) U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (i) any domestic commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (ii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody’s is at least P-1 or the equivalent thereof (any such bank being an
“Approved Bank”), in each case with maturities of not more than 364 days from

 

4

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the date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody’s and maturing within six months of the date of acquisition,
(d) repurchase agreements with a bank or trust company (including a Lender) or a
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (e) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment, (f) auction preferred stock rated in
the highest short-term credit rating category by S&P or Moody’s and (g) money
market mutual funds (i) that invest substantially all of their assets in
investments of the types referenced in clauses (a) – (f) and (ii) having the
highest rating available from S&P or Moody’s.

 

“Change of Control” shall mean (a) any Person or “group” shall have acquired or
hold “beneficial ownership,” directly or indirectly, of, or shall have acquired
or hold by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of,
or control over, Voting Stock of the Borrower (or other securities convertible
into such Voting Stock) representing 35% or more of the combined voting power of
all Voting Stock of the Borrower or 35% or more of the economic interests of the
Borrower, (b) the Continuing Directors shall cease for any reason to constitute
a majority of the members of the board of directors of the Borrower then in
office or (c) a “Change of Control” as defined in the Senior Subordinated Note
Indenture, the Subordinated Convertible Note Indenture or the indenture or other
documentation pursuant to which any Subordinated Indebtedness permitted under
subsection 6.1(f) is issued shall have occurred. As used herein, “beneficial
ownership” and “group” shall have the meanings provided in Rule 13d-3 and Rule
13d-5, respectively, of the Securities and Exchange Commission under the
Securities Exchange Act of 1934.

 

“Closing Date” shall mean the date of this Credit Agreement.

 

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

 

“Collateral” shall mean a collective reference to the collateral which is
identified in, and at any time will be covered by, the Security Documents and
any other collateral from time to time securing the Credit Party Obligations.

 

“Collateral Account” shall have the meaning set forth in the Collateral Account
Agreement.

 

“Collateral Account Agreement” shall mean the Collateral Account Agreement
executed and delivered by the Borrower and the Administrative Agent on the
Closing Date, as such Collateral Account Agreement may be amended, modified,
supplemented or restated from time to time.

 

5

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“Commitment” shall mean the Revolving Commitment, the LOC Commitment, the
Swingline Commitment, and the Term Loan Commitment, individually or
collectively, as appropriate.

 

“Commitment Fee” shall have the meaning set forth in Section 2.6(a).

 

“Commitment Percentage” shall mean the Revolving Commitment Percentage and/or
the Term Loan Commitment Percentage, as appropriate.

 

“Commitment Period” shall mean the period from and including the Closing Date to
but not including the Revolving Commitment Termination Date.

 

“Commitment Transfer Supplement” shall mean a Commitment Transfer Supplement,
substantially in the form of Schedule 9.6(c).

 

“Confidential Information” shall have the meaning set forth in Section 9.15.

 

“Consolidated Capital Expenditures” shall mean, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of the Borrower and its
Subsidiaries and including Additional Acquisitions, but excluding expenditures
made in connection with any Permitted Acquisition) by the Borrower and its
Subsidiaries during such period that, in conformity with GAAP, are included in
“additions to property, plant or equipment” or comparable items reflected in the
consolidated statement of cash flows of the Borrower and its Subsidiaries net of
the amount of (i) any reimbursement payments made to the Borrower or any of its
Subsidiaries by any third parties in connection with any such expenditures, and
(ii) any sale and lease-back transaction proceeds received by the Borrower or
any of its Subsidiaries from any third parties in connection with any such
expenditure to the extent such proceeds are applied in accordance with
Section 2.8(b), in each case, to the extent that such expenditures have actually
been made by the Borrower or its Subsidiaries for such Fiscal Year.

 

“Consolidated EBITDA” shall mean, for any period, the sum of (a) Consolidated
Net Income for such period, plus (b) an amount which, in the determination of
Consolidated Net Income, has been deducted for (i) Consolidated Interest Expense
for such period, (ii) total federal, state, local and foreign income, franchise,
value added and similar taxes for such period, (iii) total depreciation expense
for such period, (iv) total amortization expense for such period, including but
not limited to amortization of leasehold improvements and to amortization of
goodwill, organization costs and other intangibles and (v) fees and expenses
incurred in connection with the closing of this Credit Agreement (including for
this purpose any expense or write-off associated with the repayment of
outstanding principal amounts under the Existing Credit Agreement out of the
proceeds of the Senior Subordinated Convertible Notes), the closing of the
Senior Subordinated Convertible Notes, any secondary offering of the Borrower’s
Capital Stock and similar capital events (including, without limitation, debt
and equity issuances), plus/minus (c) an amount which, in the determination of
Consolidated Net Income, has been deducted (or added as the case may be) for
other non-recurring non-cash items decreasing or increasing Consolidated Net
Income, all of the foregoing as determined on a consolidated basis for the
Borrower and its Subsidiaries in conformity with GAAP.

 

6

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“Consolidated Fixed Charge Coverage Ratio” shall mean, for any consecutive four
Fiscal Quarter period, the ratio of (a) Consolidated Pro Forma EBITDA for such
period, to (b) the sum of Consolidated Interest Expense for such period plus
Scheduled Debt Payments for such period plus total federal, state, local and
foreign income, franchise, value added and similar taxes paid in cash during
such period plus Consolidated Capital Expenditures (net of any proceeds of any
related financing with respect to such expenditures as permitted under
Section 6.1(c)) for such period plus cash dividends and cash repurchases of
Capital Stock of the Borrower made pursuant to Section 6.5(c) and cash paid with
respect to redemptions or conversions of the Senior Subordinated Convertible
Notes.

 

“Consolidated Interest Expense” shall mean, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of the Borrower and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of the Borrower
and its Subsidiaries, including Letter of Credit Fees and net cash costs under
Hedging Agreements (excluding (a) the Convertible Hedging Agreement and (b) any
mark-to-market adjustments related to any Hedging Agreements), but excluding,
however, any amortization or write-off of deferred financing costs, any
prepayment penalties with respect to any debt issuances of Indebtedness and any
amounts referred to in Section 2.6 payable to the Administrative Agent and the
Lenders on or before the Closing Date.

 

“Consolidated Leverage Ratio” shall mean, as of any date of determination, the
ratio of (a) Consolidated Total Debt as of the last day of the Fiscal Quarter of
the Borrower ending on or immediately prior to such date to (b) Consolidated Pro
Forma EBITDA for the four consecutive Fiscal Quarter period ending as of the
last day of the Fiscal Quarter of the Borrower ending on or immediately prior to
such date of determination.

 

“Consolidated Net Income” shall mean, for any period, the net income (or loss)
of the Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (a) the income (or loss) of any Person (other than
a Subsidiary of the Borrower) in which any other Person (other than the Borrower
or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of cash dividends or other distributions actually paid to the Borrower or
any of its Subsidiaries by such Person during such period, (b) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of its
Subsidiaries or such Person’s assets are acquired by the Borrower or any of its
Subsidiaries, (c) any after-tax gains or losses attributable to asset sales of
any Pension Plan, (d) the cumulative effect of any adopted accounting change
included in the current Fiscal Year’s income statement and (e) (to the extent
not included in clauses (a) through (d) above) any net extraordinary gains or
net non-cash extraordinary losses.

 

“Consolidated Pro Forma EBITDA” shall mean, for any consecutive four Fiscal
Quarter period, without duplication, (a) Consolidated EBITDA for such four
Fiscal Quarter period, plus (b) for any business acquired during such four
Fiscal Quarter period, (i) EBITDA of such acquired business determined as though
such business were acquired as of the first day of such

 

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period by the Borrower and its Subsidiaries, plus (ii) the amount of any
historical extraordinary or nonrecurring costs or expenses or other verifiable
costs or expenses that will not continue after the acquisition date (including
without limitation excess owner/management compensation, plus (iii) any
reasonable operating expenses (including, without limitation, allocated general
and administrative expenses) to be eliminated and any costs savings resulting
from the inclusion of such acquired business under existing contractual
arrangements, in each case that are approved by the Administrative Agent.

 

“Consolidated Pro Forma Leverage Ratio” shall mean, as of any date of
determination, the ratio of (a) Consolidated Total Debt as of the last day of
the Fiscal Quarter of the Borrower ending on or immediately prior to such date,
net of cash and Cash Equivalents in excess of $40,000,000 on the balance sheet
of the Borrower as of the last day of such Fiscal Quarter, such netted amount
not to exceed $75,000,000, to (b) Consolidated Pro Forma EBITDA for the four
consecutive Fiscal Quarter period ending as of the last day of the Fiscal
Quarter of the Borrower ending on or immediately prior to such date of
determination.

 

“Consolidated Senior Leverage Ratio” shall mean, as of any date of
determination, the ratio of (a) Consolidated Total Debt as of the last day of
the Fiscal Quarter of the Borrower ending on or immediately prior to such date,
net of (i) cash and Cash Equivalents in excess of $40,000,000 on the balance
sheet of the Borrower as of the last day of such Fiscal Quarter, such netted
amount not to exceed $75,000,000 and (ii) the outstanding principal amount of
Subordinated Indebtedness of the Borrower and its Subsidiaries on a consolidated
basis as of the last day of the Fiscal Quarter of the Borrower ending on or
immediately prior to such date to (b) Consolidated Pro Forma EBITDA for the four
consecutive Fiscal Quarter period ending as of the last day of the Fiscal
Quarter of the Borrower ending on or immediately prior to such date of
determination.

 

“Consolidated Total Debt” shall mean, as of any date of determination, all
Indebtedness of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP.

 

“Consolidated Working Capital” shall mean, at any time, the excess of
(i) current assets (excluding cash and Cash Equivalents) of the Credit Parties
and their Subsidiaries on a consolidated basis at such time less (ii) current
liabilities (but excluding the current portion of any long-term Indebtedness) of
the Credit Parties and their Subsidiaries on a consolidated basis at such time,
all in accordance with GAAP.

 

“Contingent Obligation” shall mean, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (a) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof,
(b) with respect to any letter of credit issued for the account of that Person
or as to which that Person is otherwise liable for reimbursement of drawings, or
(c) under Hedge Agreements. Contingent Obligations shall include (i) the direct
or indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of

 

8

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business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, and (ii) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (A) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (B) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (A) or (B) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.

 

“Continuing Directors” shall mean the directors of the Borrower on the Closing
Date and each other director, if in each case such other director’s nomination
for election to the board of directors of the Borrower is recommended by a
majority of the then serving members of the board of directors.

 

“Contractual Obligation” shall mean, as applied to any Person, any provision of
any Capital Stock issued by that Person or of any material indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.

 

“Convertible Hedging Agreement” shall mean any convertible note hedge
transactions entered into for the purpose of hedging equity or other risks, and
not for speculative purposes, in connection with the issuance of any
Subordinated Indebtedness convertible into equity of the Borrower pursuant to
its terms and permitted pursuant to Section 6.1(f).

 

“Copyright Licenses” shall mean any written agreement naming any Credit Party as
licensor and granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 3.21.

 

“Copyrights” shall mean (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright office including, without limitation, any thereof referred to
in Schedule 3.21, and (b) all renewals thereof including, without limitation,
any thereof referred to in Schedule 3.21.

 

“Credit Documents” shall mean this Credit Agreement, each of the Notes, any
Joinder Agreement, the Letters of Credit, any Commitment Transfer Supplement,
the LOC Documents and the Security Documents and all other agreements,
documents, certificates and instruments delivered to the Administrative Agent or
any Lender by any Credit Party in connection therewith (other than any
agreement, document, certificate or instrument related to a Hedging Agreement).

 

“Credit Party” or “Credit Parties” shall mean any of the Borrower or the
Guarantors, individually or collectively, as appropriate.

 

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“Credit Party Obligations” shall mean, without duplication, (a) all of the
obligations, indebtedness and liabilities of the Credit Parties to the Lenders
(including the Issuing Lender) and the Administrative Agent, whenever arising,
under this Credit Agreement, the Notes or any of the other Credit Documents
including principal, interest, fees, reimbursements and indemnification
obligations and other amounts (including, but not limited to, any interest
accruing after the occurrence of a filing of a petition of bankruptcy under the
Bankruptcy Code with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and (b) all liabilities
and obligations, whenever arising, owing from the Credit Parties or any of their
Subsidiaries to any Hedging Agreement Provider arising under any Secured Hedging
Agreement permitted pursuant to Section 6.3(h).

 

“Debt Issuance” shall mean the incurrence of any Indebtedness for borrowed money
by any Credit Party or any of its Subsidiaries (excluding, for purposes hereof,
any Equity Issuance or any Indebtedness of the Credit Parties and their
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof (other than
Indebtedness incurred after the Closing Date pursuant to Section 6.1(f)).

 

“Default” shall mean any of the events specified in Section 7.1, whether or not
any requirement for the giving of notice or the lapse of time, or both, or any
other condition, has been satisfied.

 

“Defaulting Lender” shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender when due an amount owed by such Lender pursuant to the terms of this
Credit Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.

 

“Deposit Account” shall mean a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.

 

“Disqualified Capital Stock” shall mean, with respect to any Person, Capital
Stock of such Person as to which (a) the maturity, (b) mandatory redemption or
(c) redemption, repurchase, conversion or exchange at the option of the holder
thereof occurs, or may occur, on or prior to the date that is six months after
the Term Loan Maturity Date; provided, however, that such Capital Stock that
would not otherwise be characterized as Disqualified Capital Stock under this
definition shall not constitute Disqualified Capital Stock solely as a result of
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem Capital Stock upon the occurrence of a “change of control”
occurring prior to the Term Loan Maturity Date, if (i) such repurchase
obligation may not be triggered unless an Event of Default under this Agreement
also arises and (ii) no such repurchase or redemption is permitted to be
consummated unless and until all Credit Party Obligations (other than inchoate
indemnification and reimbursement obligations) shall have been satisfied in
full.

 

“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.

 

10

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“Domestic Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s Domestic Lending Office with the Administrative
Agent; and thereafter, such other office of such Lender as such Lender may from
time to time specify to the Administrative Agent and the Borrower as the office
of such Lender at which Alternate Base Rate Loans of such Lender are to be made.

 

“Domestic Subsidiary” shall mean any Subsidiary that is organized and existing
under the laws of the United States or any state or commonwealth thereof or
under the laws of the District of Columbia.

 

“EBITDA” shall mean for any business acquired by the Borrower and its
Subsidiaries, “Consolidated EBITDA” as defined herein substituting references to
such acquired business for references to “the Borrower and its Subsidiaries” as
used in such definition.

 

“Employee Benefit Plan” shall mean any “employee benefit plan” as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.

 

“Environmental Claim” shall mean any written investigation, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any governmental authority or any other
Person, arising (a) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (b) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (c) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.

 

“Environmental Laws” shall mean any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other published requirements of Governmental
Authorities relating to (a) environmental matters, including those relating to
any Hazardous Materials Activity, (b) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (c) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to the Borrower or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act
(42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §136
et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), the
Oil Pollution Act (33 U.S.C. § 2701 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), each as amended or
supplemented, any analogous present or future state or local statutes or laws,
and any regulations promulgated pursuant to any of the foregoing.

 

“Equity Issuance” shall mean any issuance by any the Borrower or any of its
Subsidiaries to any Person which is not a Credit Party of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants (excluding any shares of its Capital

 

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Stock pursuant to the exercise of stock options held by officers or employees of
the Credit Parties) or (c) any shares of its Capital Stock pursuant to the
conversion of any debt securities to equity. The term “Equity Issuance” shall
not include (i) any Asset Disposition, (ii) any Debt Issuance or (iii) any
issuance of shares of Capital Stock of the Borrower as consideration for or in
connection with a Permitted Acquisition.

 

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

 

“ERISA Affiliate” shall mean, as applied to any Person, (a) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which that Person is a member; (b) any trade or
business (whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (c) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that
Person, any corporation described in clause (a) above or any trade or business
described in clause (b) above is a member. Any former ERISA Affiliate of the
Borrower or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of the Borrower or such Subsidiary within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of the
Borrower or such Subsidiary and with respect to liabilities arising after such
period for which the Borrower or such Subsidiary could be liable under the Code
or ERISA.

 

“ERISA Event” shall mean (a) a “reportable event” within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (b) the failure to meet the minimum funding
standards of Section 412 of the Code with respect to any Pension Plan (whether
or not waived in accordance with Section 412(d) of the Code) or the failure to
make by its due date a required installment under Section 412(m) of the Code
with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (c) the distribution of a notice of intent
to terminate or the actual termination of an Employee Benefit Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA; (d) the withdrawal by the Borrower, any of
its Subsidiaries or any of their respective ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA;
(e) the institution by the PBGC of proceedings to terminate any Pension Plan, or
the occurrence of any event or condition which constitutes grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (f) the imposition of liability on the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (g) the withdrawal of the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or it is insolvent pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (h) the occurrence of an act or omission which could give rise to the
imposition on the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates of fines, penalties, taxes or related

 

12

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charges under Chapter 43 of the Code or under Section 409, Section 502(c),
(i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan;
(i) the assertion of a material claim (other than routine claims for benefits or
for a qualified domestic relations order) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against the Borrower,
any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (j) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Code) to
qualify under Section 401(a) of the Code, or the failure of any trust forming
part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Code; (k) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to
any Pension Plan; or (l) the adoption of an amendment to any Employee Benefit
Plan requiring the provision of security to such Employee Benefit Plan pursuant
to Section 307 of ERISA.

 

“Eurodollar Reserve Percentage” shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of Default” shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.

 

“Excess Cash Flow” shall mean, with respect to each Fiscal Year for the Credit
Parties and their Subsidiaries on a consolidated basis, an amount equal to
(a) Consolidated EBITDA for such period minus (b) Consolidated Capital
Expenditures actually made by any Credit Party or Subsidiary for such period to
the extent not financed with the proceeds of Indebtedness minus (c) Scheduled
Debt Payments made during such period minus (d) Consolidated Interest Expense
actually paid in cash by a Credit Party or Subsidiary for such period minus
(e) amounts actually paid in cash in respect of total federal, state, local and
foreign income, value added and similar taxes for such period minus
(f) increases or plus decreases in Consolidated Working Capital for such period
from the same period in the prior fiscal year minus (g) cash paid during such
Fiscal Year as consideration in connection with a Permitted Acquisition to the
extent such cash paid has not been previously deducted in calculating Excess
Cash Flow for a prior Fiscal Year pursuant to clause (h), minus (h) cash to be
paid as consideration in connection with a Permitted Acquisition to the extent a
Credit Party has entered into a letter of intent during such Fiscal Year with
respect to such Permitted Acquisition; provided that, if such letter of intent
(or the purchase agreement with respect to such Permitted Acquisition) is
terminated or if such Permitted Acquisition is not consummated, the Borrower
shall promptly prepay the Loans and/or cash collateralize the LOC Obligations in
an amount equal to 50% of such cash to the extent required by, and in accordance
with the terms of, Section 2.8(b)(v).

 

“Existing Hedging Agreements” shall mean the Hedging Agreements described on
Schedule 1.1-5.

 

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“Existing Letters of Credit” shall mean the letters of credit described by date
of issuance, amount, purpose and the date of expiry on Schedule 1.1-4 hereto.

 

“Existing Purchasing Lender” shall have the meaning set forth in Section 9.6(c).

 

“Extension of Credit” shall mean, as to any Lender, the making of a Loan by such
Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.

 

“Facilities” shall mean any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased or operated by the Borrower or any of its Subsidiaries or any of
their respective predecessors or Affiliates.

 

“Federal Funds Effective Rate” shall have the meaning set forth in the
definition of “Alternate Base Rate”.

 

“Fee Letter” shall mean the letter agreement dated November 28, 2005 addressed
to the Borrower from Wachovia and Wachovia Capital Markets, LLC, as amended,
modified or otherwise supplemented.

 

“Financial Plan” shall have the meaning set forth in Section 5.1(l).

 

“First Priority” shall mean, with respect to any Lien purported to be created in
any Collateral pursuant to any Security Document, that (a) such Lien has
priority over any other Lien on such Collateral other than any Permitted
Encumbrances having priority by operation of law over the Liens purported to be
created pursuant to the Security Documents and (b) such Lien is the only Lien
(other than Permitted Encumbrances) to which such Collateral is subject.

 

“Fiscal Quarter” shall mean a fiscal quarter of any Fiscal Year.

 

“Fiscal Year” shall mean the fiscal year of the Borrower and its Subsidiaries
ending on the last Thursday in September of each calendar year.

 

“Flood Hazard Property” shall mean a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.

 

“GAAP” shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 6.6 to the provisions of Section 1.3.

 

“Government Acts” shall have the meaning set forth in Section 2.20.

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Governmental Authorization” shall mean any permit, license, authorization,
plan, directive, consent order or consent decree of or from any Governmental
Authority.

 

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“Guarantor” shall mean any of the Domestic Subsidiaries identified as a
“Guarantor” on the signature pages hereto and the Additional Credit Parties
which execute a Joinder Agreement, together with their successors and permitted
assigns.

 

“Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

 

“Hazardous Materials” shall mean (a) any chemical, material or substance at any
time defined as or included in the definition of “hazardous substances”,
“hazardous wastes”, “hazardous materials”, “extremely hazardous waste”, acutely
hazardous waste”, “radioactive waste”, “biohazardous waste”, “pollutant”, “toxic
pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”,
“toxic substances”, or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import under any
applicable Environmental Laws); (b) any oil, petroleum, petroleum fraction or
petroleum derived substance; (c) any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal resources; (d) any flammable substances or explosives;
(e) any radioactive materials; (f) any asbestos-containing materials; (g) urea
formaldehyde foam insulation; (h) electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (i) pesticides; and
(j) any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority or which may or could pose a
hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor environment.

 

“Hazardous Materials Activity” shall mean any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.

 

“Hedging Agreements” shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.

 

“Hedging Agreement Provider” shall mean any Person that enters into a Secured
Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.3(h) to the extent such Person is a Lender, an Affiliate
of a Lender or any other Person that was a Lender (or an Affiliate of a Lender)
at the time it entered into the Secured Hedging Agreement but has ceased to be a
Lender (or whose Affiliate has ceased to be a Lender) under the Credit
Agreement.

 

“Incremental Facility” shall have the meaning set forth in Section 2.3.

 

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“Indebtedness” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than any such obligations incurred under ERISA or which represent accounts
payable incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance sheet of
such Person in accordance with GAAP, (e) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (f) all Contingent Obligations of
such Person with respect to Indebtedness of another Person, (g) the principal
portion of all obligations of such Person under Capital Leases, (h) all
Disqualified Capital Stock issued by such Person, (i) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product, and
(j) the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer. Obligations under Hedging
Agreements shall constitute Contingent Obligations, but not Indebtedness.

 

“Intellectual Property” shall mean all Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses

 

“Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan or
Swingline Loan, the last day of each March, June, September and December and on
the applicable Maturity Date, (b) as to any LIBOR Rate Loan having an Interest
Period of three months or less, the last day of such Interest Period, and (c) as
to any LIBOR Rate Loan having an Interest Period longer than three months, each
day which is three months after the first day of such Interest Period and the
last day of such Interest Period.

 

“Interest Period” shall mean, with respect to any LIBOR Rate Loan,

 

(a) initially, the period commencing on the Borrowing Date or conversion date,
as the case may be, with respect to such LIBOR Rate Loan and ending one, two,
three or six months thereafter, as selected by the Borrower in the notice of
borrowing or notice of conversion given with respect thereto; and

 

(b) thereafter, each period commencing on the last day of the immediately
preceding Interest Period applicable to such LIBOR Rate Loan and ending one,
two, three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto; provided
that the foregoing provisions are subject to the following:

 

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(i) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end
on a day that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

 

(ii) any Interest Period pertaining to a LIBOR Rate Loan 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 relevant calendar month;

 

(iii) if the Borrower shall fail to give notice as provided above, the Borrower
shall be deemed to have selected an Alternate Base Rate Loan to replace the
affected LIBOR Rate Loan;

 

(iv) no Interest Period in respect of any Loan shall extend beyond the
applicable Maturity Date and, further with regard to the Term Loan, no Interest
Period shall extend beyond any principal amortization payment date unless the
portion of the Term Loan consisting of Alternate Base Rate Loans together with
the portion of the Term Loan consisting of LIBOR Rate Loans with Interest
Periods expiring prior to or concurrently with the date such principal
amortization payment date is due, is at least equal to the amount of such
principal amortization payment due on such date; and

 

(v) no more than ten (10) LIBOR Rate Loans may be in effect at any time. For
purposes hereof, LIBOR Rate Loans with different Interest Periods shall be
considered as separate LIBOR Rate Loans, even if they shall begin on the same
date and have the same duration, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new LIBOR Rate Loan with a single
Interest Period.

 

“Investment” shall mean (a) any direct or indirect purchase or other acquisition
by the Borrower or any of its Subsidiaries of, or of a beneficial interest in,
any Capital Stock of any other Person, (b) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of the
Borrower from any Person other than the Borrower or any of its Subsidiaries, of
any Capital Stock of such Person, or (c) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar items in the ordinary course of business) or
capital contribution by the Borrower or any of its Subsidiaries to any other
Person (other than a wholly-owned Subsidiary of the Borrower), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.

 

“Issuing Lender” shall mean Wachovia or any successor issuing lender hereunder.

 

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“Issuing Lender Fees” shall have the meaning set forth in Section 2.6(c).

 

“Joinder Agreement” shall mean a Joinder Agreement substantially in the form of
Schedule 5.9, executed and delivered by an Additional Credit Party in accordance
with the provisions of Section 5.9.

 

“Joint Venture” shall mean a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party.

 

“Lender” shall have the meaning set forth in the first paragraph of this Credit
Agreement.

 

“Lender Commitment Letter” shall mean, with respect to any Lender, the letter
(or other correspondence) to such Lender from the Administrative Agent notifying
such Lender of its LOC Commitment, Revolving Commitment Percentage and/or Term
Loan Commitment Percentage.

 

“Letters of Credit” shall mean (a) any letter of credit issued by the Issuing
Lender pursuant to Section 2.4 and (b) any Existing Letter of Credit, in each
case as such letter of credit may be amended, modified, extended, renewed or
replaced from time to time.

 

“Letter of Credit Fee” shall have the meaning set forth in Section 2.6(b).

 

“LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term “LIBOR” shall mean, for any LIBOR Rate Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%). If, for any reason, neither of such rates is available,
then “LIBOR” shall mean the rate per annum at which, as determined by the
Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 A.M. London
time, two (2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks in the
London interbank market for a period equal to the Interest Period selected.

 

“LIBOR Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s LIBOR Lending Office with the Administrative Agent;
and thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.

 

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“LIBOR Rate” shall mean a rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
the following formula:

 

LIBOR Rate =

  LIBOR    

1.00 - Eurodollar Reserve Percentage

 

“LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which is
based on the LIBOR Rate.

 

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any priority or other security agreement or preferential arrangement
having the practical effect of any of the foregoing, of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the same economic
effect as any of the foregoing).

 

“Loan” shall mean a Revolving Loan, a Swingline Loan, and/or the Term Loan, as
appropriate.

 

“LOC Commitment” shall mean the commitment of the Issuing Lender to issue
Letters of Credit and with respect to each Lender, the commitment of such Lender
to purchase participation interests in the Letters of Credit up to such Lender’s
LOC Committed Amount as specified in the Lender Commitment Letter or in the
Register, as such amount may be reduced from time to time in accordance with the
provisions hereof.

 

“LOC Committed Amount” shall mean, collectively, the aggregate amount of all of
the LOC Commitments of the Lenders to issue and participate in Letters of Credit
as referenced in Section 2.4 and, individually, the amount of each Lender’s LOC
Commitment as specified in Lender Commitment Letter or in the Register.

 

“LOC Documents” shall mean, with respect to any Letter of Credit, such Letter of
Credit, any amendments thereto, any documents delivered in connection therewith,
any application therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (a) the rights and obligations of the parties
concerned or (b) any collateral security for such obligations.

 

“LOC Mandatory Borrowing” shall have the meaning set forth in Section 2.4(e).

 

“LOC Obligations” shall mean, at any time, the sum of (a) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (b) the aggregate amount
of all drawings under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.

 

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“Margin Stock” has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower
or any Guarantor to perform its obligations, when such obligations are required
to be performed, under this Credit Agreement, any of the Notes or any other
Credit Document or (c) the validity or enforceability of this Credit Agreement,
any of the Notes or any of the other Credit Documents or the rights or remedies
of the Administrative Agent or the Lenders hereunder or thereunder or the
perfection or priority of any Lien in favor of the Administrative Agent on any
material portion of the Collateral.

 

“Material Contract” shall mean each of the contracts set forth on Schedule 1.1-3
annexed hereto and any other contract or other arrangement to which the Borrower
or any of its Subsidiaries is a party (other than the Credit Documents) for
which breach, nonperformance, cancellation or failure to renew could reasonably
be expected to have a Material Adverse Effect.

 

“Maturity Date” shall mean (i) with respect to the Term Loan, the Term Loan
Maturity Date and (ii) with respect to the Revolving Loans, the Revolving
Commitment Termination Date.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage” shall mean a security instrument (whether designated as a deed of
trust, a mortgage, a deed to secure debt or by any similar title) executed and
delivered by any Credit Party in favor of the Administrative Agent,
substantially in the form of Schedule 1.1-2 annexed hereto or in such other form
as may be approved by the Administrative Agent in its sole discretion, in each
case with such changes thereto as may be recommended by the Administrative
Agent’s local counsel based on local laws or customary local mortgage, deed to
secured debt or deed of trust practices, as such security instrument may be
amended, supplemented or otherwise modified from time to time.

 

“Mortgage Delivery Date” shall mean the end of the second fiscal quarter or the
end of the fourth fiscal quarter, as appropriate, of any Fiscal Year.

 

“Mortgaged Property” shall mean any real property of the Credit Parties subject
to a Mortgage.

 

“Multiemployer Plan” shall mean any Employee Benefit Plan which is a
“multiemployer plan” as defined in Section 3(37) of ERISA.

 

“Net Cash Proceeds” shall mean the aggregate Cash proceeds received by any
Credit Party or any Subsidiary in respect of any Asset Disposition, Equity
Issuance or Debt Issuance (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received, and including any Cash received under any
insurance policy or as a result of the taking of any assets pursuant to the
power of eminent domain, condemnation or otherwise), net of (a) direct costs
(including, without

 

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limitation, legal, accounting and investment banking fees, and sales
commissions), (b) taxes reasonably estimated to be actually payable in
connection with such Asset Disposition, Equity Issuance or Debt Issuance as a
result of such Asset Disposition, Equity Issuance or Debt Issuance, (c) with
respect to any Asset Disposition, payment of the principal amount, premium or
penalty, if any, on any Indebtedness (other than the Obligations) secured by a
Lien on the assets or Capital Stock sold and required to be repaid because of
such Asset Disposition, (d) with respect to any Asset Disposition, reasonable
reserves established in good faith by the Borrower (and reasonably acceptable to
the Administrative Agent) in respect of (i) possible adjustments to the sale
price, (ii) any retained liabilities or obligations relating to the assets sold
and (iii) indemnification obligations undertaken with respect to indemnification
provisions and representations and warranties in connection with such Asset
Disposition and (e) with respect to any Debt Issuance, the net cost of any
related Convertible Hedging Agreements. “Net Cash Proceeds” shall include,
without limitation, any Cash received upon the sale or other disposition of any
non-cash consideration received by any Credit Party or any Subsidiary in any
Asset Disposition, Equity Issuance or Debt Issuance.

 

“New Purchasing Lender” shall have the meaning set forth in Section 9.6(c).

 

“Note” or “Notes” shall mean the Revolving Notes, the Swingline Note and/or the
Term Notes, collectively, separately or individually, as appropriate.

 

“Notice of Borrowing” shall mean the written notice of borrowing as referenced
and defined in Section 2.1(b)(i) or 2.5(b)(i), as appropriate.

 

“Notice of Conversion” shall mean the written notice of extension or conversion
as referenced and defined in Section 2.11.

 

“Obligations” shall mean, collectively, Loans and LOC Obligations and all other
obligations of the Credit Parties to the Administrative Agent and the Lenders
under the Credit Documents.

 

“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Officer’s Certificate” shall mean, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers’ Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (a) a statement that the officer or officers
making or giving such Officers’ Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(b) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (c) a statement as to whether, in the opinion of the signers,
such condition has been complied with.

 

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“Operating Lease” shall mean, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.

 

“Participant” shall have the meaning set forth in Section 9.6(b).

 

“Participation Interest” shall mean the purchase by a Lender of a participation
interest in Letters of Credit as provided in Section 2.4 and in Swingline Loans
as provided in Section 2.5.

 

“Patent License” shall mean all agreements, whether written or oral, providing
for the grant by or to a Credit Party of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any thereof
referred to in Schedule 3.21.

 

“Patents” shall mean (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule 3.21, and (b) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any thereof referred to in Schedule 3.21.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA, or any successor thereto.

 

“Pension Plan” shall mean any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or
Section 302 of ERISA.

 

“Permitted Acquisition” shall mean an acquisition of assets or a business
effected in accordance with the provisions of Section 6.7(d).

 

“Permitted Encumbrances” shall mean the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by
ERISA, any such Lien relating to or imposed in connection with any Environmental
Claim, and any such Lien expressly prohibited by any applicable terms of any of
the Security Documents):

 

(a) Liens for taxes, assessments or governmental charges or claims the payment
of which is not, at the time, required by Section 5.3;

 

(b) statutory Liens of landlords, statutory Liens of banks and rights of
set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law, in each case incurred
in the ordinary course of business (i) for amounts not yet overdue or (ii) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of 30 days) are being contested in good faith by appropriate
proceedings, so long as (A) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any such contested
amounts, and (B) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral on account of such Lien;

 

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(c) Liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money), so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;

 

(d) any attachment or judgment Lien not constituting an Event of Default under
Section 7.1(h);

 

(e) leases or subleases granted to third parties in accordance with any
applicable terms of the Security Documents and not interfering in any material
respect with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Credit Party Obligations;

 

(f) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries or result in a material diminution in
the value of any Collateral as security for the Credit Party Obligations;

 

(g) any (i) interest or title of a lessor or sublessor under any lease permitted
under this Agreement, (ii) restriction or encumbrance that the interest or title
of such lessor or sublessor may be subject to, or (iii) subordination of the
interest of the lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (ii), so long as the holder of
such restriction or encumbrance agrees to recognize (if required to do so
pursuant to the provisions of such lease) the rights of such lessee or sublessee
under such lease;

 

(h) Liens arising from filing Uniform Commercial Code financing statements
relating to leases permitted by this Agreement or consignments or similar
arrangements relating to the sale of goods in the ordinary course of business;

 

(i) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods;

 

(j) any zoning or similar law or right reserved to or vested in any Governmental
Authority to control or regulate the use of any real property;

 

(k) Liens securing obligations (other than obligations representing Indebtedness
for borrowed money) under operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of the Borrower and its
Subsidiaries;

 

(l) licenses of Intellectual Property rights granted by the Borrower or any of
its Subsidiaries in the ordinary course of business and not interfering in any
material respect with the ordinary conduct of the business of the Borrower or
such Subsidiary and;

 

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(m) Liens in favor of a Hedging Agreement Provider in connection with any
Secured Hedging Agreement, but only if such Hedging Agreement Provider and the
Administrative Agent, on behalf of the Lenders, shall share pari passu in the
collateral subject to such Liens.

 

“Permitted Investments” shall have the meaning set forth in Section 6.3.

 

“Permitted Liens” shall have the meaning set forth in Section 6.2.

 

“Permitted Sale Leaseback Transactions” shall mean sale leaseback transactions
that are permitted pursuant to Section 6.8 of this Agreement.

 

“Person” shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

 

“Pledge Agreement” shall mean the Second Amended and Restated Pledge Agreement
dated as of the Closing Date to be executed in favor of the Administrative
Agent, for the benefit of the Lenders, by the Borrower and each of the other
Credit Parties, as amended, modified, restated or supplemented from time to
time.

 

“Pledged Collateral” shall have the meaning set forth in the Pledge Agreement.

 

“Prime Rate” shall have the meaning set forth in the definition of Alternate
Base Rate.

 

“PTO” shall mean the Patent and Trademark Office.

 

“Purchasing Lenders” shall have the meaning set forth in Section 9.6(c).

 

“Real Property Asset” shall mean, at any time of determination, any interest
then owned by any Credit Party in any real property.

 

“Recovery Event” shall mean (a) theft, loss, physical destruction or damage,
taking or similar event with respect to any property or assets owned by the
Borrower or any of its Subsidiaries which results in the receipt by the Borrower
or any of its Subsidiaries of any cash insurance proceeds or condemnation award
payable by reason thereof and (b) any event resulting in the receipt by the
Borrower or any of its Subsidiaries of business interruption insurance proceeds.

 

“Register” shall have the meaning set forth in Section 9.6(d).

 

“Related Agreements” shall mean, collectively, the Related Financing Documents
and the Affiliate Agreements.

 

“Related Financing Documents” shall mean, collectively, the Senior Subordinated
Notes, the Senior Subordinated Note Indenture, the Senior Subordinated
Convertible Notes, the Senior Subordinated Convertible Note Indenture and all
other agreements or instruments delivered pursuant to or in connection with any
of the foregoing including any purchase agreement or registration rights
agreement.

 

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“Related Fund” shall mean, with respect to any Lender or other Person who
invests in commercial bank loans in the ordinary course of business, any other
fund or trust or entity that invests in commercial bank loans in the ordinary
course of business and is advised or managed by such Lender, by an Affiliate of
such Lender or other Persons or the same investment advisor as such Lender or by
an Affiliate of such Lender or investment advisor.

 

“Release” shall mean any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.

 

“Required Lenders” shall mean Lenders holding in the aggregate greater than 50%
of the sum of (i) the Revolving Commitments (and Participation Interests
therein) or, if the Revolving Commitments have been terminated, the outstanding
Revolving Loans and Participation Interests (including the Participation
Interests of the Issuing Lender, in its capacity as a Revolving Lender, in any
Letters of Credit and of the Swingline Lender, in its capacity as a Revolving
Lender, in Swingline Loans) and (ii) the outstanding Term Loan; provided,
however, that if any Lender shall be a Defaulting Lender at such time, then
there shall be excluded from the determination of Required Lenders, Obligations
(including Participation Interests) owing to such Defaulting Lender and such
Defaulting Lender’s Commitments, or after termination of the Commitments, the
principal balance of the Obligations owing to such Defaulting Lender.

 

“Requirement of Law” shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Restricted Junior Payment” shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Borrower now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (b) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of the Borrower
now or hereafter outstanding, (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Borrower now or hereafter outstanding, and
(d) except as permitted pursuant to Sections 6.1(f) and 6.1(g), any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.

 

“Revolving Commitment” shall mean, with respect to each Revolving Lender, the
commitment of such Revolving Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to the amount of such Revolving
Lender’s “Revolving Commitment” as specified in the Lender Commitment Letter or
in the Register, as such amount may be reduced or increased from time to time in
accordance with the terms hereof.

 

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“Revolving Commitment Percentage” shall mean, for each Revolving Lender, the
percentage identified as its Revolving Commitment Percentage in the Lender
Commitment Letter or in the Register, as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 9.6(c).

 

“Revolving Commitment Termination Date” shall mean January 2, 2012.

 

“Revolving Committed Amount” shall have the meaning set forth in Section 2.1.

 

“Revolving Lender” shall mean, as of any date of determination, a Lender holding
a Revolving Commitment on such date.

 

“Revolving Loans” shall have the meaning set forth in Section 2.1.

 

“Revolving Note” or “Revolving Notes” shall mean the promissory notes of the
Borrower in favor of each of the Lenders evidencing the Revolving Loans provided
pursuant to Section 2.1(e), individually or collectively, as appropriate, as
such promissory notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time.

 

“S&P” shall mean Standard & Poor’s Ratings Group, a division of The McGraw Hill
Companies, Inc.

 

“Sanctioned Country” shall mean a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time.

 

“Sanctioned Person” shall mean (i) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or
(C) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC.

 

“Scheduled Debt Payments” shall mean, as of any date of determination for the
Borrower and its Subsidiaries, the sum of all scheduled payments of principal on
Indebtedness for the applicable period ending on the date of determination
(including the principal component of payments due on Capital Leases during the
applicable period ending on the date of determination), as such scheduled
payments may be adjusted from time to time as a result of mandatory prepayments
made pursuant to Section 2.8(b).

 

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“Secured Hedging Agreement” shall mean (a) any Existing Hedging Agreement and
(b) any Hedging Agreement between a Credit Party and a Hedging Agreement
Provider, as amended, modified, supplemented, extended or restated from time to
time.

 

“Security Agreement” shall mean the Second Amended and Restated Security
Agreement dated as of the Closing Date given by the Borrower and the other
Credit Parties to the Administrative Agent, for the benefit of the Lenders, as
amended, modified or supplemented from time to time in accordance with its
terms.

 

“Security Documents” shall mean the Security Agreement, the Pledge Agreement,
the Mortgages, the Additional Mortgages, the Collateral Account Agreement and
any other documents executed and delivered in connection with the granting,
attachment and perfection of the Administrative Agent’s security interests and
liens arising thereunder, including, without limitation, Uniform Commercial Code
financing statements.

 

“Senior Subordinated Convertible Note Indenture” shall mean the indenture dated
as of November 22, 2005, among the Borrower, the guarantors named therein and
Wachovia, as trustee, pursuant to which the Senior Subordinated Convertible
Notes were issued, as such indenture may be amended from time to time to the
extent permitted under Section 6.13.

 

“Senior Subordinated Convertible Notes” shall mean the 3.0% Senior Subordinated
Convertible Notes due 2012 of the Borrower issued pursuant to the Senior
Subordinated Convertible Note Indenture, as such convertible notes may be
amended from time to time to the extent permitted under Section 6.13.

 

“Senior Subordinated Note Indenture” shall mean the indenture dated as of
February 13, 2004, among the Borrower, the guarantors named therein and
Wachovia, as trustee, pursuant to which the Senior Subordinated Notes were
issued, as such indenture may be amended from time to time to the extent
permitted under Section 6.13.

 

“Senior Subordinated Notes” shall mean the 7.75% Senior Subordinated Notes due
2014 of the Borrower issued pursuant to the Senior Subordinated Note Indenture,
as such notes may be amended from time to time to the extent permitted under
Section 6.13.

 

“Solvent” shall mean, with respect to any Person, that as of the date of
determination both (a) (i) the then fair saleable value of the property of such
Person is (A) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (B) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (b) such Person is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

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“Subordinated Indebtedness” shall mean (a) the Indebtedness of the Borrower
evidenced by the Senior Subordinated Notes, the Indebtedness of the Borrower
evidenced by the Senior Subordinated Convertible Notes and any subordinated
indebtedness issued in compliance with Section 6.1(f) and Section 6.1(g) and
(b) any other Indebtedness of the Borrower subordinated in right of payment to
the Credit Party Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance satisfactory to the
Administrative Agent.

 

“Subsidiary” shall mean, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Credit Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding up to
the Swingline Committed Amount, and the commitment of the Lenders to purchase
participation interests in the Swingline Loans as provided in
Section 2.5(b)(ii), as such amounts may be reduced from time to time in
accordance with the provisions hereof.

 

“Swingline Committed Amount” shall have the meaning set forth in Section 2.5(a).

 

“Swingline Lender” shall mean Wachovia or any successor swingline lender
hereunder.

 

“Swingline Loan” or “Swingline Loans” shall have the meaning set forth in
Section 2.5(a).

 

“Swingline Mandatory Borrowing” shall have the meaning set forth in
Section 2.5(b)(ii).

 

“Swingline Note” shall mean the promissory note of the Borrower in favor of the
Swingline Lender evidencing the Swingline Loans provided pursuant to
Section 2.5(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

 

“Taxes” shall have the meaning set forth in Section 2.19.

 

“Term Loan” shall have the meaning set forth in Section 2.2(a).

 

“Term Loan Lender” shall mean, as of any date of determination, a Lender holding
a Term Loan Commitment or a portion of outstanding Term Loan on such date.

 

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“Term Loan Commitment” shall mean, with respect to each Term Loan Lender, the
commitment of such Lender to make its portion of the Term Loan in a principal
amount equal to such Lender’s Term Loan Commitment Percentage of the Term Loan
Committed Amount (and for purposes of making determinations of Required Lenders
hereunder after the Closing Date, the principal amount outstanding on the Term
Loan).

 

“Term Loan Commitment Percentage” shall mean, for any Term Loan Lender, the
percentage identified as its Term Loan Commitment Percentage in the Lender
Commitment Letter or in the Commitment Transfer Supplement pursuant to which
such Lender became a Lender hereunder, as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 9.6.

 

“Term Loan Committed Amount” shall have the meaning set forth in Section 2.2(a).

 

“Term Loan Maturity Date” shall mean January 2, 2012.

 

“Term Note” or “Term Notes” shall mean the promissory notes of the Borrower in
favor of each of the Term Loan Lenders evidencing the portion of the Term Loan
provided pursuant to Section 2.2(d), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

 

“Trademark License” shall means any agreement, written or oral, providing for
the grant by or to a Credit Party of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 3.21.

 

“Trademarks” shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress and
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 3.21, and (b) all renewals
thereof, including, without limitation, any thereof referred to in
Schedule 3.21.

 

“Tranche” shall mean the collective reference to LIBOR Rate Loans whose Interest
Periods begin and end on the same day. A Tranche may sometimes be referred to as
a “LIBOR Tranche”.

 

“Transfer Closing Date” shall have the meaning set forth in each Commitment
Transfer Supplement.

 

“2.19 Certificate” shall have the meaning set forth in Section 2.19.

 

“Type” shall mean, as to any Loan, its nature as an Alternate Base Rate Loan or
LIBOR Rate Loan, as the case may be.

 

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“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

 

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

 

“Works” shall mean all works which are subject to copyright protection pursuant
to Title 17 of the United States Code.

 

Section 1.2 Other Definitional Provisions.

 

(a) Unless otherwise specified therein, all terms defined in this Credit
Agreement shall have the defined meanings when used in the Notes or other Credit
Documents or any certificate or other document made or delivered pursuant
hereto.

 

(b) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Credit Agreement shall refer to this Credit Agreement as a
whole and not to any particular provision of this Credit Agreement, and Section,
subsection, Schedule and Exhibit references are to this Credit Agreement unless
otherwise specified.

 

(c) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(d) The terms “include”, “including” and similar terms shall be construed as if
followed by the phrase “without limitation.”

 

Section 1.3 Accounting Terms.

 

Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Borrower delivered to the Lenders;
provided that, if the Borrower shall notify the Administrative Agent that it
wishes to amend any covenant in Section 6.6 to appropriately reflect the effect
of any change in GAAP on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Lenders wish to
amend Section 6.6 for such purpose), then the Borrower’s compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Lenders.

 

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Section 1.4 Time References.

 

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

 

ARTICLE II

 

THE LOANS; AMOUNT AND TERMS

 

Section 2.1 Revolving Loans.

 

(a) Revolving Commitment. During the Commitment Period, subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make available to
the Borrower from time to time such Revolving Lender’s Revolving Commitment
Percentage of revolving credit loans (“Revolving Loans”) in an aggregate
principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (as
reduced from time to time as provided in Section 2.7, the “Revolving Committed
Amount”) for the purposes hereinafter set forth; provided, however, that
(i) with regard to each Revolving Lender individually, the sum of such Revolving
Lender’s share of outstanding Revolving Loans plus such Revolving Lender’s
Revolving Commitment Percentage of outstanding Swingline Loans plus such
Revolving Lender’s Revolving Commitment Percentage of LOC Obligations shall not
exceed such Revolving Lender’s Revolving Committed Amount, and (ii) with regard
to the Revolving Lenders collectively, the sum of the outstanding Revolving
Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the
Revolving Committed Amount. Revolving Loans may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the provisions
hereof; provided that all Revolving Loans made on the Closing Date or on any of
the first two Business Days following the Closing Date shall only consist of
Alternate Base Rate Loans.

 

(b) Revolving Loan Borrowings.

 

(i) Notice of Borrowing. The Borrower may request a Revolving Loan borrowing by
written notice (or telephone notice promptly confirmed in writing which
confirmation may be by fax) to the Administrative Agent not later than
12:00 p.m. on the Business Day prior to the date of requested borrowing in the
case of Alternate Base Rate Loans, and on the third Business Day prior to the
date of the requested borrowing in the case of LIBOR Rate Loans. Each such
request for borrowing shall be irrevocable, shall be substantially in the form
of the Notice of Borrowing (a “Notice of Borrowing”) attached hereto as
Schedule 2.1(b)(i) and shall specify (A) that a Revolving Loan is requested,
(B) the date of the requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, (D) whether the borrowing shall be
comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a combination
thereof, and if LIBOR Rate Loans are requested, the Interest Period(s) therefor.
If the Borrower shall fail to specify in any such Notice of Borrowing (I) an
applicable Interest Period in

 

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the case of a LIBOR Rate Loan, then such notice shall be deemed to be a request
for an Interest Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a request for an Alternate
Base Rate Loan hereunder. The Administrative Agent shall give notice to each
Revolving Lender promptly, but in any event on the same Business Day as receipt
of such notice by the Administrative Agent, of each Notice of Borrowing, the
contents thereof and each such Revolving Lender’s share thereof.

 

(ii) Advances. Each Revolving Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative Agent
on record with the Lenders, or at such other office as the Administrative Agent
may designate in writing, by 1:00 p.m. on the date specified in the applicable
Notice of Borrowing in Dollars and in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the Administrative Agent by crediting the account of the Borrower on the
books of such office with the aggregate of the amounts made available to the
Administrative Agent by the Revolving Lenders and in like funds as received by
the Administrative Agent.

 

(c) Repayment. The principal amount of all Revolving Loans shall be due and
payable in full on the Revolving Commitment Termination Date.

 

(d) Interest. Subject to the provisions of Section 2.10, Revolving Loans shall
bear interest as follows:

 

(i) Alternate Base Rate Loans. During such periods as Revolving Loans shall be
comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall
bear interest at a per annum rate equal to the sum of the Alternate Base Rate
plus the Applicable Margin; and

 

(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be comprised
of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per
annum rate equal to the sum of the LIBOR Rate plus the Applicable Margin.

 

Interest on Revolving Loans shall be payable in arrears on each Interest Payment
Date.

 

(e) Revolving Notes. Upon the request of a Revolving Lender, such Revolving
Lender’s Revolving Commitment shall be evidenced by a duly executed promissory
note of the Borrower to such Revolving Lender in substantially the form of
Schedule 2.1(e).

 

Section 2.2 Term Loan Facility.

 

(a) Term Loan. Subject to the terms and conditions hereof, each Term Loan Lender
severally agrees to make available to the Borrower on the Closing Date such Term
Loan Lender’s Term Loan Commitment Percentage of a term loan in Dollars (the
“Term Loan”) in the aggregate principal amount of TWO HUNDRED FIVE MILLION
DOLLARS ($205,000,000)

 

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(the “Term Loan Committed Amount”), for the purposes hereinafter set forth. The
Term Loan may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, as the Borrower may request; provided that on the Closing
Date the Term Loan shall only consist of Alternate Base Rate Loans. Amounts
repaid or prepaid on the Term Loan may not be reborrowed.

 

(b) Repayment of Term Loan. The principal amount of the Term Loan shall be
repaid in twenty-four (24) consecutive quarterly installments as follows, unless
accelerated sooner pursuant to Section 7.2:

 

Principal Amortization Payment Date

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

  Term Loan Principal
Amortization Payment

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

March 31, 2006

  $ 512,500

June 30, 2006

  $ 512,500

September 30, 2006

  $ 512,500

December 31, 2006

  $ 512,500

March 31, 2007

  $ 512,500

June 30, 2007

  $ 512,500

September 30, 2007

  $ 512,500

December 31, 2007

  $ 512,500

March 31, 2008

  $ 512,500

June 30, 2008

  $ 512,500

September 30, 2008

  $ 512,500

December 31, 2008

  $ 512,500

March 31, 2009

  $ 512,500

June 30, 2009

  $ 512,500

September 30, 2009

  $ 512,500

December 31, 2009

  $ 512,500

March 31, 2010

  $ 512,500

June 30, 2010

  $ 512,500

September 30, 2010

  $ 512,500

December 31, 2010

  $ 512,500

March 31, 2011

  $ 512,500

June 30, 2011

  $ 512,500

September 30, 2011

  $ 512,500

Term Loan Maturity Date

   
 
 
  $193,212,500 or the
remaining principal
amount then
outstanding

 

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The outstanding principal amount of the Term Loan and all accrued but unpaid
interest and other amounts payable with respect to the Term Loan shall be repaid
on the Term Loan Maturity Date.

 

(c) Interest on the Term Loan. Subject to the provisions of Section 2.10, the
Term Loan shall bear interest as follows:

 

(i) Alternate Base Rate Loans. During such periods as the Term Loan shall be
comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall
bear interest at a per annum rate equal to the sum of the Alternate Base Rate
plus the Applicable Margin; and

 

(ii) LIBOR Rate Loans. During such periods as the Term Loan shall be comprised
of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per
annum rate equal to the sum of the LIBOR Rate plus the Applicable Margin.

 

Interest on the Term Loan shall be payable in arrears on each Interest Payment
Date.

 

(d) Term Notes. Upon the request of a Term Loan Lender, such Term Loan Lender’s
Term Loan Commitment shall be evidenced by a duly executed promissory note of
the Borrower to such Term Loan Lender in substantially the form of
Schedule 2.2(d).

 

Section 2.3 Incremental Facilities.

 

Subject to the terms and conditions set forth herein, the Borrower shall have
the right, at any time and from time to time, to incur additional Indebtedness
under this Agreement in an aggregate amount of up to $100,000,000 (each, an
“Incremental Facility”) which may be borrowed in the form of (a) one or more
increases to the Revolving Committed Amount (the “Additional Revolving Loans”)
and/or (b) a term loan facility (the “Additional Term Loan”; together with any
Additional Revolving Loans, the “Additional Loans”), in an aggregate amount at
any one time of up to $100,000,000. The following terms and conditions shall
apply: (i) the aggregate amount of all Additional Loans shall not at any one
time exceed $100,000,000, (ii) the terms and conditions of any Additional Term
Loans shall be reasonably satisfactory to the Administrative Agent and the
Additional Loan Lenders (as such term is defined below), (iii) the loans made
under any Additional Loan facilities shall constitute Credit Party Obligations,
(iv) any Additional Revolving Loans shall not have a shorter maturity or higher
Applicable Margin than the existing Revolving Loans and shall have other terms
and conditions reasonably acceptable to the Administrative Agent and the
Additional Loan Lenders, (v) any Additional Term Loan shall not have a shorter
maturity or higher Applicable Margin than the Term Loan, and shall have other
terms and conditions reasonably acceptable to the Administrative Agent, (vi) any
Additional Loans shall be entitled to the same voting rights as the existing
Loans and shall be entitled to receive proceeds of prepayments on the same basis
as comparable Loans, (vii)

 

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any Additional Loans shall be obtained from existing Lenders or from other
banks, financial institutions or investment funds, in each case in accordance
with the terms set forth below (such Persons being referred to herein as the
“Additional Loan Lenders”), (viii) each Additional Loan shall be in a minimum
principal amount of $10,000,000 and integral multiples of $1,000,000 in excess
thereof, (ix) the proceeds of any Additional Loans will be used to finance
capital expenditures and working capital and other general corporate purposes,
including Permitted Acquisitions, (x) the Borrower shall execute such promissory
notes as are necessary and requested by the Additional Loan Lenders to reflect
the Additional Loans, (xi) the conditions to Extensions of Credit in
Section 4.1(b), (c), (o) and (h) and Section 4.2 shall have been satisfied and
(xii) the Administrative Agent shall have received from the Borrower updated
financial projections and an officer’s certificate, in each case in form and
substance reasonably satisfactory to the Administrative Agent, demonstrating
that, after giving effect to any such Additional Loan, the Borrower will be in
compliance with the financial covenants set forth in Section 6.6. Participation
in any Additional Loans shall be offered first to each of the existing Lenders
on a pro rata basis, but none of such Lenders shall have any obligation to
provide all or any portion of any such Additional Loans. If the amount of any
Additional Loans requested by the Borrower shall exceed the commitments which
the existing Lenders are willing to provide with respect to such Additional
Loans, then the Borrower may invite other banks, financial institutions and
investment funds reasonably acceptable to the Administrative Agent to join this
Credit Agreement as Lenders hereunder for the portion of such Additional Loans
not taken by existing Lenders, provided that such other banks, financial
institutions and investment funds shall enter into such joinder agreements to
give effect thereto as the Administrative Agent and the Borrower may reasonably
request. In the case of Additional Revolving Loans, the existing Lenders shall
make such assignments (which assignments shall not be subject to the
requirements set forth in Section 9.6(c)) of the outstanding Revolving Loans and
Participation Interests to the Additional Loan Lenders providing any Additional
Revolving Loans so that, after giving effect to such assignments, each Lender
holding a Revolving Commitment (including such Additional Loan Lenders) will
hold Revolving Loans and Participation Interests equal to its Commitment
Percentage of all outstanding Revolving Loans and LOC Obligations.
Notwithstanding any provision of this Credit Agreement to the contrary, the
Administrative Agent is authorized (with the consent of the Borrower and the
Additional Loan Lenders), to enter into, on behalf of all Lenders, any
amendment, modification or supplement to this Credit Agreement or any other
Credit Document as may be necessary to incorporate the terms of any Additional
Loans.

 

Section 2.4 Letter of Credit Subfacility.

 

(a) Issuance. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require, during the Commitment Period the Issuing Lender shall
issue, and the Revolving Lenders shall participate in, Letters of Credit for the
account of the Borrower from time to time upon request in a form acceptable to
the Issuing Lender; provided, however, that (i) the aggregate amount of LOC
Obligations shall not at any time exceed NINETY MILLION DOLLARS ($90,000,000)
(the “LOC Committed Amount”), (ii) the sum of outstanding Revolving Loans plus
outstanding Swingline Loans plus LOC Obligations shall not at any time exceed
the Revolving Committed Amount, (iii) all Letters of Credit shall be denominated
in U.S. Dollars and (iv) Letters of Credit

 

35

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shall be issued for lawful corporate purposes and may be issued as standby
letters of credit, including in connection with workers’ compensation and other
insurance programs, and trade letters of credit. Except as otherwise expressly
agreed upon by all the Revolving Lenders, no Letter of Credit shall have an
original expiry date more than twelve (12) months from the date of issuance;
provided, however, so long as no Default or Event of Default has occurred and is
continuing and subject to the other terms and conditions to the issuance of
Letters of Credit hereunder, the expiry dates of Letters of Credit may be
extended annually or periodically from time to time on the request of the
Borrower or by operation of the terms of the applicable Letter of Credit to a
date not more than twelve (12) months from the date of extension; provided,
further, that no Letter of Credit, as originally issued or as extended, shall
have an expiry date (or potential draw date) extending beyond the date that is
ten (10) days prior to the Revolving Commitment Termination Date, unless such
Letter of Credit is or will be cash collateralized on terms satisfactory to the
Issuing Lender. Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry date of each Letter of Credit shall be a
Business Day. Any Letters of Credit issued hereunder shall be in a minimum
original face amount of $25,000 (or such lesser amount as approved by the
Administrative Agent). Wachovia shall be the Issuing Lender on all Letters of
Credit issued after the Closing Date. The Borrower’s reimbursement obligations
in respect of each Existing Letter of Credit, and each Lender’s participation
obligations in connection therewith, shall be governed by the terms of this
Credit Agreement.

 

(b) Notice and Reports. The request for the issuance of a Letter of Credit shall
be submitted to the Issuing Lender at least five (5) Business Days prior to the
requested date of issuance, or such shorter period in each instance as may be
agreed to by the Issuing Lender. The Issuing Lender will promptly upon request
provide to the Administrative Agent for dissemination to the Revolving Lenders a
detailed report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have occurred since
the date of any prior report, and including therein, among other things, the
account party, the beneficiary, the face amount, expiry date as well as any
payments or expirations which may have occurred. The Issuing Lender will further
provide to the Administrative Agent promptly upon request copies of the Letters
of Credit. The Issuing Lender will provide to the Administrative Agent promptly
upon request a summary report of the nature and extent of LOC Obligations then
outstanding.

 

(c) Participations. Each Revolving Lender, (i) on the Closing Date with respect
to each Existing Letter of Credit and (ii) upon issuance of any other Letter of
Credit, shall be deemed to have purchased without recourse a risk participation
from the Issuing Lender in such Letter of Credit and the obligations arising
thereunder and any collateral relating thereto, in each case in an amount equal
to its Revolving Commitment Percentage of the obligations under such Letter of
Credit and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing Lender
therefor and discharge when due, its Revolving Commitment Percentage of the
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Revolving Lender’s participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required hereunder or
under any LOC Document, each such Revolving Lender shall pay to the Issuing
Lender its Revolving Commitment Percentage of such unreimbursed drawing in same
day funds on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to and in accordance

 

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with the provisions of subsection (d) hereof. The obligation of each Revolving
Lender to so reimburse the Issuing Lender shall be absolute and unconditional
and shall not be affected by the occurrence of a Default, an Event of Default or
any other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the Issuing Lender
under any Letter of Credit, together with interest as hereinafter provided.

 

(d) Reimbursement. In the event of any drawing under any Letter of Credit, the
Issuing Lender will promptly notify the Borrower and the Administrative Agent.
The Borrower shall reimburse the Issuing Lender on the day on which the drawing
under any Letter of Credit (with the proceeds of a Revolving Loan obtained
hereunder or otherwise) is honored in same day funds as provided herein or in
the LOC Documents. If the Borrower shall fail to reimburse the Issuing Lender as
provided herein, the unreimbursed amount of such drawing shall bear interest at
a per annum rate equal to the Alternate Base Rate plus two percent (2%) for so
long as such amount shall be unreimbursed. Unless the Borrower shall notify the
Issuing Lender and the Administrative Agent prior to 11:00 a.m. on the date the
drawing is honored of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested a Revolving Loan (a “LOC Mandatory
Borrowing”) in the amount of the drawing as provided in subsection (e) hereof,
the proceeds of which will be used to satisfy the reimbursement obligations. The
Borrower’s reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of set-off,
counterclaim or defense to payment the Borrower may claim or have against the
Issuing Lender, the Administrative Agent, the Lenders, the beneficiary of the
Letter of Credit drawn upon or any other Person, including without limitation
any defense based on any failure of the Borrower to receive consideration or the
legality, validity, regularity or unenforceability of the Letter of Credit. The
Issuing Lender will promptly notify the other Revolving Lenders of the amount of
any unreimbursed drawing and each Revolving Lender shall promptly pay to the
Administrative Agent for the account of the Issuing Lender in Dollars and in
immediately available funds, the amount of such Revolving Lender’s Revolving
Commitment Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Revolving Lender from the Issuing
Lender if such notice is received at or before 2:00 p.m., otherwise such payment
shall be made at or before 12:00 Noon on the Business Day next succeeding the
day such notice is received. If such Revolving Lender does not pay such amount
to the Issuing Lender in full upon such request, such Revolving Lender shall, on
demand, pay to the Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the date of such drawing
until such Revolving Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within two (2) Business Days of the date of
drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the
Alternate Base Rate. Each Revolving Lender’s obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations under the Credit Documents and
shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(e) Repayment with Revolving Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Revolving Loan to reimburse a
drawing under a

 

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Letter of Credit, the Administrative Agent shall give notice to the Revolving
Lenders that a Revolving Loan has been requested or deemed requested in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised entirely of Alternate Base Rate Loans shall be
immediately made (without giving effect to any termination of the Commitments
pursuant to Section 7.2) pro rata based on each Revolving Lender’s respective
Revolving Commitment Percentage (determined before giving effect to any
termination of the Commitments pursuant to Section 7.2). The proceeds of such
LOC Mandatory Borrowing shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Revolving Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any such
request or deemed request on account of each LOC Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the same
such date notwithstanding (i) the amount of LOC Mandatory Borrowing may not
comply with the minimum amount for borrowings of Revolving Loans otherwise
required hereunder, (ii) whether any conditions specified in Section 4.2 are
then satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for Revolving Loan to be
made by the time otherwise required in Section 2.1(b), (v) the date of such LOC
Mandatory Borrowing, or (vi) any reduction in the Revolving Committed Amount
after any such Letter of Credit may have been drawn upon. In the event that any
LOC Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code), then each such Revolving Lender
hereby agrees that it shall forthwith fund (as of the date the LOC Mandatory
Borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) its
Participation Interests in the outstanding LOC Obligations; provided, further,
that in the event any Revolving Lender shall fail to fund its Participation
Interest on the date the LOC Mandatory Borrowing would otherwise have occurred,
then the amount of such Revolving Lender’s unfunded Participation Interest
therein shall bear interest payable by such Revolving Lender to the Issuing
Lender upon demand, at the rate equal to, if paid within two (2) Business Days
of such date, the Federal Funds Effective Rate, and thereafter at a rate equal
to the Alternate Base Rate.

 

(f) Modification, Extension. The issuance of any supplement, modification,
amendment, renewal, or extension to any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.

 

(g) Uniform Customs and Practices. The Issuing Lender shall have the Letters of
Credit be subject to The Uniform Customs and Practice for Documentary Credits,
as published as of the date of issue by the International Chamber of Commerce
(the “UCP”), in which case the UCP may be incorporated therein and deemed in all
respects to be a part thereof.

 

(h) Designation of Subsidiaries as Account Parties. Notwithstanding anything to
the contrary set forth in this Credit Agreement, including without limitation
Section 2.4(a), a Letter of Credit issued hereunder shall upon the request of
the Borrower be issued for the account of any Subsidiary of the Borrower,
provided that notwithstanding such request, the Borrower shall be the actual
account party for all purposes of this Credit Agreement for such Letter of
Credit and such request shall not affect the Borrower’s reimbursement
obligations hereunder with respect to such Letter of Credit.

 

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Section 2.5 Swingline Loan Subfacility.

 

(a) Swingline Commitment. During the Commitment Period, subject to the terms and
conditions hereof, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans to the Borrower (each a “Swingline Loan”
and, collectively, the “Swingline Loans”) for the purposes hereinafter set
forth; provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed TEN MILLION DOLLARS ($10,000,000) (the
“Swingline Committed Amount”), and (ii) the sum of the outstanding Revolving
Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the
Revolving Committed Amount. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.

 

(b) Swingline Loan Borrowings.

 

(i) Notice of Borrowing and Disbursement. The Swingline Lender will make
Swingline Loans available to the Borrower on any Business Day upon written
request made by the Borrower not later than 12:00 Noon on such Business Day. A
notice of request for Swingline Loan borrowing shall be made in the form of
Schedule 2.1(b)(i) with appropriate modifications (which notice may be made by
fax).

 

(ii) Repayment of Swingline Loans. Each Swingline Loan borrowing shall be due
and payable on the Revolving Commitment Termination Date. The Swingline Lender
may, at any time, in its sole discretion, by written notice to the Borrower and
the Administrative Agent, demand repayment of its Swingline Loans by way of a
Revolving Loan borrowing, in which case the Borrower shall be deemed to have
requested a Revolving Loan borrowing comprised entirely of Alternate Base Rate
Loans in the amount of such Swingline Loans; provided, however, that, in the
following circumstances, any such demand shall also be deemed to have been given
one Business Day prior to each of (i) the Revolving Commitment Termination Date,
(ii) the occurrence of any Event of Default described in Section 7.1(f) or
Section 7.1(g), (iii) upon acceleration of the Credit Party Obligations under
the Credit Documents, whether on account of an Event of Default described in
Section 7.1(f) or Section 7.1(g) or any other Event of Default, and (iv) the
exercise of remedies in accordance with the provisions of Section 7.2 hereof
(each such Revolving Loan borrowing made on account of any such deemed request
therefor as provided herein being hereinafter referred to as a “Swingline
Mandatory Borrowing”). Each Revolving Lender hereby irrevocably agrees to make
such Revolving Loans promptly upon any such request or deemed request on account
of each Swingline Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the same such date notwithstanding (A) the
amount of Swingline Mandatory Borrowing may not comply with the minimum amount
for borrowings of Revolving Loans otherwise required hereunder, (B) whether any
conditions specified in Section 4.2 are then satisfied, (C) whether a Default or
an Event of Default then exists, (D) failure of any such request or deemed
request for Revolving Loans to be made by the time otherwise required in
Section 2.1(b)(i), (E) the date of such Swingline Mandatory Borrowing, or
(F) any reduction in the Revolving Committed

 

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Amount or termination of the Revolving Commitments immediately prior to such
Swingline Mandatory Borrowing or contemporaneously therewith. In the event that
any Swingline Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code), then each Revolving
Lender hereby agrees that it shall forthwith purchase (as of the date the
Swingline Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such participations in the outstanding
Swingline Loans as shall be necessary to cause each such Revolving Lender to
share in such Swingline Loans ratably based upon its respective Revolving
Commitment Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 7.2); provided that (I) all interest payable on
the Swingline Loans shall be for the account of the Swingline Lender until the
date as of which the respective Revolving Lender’s participation is purchased,
and (II) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Revolving Lender shall be required to pay to the
Swingline Lender interest on the principal amount of such participation
purchased for each day from and including the date upon which the purchase
occurs hereunder to but excluding the date of payment for such participation, at
the rate equal to, if paid within two (2) Business Days of the date of the
Swingline Mandatory Borrowing, the Federal Funds Effective Rate, and thereafter
at a rate equal to the Alternate Base Rate.

 

(c) Interest on Swingline Loans. Subject to the provisions of Section 2.10,
Swingline Loans shall bear interest at a per annum rate equal to the Alternate
Base Rate plus the Applicable Margin for Revolving Loans that are Alternate Base
Rate Loans. Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.

 

(d) Swingline Note. The Swingline Loans shall be evidenced by a duly executed
promissory note of the Borrower to the Swingline Lender in the original amount
of the Swingline Committed Amount and substantially in the form of
Schedule 2.5(d).

 

Section 2.6 Fees.

 

(a) Commitment Fee. In consideration of the Revolving Commitments, the Borrower
agrees to pay to the Administrative Agent for the ratable benefit of the
Revolving Lenders a commitment fee (the “Commitment Fee”) in an amount equal to
the Applicable Margin per annum on the average daily unused amount of the
Revolving Committed Amount. For purposes of computation of the Commitment Fee,
LOC Obligations and Swingline Loans shall be considered usage of the Revolving
Committed Amount. The Commitment Fee shall be payable quarterly on the last
Business Day of each calendar quarter for such calendar quarter then ending.

 

(b) Letter of Credit Fees. In consideration of the LOC Commitments, the Borrower
agrees to pay to the Issuing Lender for the ratable benefit of the Revolving
Lenders a fee (the “Letter of Credit Fee”) equal to the Applicable Margin per
annum on the average daily maximum amount available to be drawn under each
Letter of Credit from the date of issuance to the date of expiration. In
addition to such Letter of Credit Fee, the Issuing Lender shall charge,

 

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and retain for its own account without sharing by the other Revolving Lenders,
an additional facing fee (the “Letter of Credit Facing Fee”) of one-quarter of
one percent (0.25%) per annum on the average daily maximum amount available to
be drawn under each such Letter of Credit issued by it. The Issuing Lender shall
promptly pay over to the Administrative Agent for the ratable benefit of the
Revolving Lenders (including the Issuing Lender in its capacity as a Revolving
Lender), the Letter of Credit Fee. The Letter of Credit Fee and the Letter of
Credit Facing Fee shall be payable quarterly in arrears on the last Business Day
of each calendar quarter for such calendar quarter then ending.

 

(c) Issuing Lender Fees. In addition to the Letter of Credit Fees payable
pursuant to subsection (b) hereof, the Borrower shall pay to the Issuing Lender
for its own account without sharing by the other Lenders the reasonable and
customary charges from time to time of the Issuing Lender with respect to the
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the “Issuing Lender
Fees”).

 

(d) Administrative Fee. The Borrower agrees to pay to the Administrative Agent
the annual administrative fee as described in the Fee Letter.

 

Section 2.7 Commitment Reductions.

 

(a) Voluntary Reductions. The Borrower shall have the right to terminate or
permanently reduce the unused portion of the Revolving Committed Amount at any
time or from time to time upon not less than five Business Days’ prior notice
(which notice may be made by fax) to the Administrative Agent (which shall
notify the Revolving Lenders thereof as soon as practicable) of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction which shall be in a minimum amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof and shall be
irrevocable and effective upon receipt by the Administrative Agent, provided
that no such reduction or termination shall be permitted if after giving effect
thereto, and to any prepayments of the Loans made on the effective date thereof,
the sum of the outstanding Revolving Loans plus outstanding Swingline Loans plus
LOC Obligations would exceed the Revolving Committed Amount.

 

(b) Revolving Commitment Termination Date. The Revolving Commitment, the
Swingline Commitment and the LOC Commitment shall automatically terminate on the
Revolving Commitment Termination Date.

 

Section 2.8 Prepayments.

 

(a) Optional Prepayments. The Borrower shall have the right to prepay Loans in
whole or in part from time to time; provided, however, that each partial
prepayment of a Revolving Loan and the Term Loan shall be in a minimum principal
amount of $1,000,000 and integral multiples of $500,000 in excess thereof, and
each partial prepayment of a Swingline Loan shall be in a minimum principal
amount of $100,000 and integral multiples of $50,000 in excess thereof. The
Borrower shall give the Administrative Agent (which shall notify the Lenders
thereof as soon as practicable) three Business Days’ irrevocable notice (which
notice

 

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may be made by fax) of an optional payment in the case of LIBOR Rate Loans and
one Business Day’s irrevocable notice in the case of Alternate Base Rate Loans,
such notice to be substantially in the form of Schedule 2.8(a). All optional
prepayments pursuant to this Section 2.8(a) shall be applied as the Borrower may
elect. All prepayments under this Section 2.8(a) shall be subject to
Section 2.18, but otherwise without premium or penalty. Interest on the
principal amount prepaid shall be payable on the date that a prepayment is made
hereunder through the date of prepayment. Amounts prepaid on the Term Loan may
not be reborrowed.

 

(b) Mandatory Prepayments.

 

(i) Revolving Committed Amount. If at any time after the Closing Date, the sum
of the outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
Obligations shall exceed the Revolving Committed Amount, the Borrower
immediately shall prepay the Loans in an amount sufficient to eliminate such
excess (such prepayment to be applied as set forth in clause (vi) below).

 

(ii) Asset Dispositions. Promptly following any Asset Disposition in excess of
$10,000,000 in the aggregate (for all Asset Dispositions) in any Fiscal Year,
the Borrower shall prepay the Loans and/or cash collateralize the LOC
Obligations in an aggregate amount equal to the Net Cash Proceeds derived from
such Asset Disposition (such prepayment to be applied as set forth in
clause (vi) below); provided, however, that so long as no Default or Event of
Default has occurred and is continuing, such Net Cash Proceeds shall not be
required to be so applied to the extent the Borrower delivers to the
Administrative Agent a certificate stating that the Borrower intends to reinvest
such Net Cash Proceeds in additional assets or properties utilized or intended
to be utilized in any business permitted under Section 6.12 (including Permitted
Acquisitions) within 270 days of the receipt of such Net Cash Proceeds, it being
expressly agreed that any Net Cash Proceeds not so reinvested by the end of the
applicable period shall be applied to repay the Loans and/or cash collateralize
the LOC Obligations immediately thereafter.

 

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(iii) Issuances. Immediately upon receipt by any Credit Party of proceeds from
(A) any Debt Issuance, the Borrower shall prepay the Loans in an aggregate
amount equal to (1) if such Debt Issuance is made pursuant to Section 6.1(f),
fifty percent (50%) of the Net Cash Proceeds of such Debt Issuance; provided
that if such Debt Issuance is made in replacement of, or exchange for,
Subordinated Indebtedness permitted under Section 6.1(f) or all or substantially
all of the proceeds of such Debt Issuance are used to consummate a Permitted
Acquisition, then no prepayment shall be required, and (2) if such Debt Issuance
is any other Debt Issuance, one hundred percent (100%) of the Net Cash Proceeds
of such Debt Issuance (each such prepayment to be applied as set forth in
clause (vi) below), or (B) any Equity Issuance, the Borrower shall prepay the
Loans and/or cash collateralize the LOC Obligations in an aggregate amount equal
to fifty percent (50%) of the Net Cash Proceeds of such Equity Issuance (such
prepayment to be applied as set forth in clause (vi) below; provided that (1) if
such Equity Issuance is made in replacement of, or exchange for, Subordinated
Indebtedness permitted under Section 6.1(f) or all or substantially all of the
proceeds of such Equity Issuance are used to consummate a Permitted Acquisition
or (2) if the Consolidated Leverage Ratio of the Borrower is less than or equal
to 3.50 to 1.00 as of the most recently ended Fiscal Quarter, then no prepayment
shall be required.

 

(iv) Recovery Event. Promptly following the receipt of Cash proceeds from a
Recovery Event in excess of $5,000,000 in the aggregate (for all Recovery
Events) in any Fiscal Year, the Borrower shall prepay the Loans and/or cash
collateralize the LOC Obligations in an aggregate amount equal to such Net Cash
Proceeds (such prepayment to be applied as set forth in clause (vi) below);
provided, however, that, so long as no Default or Event of Default has occurred
and is continuing at the time of such Recovery Event, (A) the Borrower and its
Subsidiaries may retain Net Cash Proceeds consisting of business interruption
insurance proceeds and (B) any other Net Cash Proceeds shall not be required to
be so applied to the extent the Borrower delivers to the Administrative Agent a
certificate stating that the Borrower intends to use such Net Cash Proceeds to
repair, restore or replace the assets subject to the Recovery Event within
360 days of the receipt of such Net Cash Proceeds or, to the extent the Borrower
can demonstrate to the satisfaction of the Administrative Agent that the
Borrower is continuing to make good faith efforts to repair or replace the
damaged properties, such later date as approved by the Administrative Agent, it
being expressly agreed that any Net Cash Proceeds not so reinvested by the end
of the applicable period shall be applied to repay the Loans and/or cash
collateralize the LOC Obligations immediately thereafter.

 

(v) Excess Cash Flow. If the Consolidated Leverage Ratio is greater than 3.50 to
1.0 at the end of any Fiscal Year (commencing with the Fiscal Year ending
September 29, 2006), within 90 days after such Fiscal Year end, the Borrower
shall prepay the Loans and/or cash collateralize the LOC Obligations in an
amount equal to the lesser of (a) 50% of the Excess Cash Flow earned during such
Fiscal Year minus any voluntary prepayments of the Term Loan pursuant to
Section 2.8(a) made during such Fiscal Year or (b) the amount of prepayment
necessary to lower the Consolidated Leverage Ratio to 3.50 to 1.00, after giving
pro forma effect to such prepayment. Any payments of Excess Cash Flow shall be
applied as set forth in clause (vi) below.

 

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(vi) Application of Mandatory Prepayments. All amounts required to be paid
pursuant to this Section 2.8(b) shall be applied as follows: (A) with respect to
all amounts prepaid pursuant to Section 2.8(b)(i), to the Revolving Loans and
then (after all Revolving Loans have been repaid) to a Cash collateral account
in respect of LOC Obligations, (B) with respect to all amounts prepaid pursuant
to Sections 2.8(b)(ii) through (v), (1) first, pro rata to the Term Loan
(ratably to the remaining amortization payments relating thereto) and
(2) second, to the Revolving Loans without a corresponding reduction in the
Revolving Commitments and (after all Revolving Loans have been repaid) to the
Collateral Account in respect of LOC Obligations. Within the parameters of the
applications set forth above, prepayments shall be applied first to Alternate
Base Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period
maturities. All prepayments under this Section 2.8(b) shall be subject to
Section 2.18 and be accompanied by interest on the principal amount prepaid
through the date of prepayment. In the event any amount required to be paid
pursuant to this Section 2.8(b) is required to be applied to repay any LIBOR
Rate Loan on any day other than the last day of the applicable Interest Period,
so long as no Default or Event of Default has occurred and is continuing, the
Borrower may request that such repayment amounts not be applied to the
applicable LIBOR Rate Loan immediately, but rather be deposited in the
Collateral Account. The Administrative Agent shall apply all such deposited
amounts to repay the applicable LIBOR Rate Loans, in each case as of the last
day of their respective Interest Periods (or, at the direction of the Borrower,
at any earlier date) until the allocable amounts held in the Collateral Account
for payment of such LIBOR Rate Loans have been exhausted. Upon the occurrence of
a Default or an Event of Default, the Administrative Agent may, in its sole
discretion, immediately apply all amounts held in the Collateral Account for
payment of LIBOR Rate Loans to satisfy any of the Obligations.

 

(c) Hedging Obligations Unaffected. Any prepayment made pursuant to this
Section 2.8 shall not affect the Borrower’s obligation to continue to make
payments under any Hedging Agreement, which shall remain in full force and
effect notwithstanding such prepayment, subject to the terms of such Hedging
Agreement.

 

Section 2.9 Minimum Borrowing Amounts and Principal Amount of Tranches; Lending
Offices.

 

(a) Minimum Borrowing Amounts. Each Revolving Loan which is an Alternate Base
Rate Loan shall be in a minimum aggregate amount of $1,000,000 and in integral
multiples of $50,000 in excess thereof (or the remaining amount of the Revolving
Committed Amount, if less). Each Revolving Loan which is a LIBOR Rate Loan shall
be in a minimum aggregate amount of $2,000,000 and in integral multiples of
$100,000 in excess thereof. Each Term Loan which is an Alternate Base Rate Loan
shall be in a minimum aggregate amount of $1,000,000 and in integral multiples
of $50,000 in excess thereof. Each Term Loan which is a LIBOR Rate Loan shall be
in a minimum aggregate amount of $3,000,000 and in integral multiples of
$100,000 in excess thereof. Each Swingline Loan borrowing shall be in a minimum
aggregate amount of $50,000 and in integral amounts of $25,000 in excess
thereof.

 

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(b) Tranches. All borrowings, payments and prepayments in respect of Revolving
Loans and the Term Loan shall be in such amounts and be made pursuant to such
elections so that after giving effect thereto the aggregate principal amount of
the Revolving Loans and the Term Loan comprising any Tranche shall be (a) with
respect to Alternate Base Rate Loans, $1,000,000 or a whole multiple of $50,000
in excess thereof and (b) with respect to LIBOR Rate Loans, $2,000,000 or a
whole multiple of $100,000 in excess thereof.

 

(c) Lending Offices. LIBOR Rate Loans shall be made by each Lender at its LIBOR
Lending Office and Alternate Base Rate Loans at its Domestic Lending Office.

 

Section 2.10 Default Rate and Payment Dates.

 

Upon the occurrence and during the continuance of an Event of Default, at the
option of the Required Lenders, the principal of and, to the extent permitted by
law, interest on the Loans and any other amounts owing hereunder or under the
other Credit Documents shall bear interest, payable on demand, at a per annum
rate 2% greater than the rate which would otherwise be applicable (or if no rate
is applicable, whether in respect of interest, fees or other amounts, then the
Alternate Base Rate plus the Applicable Margin plus 2%).

 

Section 2.11 Conversion Options.

 

(a) The Borrower may, in the case of Revolving Loans and the Term Loan, elect
from time to time to convert Alternate Base Rate Loans to LIBOR Rate Loans, by
giving the Administrative Agent at least three Business Days’ prior irrevocable
written notice (which notice may be by fax) of such election. A form of Notice
of Conversion/ Extension is attached as Schedule 2.11. If the date upon which an
Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan is not a
Business Day, then such conversion shall be made on the next succeeding Business
Day and during the period from such last day of an Interest Period to such
succeeding Business Day such Loan shall bear interest as if it were an Alternate
Base Rate Loan. All or any part of outstanding Alternate Base Rate Loans may be
converted as provided herein; provided that (i) no Loan may be converted into a
LIBOR Rate Loan when any Default or Event of Default has occurred and is
continuing and (ii) partial conversions shall be in an aggregate principal
amount of $2,000,000 or a whole multiple of $100,000 in excess thereof, or in
any amount less than $2,000,000 which may represent the aggregate principal
amount of all outstanding LIBOR Rate Loans.

 

(b) Any LIBOR Rate Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
notice provisions contained in Section 2.11(a); provided, that no LIBOR Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, in which case such Loan shall be automatically converted to
an Alternate Base Rate Loan at the end of the applicable Interest Period with
respect thereto. If the Borrower shall fail to give timely notice of an election
to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not
permitted hereunder, such LIBOR Rate Loans shall be automatically converted to
Alternate Base Rate Loans at the end of the applicable Interest Period with
respect thereto.

 

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Section 2.12 Computation of Interest and Fees.

 

(a) Interest payable hereunder with respect to Alternate Base Rate Loans based
on the Prime Rate shall be calculated on the basis of a year of 365 days (or 366
days, as applicable) for the actual days elapsed. All other fees, interest and
all other amounts payable hereunder shall be calculated on the basis of a
360 day year for the actual days elapsed. The Administrative Agent shall as soon
as practicable notify the Borrower and the Lenders of each determination of a
LIBOR Rate on the Business Day of the determination thereof. Any change in the
interest rate on a Loan resulting from a change in the Alternate Base Rate shall
become effective as of the opening of business on the day on which such change
in the Alternate Base Rate shall become effective. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Credit Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the computations used by the Administrative Agent in determining any
interest rate.

 

(c) It is the intent of the Lenders and the Credit Parties to conform to and
contract in strict compliance with applicable usury law from time to time in
effect. All agreements between the Lenders and the Credit Parties are hereby
limited by the provisions of this paragraph which shall override and control all
such agreements, whether now existing or hereafter arising and whether written
or oral. In no way, nor in any event or contingency (including but not limited
to prepayment or acceleration of the maturity of any Obligation), shall the
interest taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount
permissible under applicable law. If, from any possible construction of any of
the Credit Documents or any other document, interest would otherwise be payable
in excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this paragraph and such interest shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which would,
apart from this provision, be in excess of the maximum nonusurious amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
the Loans and not to the payment of interest, or refunded to the Borrower or the
other payor thereof if and to the extent such amount which would have been
excessive exceeds such unpaid principal amount of the Loans. The right to demand
payment of the Loans or any other Indebtedness evidenced by any of the Credit
Documents does not include the right to receive any interest which has not
otherwise accrued on the date of such demand, and the Lenders do not intend to
charge or receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the Loans
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.

 

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Section 2.13 Pro Rata Treatment and Payments.

 

(a) Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Revolving
Commitment Percentages of the Revolving Lenders. Subject to the terms of this
Section 2.13(a) and to Section 2.13(b), each payment under this Credit Agreement
or any Note shall be applied, first, to any fees then due and owing by the
Borrower pursuant to Section 2.6, second, to interest then due and owing in
respect of the Credit Party Obligations of the Borrower, third, to principal
then due and owing hereunder and under the Credit Party Obligations of the
Borrower and, fourth, to all amounts then due and owing in respect of the Credit
Party Obligations. Each payment on account of any fees pursuant to Section 2.6
shall be made pro rata in accordance with the respective amounts due and owing
(except as to the portion of the Letter of Credit retained by the Issuing Lender
and the Issuing Lender Fees). Each payment (other than prepayments) by the
Borrower on account of principal of and interest on the Revolving Loans and on
the Term Loan shall be made pro rata to the Lenders according to the respective
amounts due and owing. Prepayments made pursuant to Section 2.16 shall be
applied in accordance with such Section. Each mandatory prepayment on account of
principal of the Loans shall be applied in accordance with Section 2.8(b). All
payments (including prepayments) to be made by the Borrower on account of
principal, interest, fees and other amounts shall be made without defense,
set-off or counterclaim (except as provided in Section 2.19(b)) and shall be
made to the Administrative Agent for the account of the Lenders at the
Administrative Agent’s office on record with the Borrower in Dollars and in
immediately available funds not later than 12:00 Noon on the date when due. The
Administrative Agent shall distribute such payments to the Lenders entitled
thereto promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Rate Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.

 

(b) Allocation of Payments After Exercise of Remedies. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after the exercise of
remedies (other than the invocation of default interest pursuant to
Section 2.10) by the Administrative Agent or the Lenders pursuant to Section 7.2
(or after the Commitments shall automatically terminate and the Loans (with
accrued interest thereon) and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall automatically become due and payable in
accordance with the terms of such Section), all amounts collected or received by
the Administrative Agent or any Lender on account of the Credit Party
Obligations or any other amounts outstanding under any of the Credit Documents
or in respect of the Collateral shall be paid over or delivered as follows:

 

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FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys’ and consultants’ fees) of
the Administrative Agent in connection with enforcing the rights of the Lenders
under the Credit Documents and any protective advances made by the
Administrative Agent with respect to the Collateral under or pursuant to the
terms of the Security Documents;

 

SECOND, to payment of any fees owed to the Administrative Agent in its capacity
as such;

 

THIRD, to the payment of all reasonable and documented out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys’ and consultants’
fees) of each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party Obligations owing
to such Lender;

 

FOURTH, to the payment of all of the Credit Party Obligations consisting of
accrued fees and interest, and including with respect to any Secured Hedging
Agreement, any fees, premiums and scheduled periodic payments due under such
Secured Hedging Agreement and any interest accrued thereon;

 

FIFTH, to the payment of the outstanding principal amount of the Credit Party
Obligations and the payment or cash collateralization of the outstanding LOC
Obligations, and including with respect to any Secured Hedging Agreement, any
breakage, termination or other payments due under such Secured Hedging Agreement
and any interest accrued thereon;

 

SIXTH, to all other Credit Party Obligations and other obligations which shall
have become due and payable under the Credit Documents or otherwise and not
repaid pursuant to clauses “FIRST” through “FIFTH” above;

 

SEVENTH, the payment of the surplus to whomever may be lawfully entitled to
receive such surplus.

 

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans and
LOC Obligations held by such Lender bears to the aggregate then outstanding
Loans and LOC Obligations) of amounts available to be applied pursuant to
clauses ”THIRD”, “FOURTH”, “FIFTH,” and “SIXTH” above; and (iii) to the extent
that any amounts available for distribution pursuant to clause ”FIFTH” above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Administrative Agent in the Collateral Account
and applied (A) first, to reimburse the Issuing Lender from time to time for any
drawings under such Letters of Credit and (B) then, following the expiration of
all Letters of Credit, to all other obligations of the types described in
clauses ”FIFTH,” and “SIXTH” above, and thereafter pursuant to clause “SEVENTH,”
in the manner provided in this Section 2.13(b). Notwithstanding the foregoing
terms of this Section 2.13(b), only Collateral proceeds and payments under the
Guaranty with respect to Secured Hedging Agreements shall be applied to
obligations under any Secured Hedging Agreement.

 

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Section 2.14 Non-Receipt of Funds by the Administrative Agent.

 

(a) Unless the Administrative Agent shall have been notified in writing by a
Lender prior to the date and time a Loan is to be made by such Lender (which
notice shall be effective upon receipt) that such Lender does not intend to make
the proceeds of such Loan available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such proceeds
available to the Administrative Agent on such date, and the Administrative Agent
may in reliance upon such assumption (but shall not be required to) make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Administrative Agent, the Administrative
Agent shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, in accordance with the terms hereof, the
Administrative Agent will promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from the Lender or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for the applicable borrowing pursuant to the
Notice of Borrowing and (ii) from a Lender at the Federal Funds Effective Rate.

 

(b) Unless the Administrative Agent shall have been notified in writing by the
Borrower, prior to the date on which any payment is due from it hereunder (which
notice shall be effective upon receipt) that the Borrower does not intend to
make such payment, the Administrative Agent may assume that the Borrower has
made such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to each Lender on
such payment date an amount equal to the portion of such assumed payment to
which such Lender is entitled hereunder, and if the Borrower has not in fact
made such payment to the Administrative Agent, such Lender shall, on demand,
repay to the Administrative Agent the amount made available to such Lender. If
such amount is repaid to the Administrative Agent on a date after the date such
amount was made available to such Lender, such Lender shall pay to the
Administrative Agent on demand interest on such amount in respect of each day
from the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is recovered by the Administrative Agent at a per
annum rate equal to the Federal Funds Effective Rate.

 

(c) A certificate of the Administrative Agent submitted to the Borrower or any
Lender with respect to any amount owing under this Section 2.14 shall be
conclusive in the absence of manifest error. The Administrative Agent shall, at
the request of the Borrower, deliver to the Borrower a statement showing the
computations used by the Administrative Agent in determining any interest rate.

 

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Section 2.15 Inability to Determine Interest Rate.

 

Notwithstanding any other provision of this Credit Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Required Lenders shall
reasonably determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Rate does not adequately and fairly reflect the
cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested
be outstanding as a LIBOR Tranche during such Interest Period, the
Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrower, and the Lenders at least
two Business Days prior to the first day of such Interest Period. Unless the
Borrower shall have notified the Administrative Agent upon receipt of such
telephone notice that they wish to rescind or modify their request regarding
such LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate
Loans shall be made as Alternate Base Rate Loans and any Loans that were
requested to be converted into or continued as LIBOR Rate Loans shall remain as
or be converted into Alternate Base Rate Loans. Until any such notice has been
withdrawn by the Administrative Agent, no further Loans shall be made as,
continued as, or converted into, LIBOR Rate Loans for the Interest Periods so
affected.

 

Section 2.16 Illegality.

 

Notwithstanding any other provision of this Credit Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof by the relevant Governmental Authority to any Lender shall make it
unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans as contemplated by this Credit Agreement or to obtain in the
interbank eurodollar market through its LIBOR Lending Office the funds with
which to make such Loans, (a) such Lender shall promptly notify the
Administrative Agent and the Borrower thereof, (b) the commitment of such Lender
hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall
forthwith be suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer exist,
and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans, if any, shall
be converted on the last day of the Interest Period for such Loans or within
such earlier period as required by law as Alternate Base Rate Loans. The
Borrower hereby agrees to promptly pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
in making any repayment in accordance with this Section including, but not
limited to, any interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate (which certificate shall include a description of the basis for the
computation) as to any additional amounts payable pursuant to this
Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material.

 

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Section 2.17 Requirements of Law.

 

(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

 

(i) shall subject such Lender to any tax of any kind whatsoever with respect to
any Letter of Credit or any application relating thereto, any LIBOR Rate Loan
made by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for tax on or determined by reference to the overall net
income or profits of such Lender and changes in the rate of such tax);

 

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender which
is not otherwise included in the determination of the LIBOR Rate hereunder; or

 

(iii) shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining LIBOR Rate Loans or the Letters of Credit or to reduce any
amount receivable hereunder or under any Note, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced amount
receivable which such Lender reasonably deems to be material as determined by
such Lender with respect to its LIBOR Rate Loans or Letters of Credit. A
certificate (which certificate shall include a description of the basis for the
computation) as to any additional amounts payable pursuant to this
Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
Domestic Lending Office or LIBOR Lending Office, as the case may be) to avoid or
to minimize any amounts which might otherwise be payable pursuant to this
Section; provided, however, that such efforts shall not cause the imposition on
such Lender of any additional costs or legal or regulatory burdens deemed by
such Lender to be material.

 

(b) If any Lender shall have reasonably determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender’s or such corporation’s
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such

 

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corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender’s or such corporation’s policies with
respect to capital adequacy) by an amount reasonably deemed by such Lender to be
material, then from time to time, within fifteen (15) days after demand by such
Lender, the Borrower shall pay to such Lender such additional amount as shall be
certified by such Lender as being required to compensate it for such reduction.
Such a certificate as to any additional amounts payable under this
Section submitted by a Lender (which certificate shall include a description of
the basis for the computation), through the Administrative Agent, to the
Borrower shall be conclusive absent manifest error.

 

(c) The agreements in this Section 2.17 shall survive the termination of this
Credit Agreement and payment of the Notes and all other amounts payable
hereunder.

 

Section 2.18 Indemnity.

 

The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Loan by such Lender in accordance with the terms
hereof, (b) default by the Borrower in accepting a borrowing after the Borrower
has given a notice in accordance with the terms hereof, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section (which certificate shall include a description of the basis for the
computation) submitted by any Lender, through the Administrative Agent, to the
Borrower (which certificate must be delivered to the Administrative Agent within
thirty days following such default, prepayment or conversion) shall be
conclusive in the absence of manifest error. The agreements in this
Section shall survive termination of this Credit Agreement and payment of the
Notes and all other amounts payable hereunder.

 

Section 2.19 Taxes.

 

(a) All payments made by the Borrower hereunder or under any Note shall be,
except as provided in Section 2.19(b), made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any Governmental Authority or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding any
tax imposed on or measured by the net income or profits of a Lender pursuant to
the laws of (i) the jurisdiction in which it is organized, (ii) the jurisdiction
in which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein or (iii) a jurisdiction in which a
Lender is deemed to be doing business and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
“Taxes”). If any Taxes are so

 

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levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Credit Agreement or under any Note, after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such Note. The Borrower will furnish to the
Administrative Agent as soon as practicable after the date the payment of any
Taxes is due pursuant to applicable law certified copies (to the extent
reasonably available and required by law) of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.

 

(b) Each Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the
Administrative Agent on or prior to the Closing Date, or in the case of a Lender
that is an assignee or transferee of an interest under this Credit Agreement
pursuant to Section 9.6(d) (unless the respective Lender was already a Lender
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) if the Lender is a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, two accurate and complete original
signed copies of Internal Revenue Service Form W-8BEN or W-8ECI (or successor
forms) certifying such Lender’s entitlement to a complete exemption from United
States withholding tax with respect to payments to be made under this Credit
Agreement and under any Note, or (ii) if the Lender is not a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, either Internal Revenue Service
Form W-8BEN or W-8ECI as set forth in clause (i) above, or (x) a certificate
substantially in the form of Schedule 2.19 (any such certificate, a “2.19
Certificate”) and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying such Lender’s
entitlement to an exemption from United States withholding tax with respect to
payments of interest to be made under this Credit Agreement and under any Note.
In addition, each Lender agrees that it will deliver upon the Borrower’s request
updated versions of the foregoing, as applicable, whenever the previous
certification has become obsolete or inaccurate in any material respect,
together with such other forms as may be required in order to confirm or
establish the entitlement of such Lender to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Credit Agreement and any Note. Notwithstanding anything to the contrary
contained in Section 2.19(a), but subject to the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold Taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Lender which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes to the extent that such Lender
has not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.19(a) hereof to gross-up
payments to be made to a Lender in respect of Taxes imposed by the United States
if (I) such Lender has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 2.19(b)
or (II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such Taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 2.19,
the Borrower agrees to pay

 

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additional amounts and to indemnify each Lender in the manner set forth in
Section 2.19(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld by
it as described in the immediately preceding sentence as a result of any changes
after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of Taxes.

 

(c) Each Lender agrees to use reasonable efforts (including reasonable efforts
to change its Domestic Lending Office or LIBOR Lending Office, as the case may
be) to avoid or to minimize any amounts which might otherwise be payable
pursuant to this Section; provided, however, that such efforts shall not cause
the imposition on such Lender of any additional costs or legal or regulatory
burdens deemed by such Lender in its sole discretion to be material.

 

(d) If the Borrower pays any additional amount pursuant to this Section 2.19
with respect to a Lender, such Lender shall use reasonable efforts to obtain a
refund of tax or credit against its tax liabilities on account of such payment;
provided that such Lender shall have no obligation to use such reasonable
efforts if either (i) it is in an excess foreign tax credit position or (ii) it
believes in good faith, in its sole discretion, that claiming a refund or credit
would cause adverse tax consequences to it. In the event that such Lender
receives such a refund or credit, such Lender shall pay to the Borrower an
amount that such Lender reasonably determines is equal to the net tax benefit
obtained by such Lender as a result of such payment by the Borrower. In the
event that no refund or credit is obtained with respect to the Borrower’s
payments to such Lender pursuant to this Section 2.19, then such Lender shall
upon request provide a certification that such Lender has not received a refund
or credit for such payments. Nothing contained in this Section 2.19(d) shall
require a Lender to disclose or detail the basis of its calculation of the
amount of any tax benefit or any other amount or the basis of its determination
referred to in the proviso to the first sentence of this Section 2.19(d) to the
Borrower or any other party.

 

(e) The agreements in this Section 2.19 shall survive the termination of this
Credit Agreement and the payment of the Notes and all other amounts payable
hereunder.

 

Section 2.20 Indemnification; Nature of Issuing Lender’s Duties.

 

(a) In addition to its other obligations under Section 2.4, the Borrower hereby
agrees to protect, indemnify, pay and save each Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) that the Issuing
Lender may incur or be subject to as a consequence, direct or indirect, of
(i) the issuance of any Letter of Credit or (ii) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions, herein
called “Government Acts”).

 

(b) As between the Borrower and the Issuing Lender, the Borrower shall assume
all risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the

 

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application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply fully with conditions required in
order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under a Letter of Credit or of the proceeds thereof; and (vii) for any
consequences arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the Issuing Lender’s rights or powers
hereunder.

 

(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put the Issuing
Lender under any resulting liability to the Borrower. It is the intention of the
parties that this Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in the issuance
of the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any Government Authority. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.

 

(d) Nothing in this Section 2.20 is intended to limit the reimbursement
obligation of the Borrower contained in Section 2.4(d) hereof. The obligations
of the Borrower under this Section 2.20 shall survive the termination of this
Credit Agreement. No act or omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the Issuing
Lender to enforce any right, power or benefit under this Credit Agreement.

 

(e) Notwithstanding anything to the contrary contained in this Section 2.20, the
Borrower shall have no obligation to indemnify the Issuing Lender in respect of
any liability incurred by the Issuing Lender arising out of, and the Borrower
shall retain all rights it may have against the Issuing Lender by reason of, the
gross negligence or willful misconduct of the Issuing Lender (including action
not taken by the Issuing Lender), as determined by a court of competent
jurisdiction.

 

Section 2.21 Replacement of Lenders.

 

The Borrower shall be permitted to replace with a financial institution
acceptable to the Administrative Agent any Lender (other than Wachovia) that
(a) requests reimbursement for amounts owing pursuant to Section 2.16, 2.17 or
2.19(a), or (b) is then in default of its obligation to make Loans hereunder;
provided that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time

 

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of such replacement, (iii) prior to any such replacement, such Lender shall have
taken no action under Section 2.16, 2.17 or 2.19(a), as applicable, so as to
eliminate the continued need for payment of amounts owing pursuant to
Section 2.16, 2.17 or 2.19(a), as applicable, so as to eliminate the continued
need for payment of amounts owing pursuant to Section 2.16, 2.17 or 2.19(a),
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such Lender under Section 2.17
if any LIBOR Rate Loan owing to such replaced Lender shall be purchased other
than on the last day of the Interest Period relating thereto, (vi) the
replacement financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of
Section 9.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.16, 2.17 or 2.19(a), as the case
may be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender. In the event the replaced Lender fails to
execute the agreements required under Section 9.6 in connection with any
assignment pursuant to this Section 2.21, the Borrower may, upon two
(2) Business Days prior notice to such replaced Lender, execute such agreements
on behalf of such replaced Lender. A Lender shall not be required to be replaced
if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such replacement cease to apply.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to enter into this Credit Agreement and to make the
Extensions of Credit herein provided for, the Credit Parties hereby represent
and warrant to the Administrative Agent and to each Lender that:

 

Section 3.1 Organization; Qualification; Good Standing; Subsidiaries; Etc.

 

(a) Organization and Powers. Each Credit Party is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization as
specified in Schedule 3.1-1 annexed hereto. Each Credit Party has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Credit
Documents and Related Agreements to which it is a party and to carry out the
transactions contemplated thereby.

 

(b) Qualification and Good Standing. Each Credit Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.

 

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(c) Conduct of Business. The Borrower and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to Section 6.12.

 

(d) Subsidiaries. All of the Subsidiaries of the Borrower as of the Closing Date
are identified in Schedule 3.1-2 annexed hereto, as such Schedule 3.1-2 may be
supplemented from time to time pursuant to the provisions of Section 5.1(o). The
Capital Stock of each of the Subsidiaries of the Borrower identified in
Schedule 3.1-2 annexed hereto is duly authorized, validly issued, fully paid and
nonassessable and none of such Capital Stock constitutes Margin Stock. Each of
the Subsidiaries of the Borrower identified in Schedule 3.1-2 annexed hereto is
a corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation or organization set forth therein, has all requisite power and
authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, and is qualified to do business and
in good standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such power and
authority has not had and will not have a Material Adverse Effect.
Schedule 3.1-2 annexed hereto correctly sets forth for the Borrower and each of
its Subsidiaries (i) the ownership interest of the Borrower and each of its
Subsidiaries in each of the Subsidiaries of the Borrower identified therein and
(ii) the number of issued and outstanding shares of Capital Stock of each such
Subsidiary and the owners thereof.

 

Section 3.2 Authorization of Borrowing, Etc.

 

(a) Authorization of Borrowing. The execution, delivery and performance of the
Credit Documents and the Related Agreements have been duly authorized by all
necessary corporate, limited liability company or partnership action on the part
of each Credit Party that is a party thereto.

 

(b) No Conflict. The execution, delivery and performance by the Credit Parties
of the Credit Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Credit Documents and
such Related Agreements do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to the Borrower or any of its
Subsidiaries, the Certificate or Articles of Incorporation or the Bylaws of the
Borrower or any of its Subsidiaries or any order, judgment or decree of any
Governmental Authority binding on the Borrower or any of its Subsidiaries,
(ii) except as set forth in Schedule 3.2(b), conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of the Borrower or any of its Subsidiaries, (iii) result
in or require the creation or imposition of any Lien upon any of the properties
or assets of the Borrower or any of its Subsidiaries (other than any Liens
created under any of the Credit Documents in favor of the Administrative Agent
on behalf of the Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of the
Borrower or any of its Subsidiaries, except for such approvals or consents which
will be obtained on or before the Closing Date and disclosed on Schedule 3.2(b).

 

(c) Governmental Consents. The execution, delivery and performance by Credit
Parties of the Credit Documents and the Related Agreements to which they are
parties and the

 

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consummation of the transactions contemplated by the Credit Documents and such
Related Agreements do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Governmental
Authority except for (i) filings and recordings required to create or protect
the Liens contemplated by the Security Documents and (ii) filings required under
the federal securities laws disclosing this Agreement and the transactions
contemplated hereby.

 

(d) Binding Obligation. Each of the Credit Documents and Related Agreements has
been duly executed and delivered by each Credit Party that is a party thereto
and is the legally valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability.

 

(e) Valid Issuance of Borrower’s Capital Stock, Senior Subordinated Notes and
Senior Subordinated Convertible Notes.

 

(i) Borrower’s Capital Stock. The Capital Stock of the Borrower is duly and
validly issued, fully paid and nonassessable. No stockholder of the Borrower has
or will have any preemptive rights to subscribe for any additional Capital Stock
of the Borrower. The issuance and sale of the outstanding Capital Stock of the
Borrower either (A) has been registered or qualified under applicable federal
and state securities laws or (B) is exempt therefrom.

 

(ii) Senior Subordinated Notes. The Borrower had the corporate power and
authority to issue the Senior Subordinated Notes at the time they were issued.
The Senior Subordinated Notes are the legally valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability. The
subordination provisions of the Senior Subordinated Notes are enforceable
against the holders thereof and the Loans and all other monetary Credit Party
Obligations are within the definition of “Senior Indebtedness” included in such
provisions. The Senior Subordinated Notes either (A) have been registered or
qualified under applicable federal and state securities laws or (B) are exempt
therefrom.

 

(iii) Senior Subordinated Convertible Notes. The Borrower had the corporate
power and authority to issue the Senior Subordinated Convertible Notes at the
time they were issued. The Senior Subordinated Convertible Notes are the legally
valid and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles relating to
enforceability. The subordination provisions of the Senior Subordinated
Convertible Notes are enforceable against the holders thereof and the Loans and
all other monetary Credit Party Obligations are within the definition of “Senior
Indebtedness” included in such provisions. The Senior Subordinated Convertible
Notes either (A) have been registered or qualified under applicable federal and
state securities laws or (B) are exempt therefrom.

 

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Section 3.3 Financial Condition.

 

The Borrower has heretofore delivered to the Lenders, at the Lenders’ request,
the following financial statements and information: (a) audited financial
statements of the Borrower and its Subsidiaries for the Fiscal Years 2003, 2004
and 2005, consisting of balance sheets and the related consolidated and
consolidating statements of income, stockholders’ equity and cash flows for each
such period, (b) a pro forma balance sheet of the Borrower and its Subsidiaries
as of September 29, 2005 and (c) five-year projections for the Borrower and its
Subsidiaries, all in reasonable detail, in form and substance satisfactory to
the Administrative Agent and certified by the chief financial officer of the
Borrower that (i) with respect to the audited financial statements, the results
of their operations and their cash flows for the periods indicated fairly
present the financial condition of the Borrower and its Subsidiaries as at the
dates indicated and (ii) with respect to the pro forma balance sheet and the
projections were prepared in good faith based upon, to the best of such
officer’s knowledge, reasonable assumptions. None of the Borrower nor any of its
Subsidiaries has (and will not have following the Closing Date) any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any such case is material
and adverse in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole.

 

Section 3.4 No Material Adverse Change; No Restricted Junior Payments.

 

Since September 29, 2005, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by Section 6.6.

 

Section 3.5 Title to Properties; Collateral Locations.

 

(a) Title to Properties; Liens. The Borrower and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in Section 3.3 or in the most recent financial
statements delivered pursuant to Section 5.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under Section 6.7. Except as permitted by
this Agreement, all such properties and assets are free and clear of Liens.

 

(b) Real Property. As of the Closing Date, Schedule 3.5(b) annexed hereto
contains a true, accurate and complete list of (i) all fee properties and
(ii) all leases, subleases or

 

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assignments of leases (together with all amendments, modifications, supplements,
renewals or extensions of any thereof) affecting each Real Property Asset of any
Credit Party, regardless of whether such Credit Party is the landlord or tenant
(whether directly or as an assignee or successor in interest) under such lease,
sublease or assignment. Except as specified in Schedule 3.5(b) annexed hereto,
each agreement listed in clause (ii) of the immediately preceding sentence is in
full force and effect and the Credit Parties do not have knowledge of any
default that has occurred and is continuing thereunder which, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect, and each such agreement constitutes the legally valid and binding
obligation of each applicable Credit Party, enforceable against such Credit
Party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles.

 

(c) Location of Collateral. Set forth in Schedule 3.5(c) is (i) a list of all
locations where any tangible personal property of the Borrower and its
Subsidiaries is located and (ii) the chief executive office and principal place
of business of the Borrower and its Subsidiaries as of the Closing Date.

 

Section 3.6 Litigation; Adverse Facts.

 

There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of the Borrower or any of
its Subsidiaries) at law or in equity, or before or by any Governmental
Authority, domestic or foreign (including any Environmental Claims) that are
pending or, to the knowledge of the Credit Parties, threatened against or
affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries and that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries (a) is in violation of any applicable laws
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any other Governmental Authority,
domestic or foreign, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.

 

Section 3.7 Taxes.

 

Except to the extent permitted by Section 5.3, all tax returns and reports of
the Borrower and its Subsidiaries required to be filed by any of them have been
timely filed, and all taxes shown on such tax returns to be due and payable and
all assessments, fees and other governmental charges upon the Borrower and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid prior to delinquency.
Except as set forth in Schedule 3.7, the Credit Parties know of no proposed tax
assessment against the Borrower or any of its Subsidiaries which is not being
actively contested by the Borrower or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

 

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Section 3.8 Contractual Obligations; Restrictive Agreements; Material Contracts.

 

(a) Neither the Borrower nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.

 

(b) Neither the Borrower nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.

 

(c) All Material Contracts are in full force and effect and no material defaults
currently exist thereunder.

 

Section 3.9 Governmental Regulation.

 

Neither the Borrower nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Credit
Party Obligations unenforceable.

 

Section 3.10 Securities Activities.

 

(a) Neither the Borrower nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.

 

(b) No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Borrower
and its Subsidiaries taken as a group do not own Margin Stock except as
identified in the financial statements referred to in Section 3.3 and
Section 5.1 and the aggregate value of all Margin Stock owned by the Borrower
and its Subsidiaries taken as a group does not exceed 25% of the value of their
assets.

 

Section 3.11 Employee Benefit Plans.

 

(a) The Borrower, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and the regulations and published interpretations thereunder with respect
to each Employee Benefit Plan, and have performed all their obligations under
each Employee Benefit Plan. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Code is so qualified.

 

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(b) No ERISA Event has occurred or is reasonably expected to occur.

 

(c) Except to the extent required under Section 4980B of the Code or except as
set forth in Schedule 3.11 annexed hereto, no Employee Benefit Plan provides
health or welfare benefits (through the purchase of insurance or otherwise) for
any retired or former employee of the Borrower, any of its Subsidiaries or any
of their respective ERISA Affiliates.

 

(d) As of the most recent valuation date for any Pension Plan, the amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $1,000,000.

 

(e) As of the most recent valuation date for each Multiemployer Plan for which
the actuarial report is available, the potential liability of the Borrower, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $1,000,000.

 

(f) No “accumulated funding deficiency” (within the meaning of Section 412 of
the Code or Section 302 of ERISA) of $1,000,000 or more has occurred or is
reasonably expected to occur.

 

Section 3.12 Broker’s Fees.

 

No broker’s or finder’s fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby, and the Borrower
hereby indemnifies the Lenders against, and agrees that it will hold the Lenders
harmless from, any claim, demand or liability for any such broker’s or finder’s
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.

 

Section 3.13 Environmental Protection.

 

Except as set forth in Schedule 3.13 annexed hereto:

 

(a) neither the Borrower nor any of its Subsidiaries nor any of their respective
Facilities or operations are subject to any outstanding written order, consent
decree or settlement agreement with any Person relating to (i) any Environmental
Law, (ii) any Environmental Claim, or (iii) any Hazardous Materials Activity
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;

 

(b) neither the Borrower nor any of its Subsidiaries has received any letter or
request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable
state law;

 

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(c) there are and, to the Credit Parties’ knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against the Borrower or any
of its Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;

 

(d) each of the Borrower and its Subsidiaries maintains an environmental
management system for its and each of its Subsidiaries’ operations that
demonstrates a commitment to material environmental compliance and includes
procedures for (i) preparing and updating written compliance manuals covering
pertinent regulatory areas, (ii) tracking changes in applicable Environmental
Laws and modifying operations to comply with new requirements thereunder,
(iii) training employees to comply with applicable environmental requirements
and updating such training as necessary, (iv) performing regular internal
compliance audits of each Facility and ensuring correction of any incidents of
non-compliance detected by means of such audits, and (v) reviewing the
compliance status of off-site waste disposal facilities;

 

(e) compliance with all current or reasonably foreseeable future requirements
pursuant to or under Environmental Laws will not, individually or in the
aggregate, have a reasonable possibility of giving rise to a Material Adverse
Effect.

 

Notwithstanding anything in this Section to the contrary, no event or condition
has occurred or is occurring with respect to the Borrower or any of its
Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 3.13 annexed hereto, which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.

 

Section 3.14 Employee Matters.

 

There are no collective bargaining agreements or Multiemployer Plans covering
the employees of the Borrower or any of its Subsidiaries as of the Closing Date
and none of the Borrower or any of their Subsidiaries (a) has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years or (b) has knowledge of any potential or pending strike, walkout
or work stoppage.

 

Section 3.15 Solvency.

 

Each Credit Party is and, upon the incurrence of any Credit Party Obligations by
such Credit Party on any date on which this representation is made, will be,
Solvent.

 

Section 3.16 Matters Relating to Collateral.

 

(a) Creation, Perfection and Priority of Liens. Subject to Sections 5.10 and
5.11, the execution and delivery of the Security Documents by the Credit
Parties, together with (i) the actions taken on or prior to the date hereof
pursuant to Sections 4.1(d), 4.1(e), 5.10 and 5.11 and the filing of any Uniform
Commercial Code financing statements and PTO filings delivered to the
Administrative Agent for filing (but not yet filed) and the recording of any
Mortgages or

 

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amendments to Mortgages delivered to the Administrative Agent for recording (but
not yet recorded), and (ii) the delivery to the Administrative Agent of any
Pledged Collateral will be, upon the due and proper completion of such filings
and recordings, effective to create or to continue in favor of the
Administrative Agent for the benefit of the Lenders, as security for the Credit
Party Obligations, a valid and perfected First Priority Lien on all of the
Collateral, subject to the periodic filing of Uniform Commercial Code
continuation statements in respect of Uniform Commercial Code financing
statements filed by or on behalf of the Administrative Agent.

 

(b) Governmental Authorizations. No authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority is required for
either (i) the pledge or grant by any Credit Party of the Liens purported to be
created in favor of the Administrative Agent pursuant to any of the Security
Documents or (ii) the exercise by the Administrative Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
pursuant to any of the Security Documents or created or provided for by
applicable law), except for filings or recordings contemplated by
Section 3.16(a) and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities.

 

(c) Absence of Third-Party Filings. Except such as may have been filed in favor
of the Administrative Agent as contemplated by Section 3.16(a) or except as such
may constitute Permitted Encumbrances, (i) no effective Uniform Commercial Code
financing statement, fixture filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office and (ii) no effective filing covering all or any part of the Intellectual
Property is on file in the PTO.

 

(d) Margin Regulations. The pledge of the Pledged Collateral pursuant to the
Pledge Agreement does not violate Regulation T, U or X of the Board of Governors
of the Federal Reserve System.

 

(e) Information Regarding Collateral. All information supplied to the
Administrative Agent by or on behalf of any Credit Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.

 

Section 3.17 Related Agreements.

 

The Borrower has delivered to the Administrative Agent complete and correct
copies of each Related Agreement and of all exhibits and schedules thereto.
Schedule 3.17 annexed hereto lists all Affiliate Agreements as of the Closing
Date. Except as set forth in Schedule 3.17 annexed hereto, none of the Related
Agreements have been amended, amended and restated, supplemented, restated or
otherwise modified on or before the Closing Date since the date any such Related
Agreement was first entered into.

 

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Section 3.18 Disclosure.

 

No representation or warranty (except with respect to projections and pro forma
financial information that are covered in the next sentence) of the Borrower or
any of its Subsidiaries contained in any Credit Document or Related Agreement or
in any other document, certificate or written statement furnished to the Lenders
by or on behalf of the Borrower or any of its Subsidiaries for use in connection
with the transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact (known to the
Borrower or any of its Subsidiaries, in the case of any document not furnished
by the Borrower and its Subsidiaries) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Borrower to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to the Credit
Parties (other than matters of a general economic nature) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and that have not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in connection with
the transactions contemplated hereby.

 

Section 3.19 Permits.

 

Each of the Credit Parties, prior to and after giving effect to the transactions
contemplated by the Credit Documents and the Related Agreements, has such
certificates, permits, licenses, franchises, consents, approvals, authorizations
and clearances that are material to the condition (financial or otherwise),
business or operations of any Credit Party (“Permits”) and is (and will be
immediately after the consummation of such transactions) in compliance in all
respects with all applicable laws as are necessary to own, lease or operate its
properties and to conduct its businesses in the manner as presently conducted
and to be conducted immediately after the consummation of such transactions
except where failure to be in compliance could not reasonably be expected to
result in a Material Adverse Effect, and all such Permits are valid and in full
force and effect and will be valid and in full force and effect immediately upon
consummation of such transactions except for those where the failure to be valid
or in effect could not reasonably be expected to result in a Material Adverse
Effect. Each of the Credit Parties, prior to and after giving effect to such
transactions, is and will be in compliance in all respects with its obligations
under such Permits except where failure to be in compliance could not reasonably
be expected to result in a Material Adverse Effect, and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination of such Permits except where such revocation or termination could
not reasonably be expected to result in a Material Adverse Effect.

 

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Section 3.20 Indebtedness.

 

Except as otherwise permitted under Section 6.1 and Section 6.4, the Borrower
and its Subsidiaries have no Indebtedness.

 

Section 3.21 Intellectual Property.

 

Each of the Borrower and its Subsidiaries owns, or has the legal right to use,
all trademarks, tradenames, copyrights, technology, know-how, processes and
other intellectual property necessary for each of them to conduct its business
as currently conducted. Set forth on Schedule 3.21 is a list of all Intellectual
Property owned by the Borrower and its Subsidiaries. Except as provided on
Schedule 3.21, no claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property of the Borrower
and its Subsidiaries or the validity or effectiveness of any such Intellectual
Property, nor do the Borrower or any of its Subsidiaries know of any such claim,
and, to the knowledge of the Borrower and its Subsidiaries, the use of such
Intellectual Property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that in the aggregate, could not reasonably be expected to have a Material
Adverse Effect. Schedule 3.21 may be updated from time to time by the Borrower
to include new Intellectual Property by giving written notice thereof to the
Administrative Agent.

 

Section 3.22 Investments.

 

All Investments of each of the Borrower and its Subsidiaries are Permitted
Investments.

 

Section 3.23 Insurance.

 

The present insurance coverage of the Credit Parties and their Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 3.23 and such insurance coverage complies the requirements set forth in
Section 5.4(b).

 

Section 3.24 Anti-Terrorism Laws.

 

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act
of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended.
Neither any Credit Party nor any or its Subsidiaries is in violation of (a) the
Trading with the Enemy Act, as amended, (b) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto or (c) the Patriot Act (as defined in Section 9.18). None of the Credit
Parties (i) is a blocked person described in section 1 of the Anti-Terrorism
Order or (ii) to the best of its knowledge, engages in any dealings or
transactions, or is otherwise associated, with any such blocked person.

 

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Section 3.25 Compliance with OFAC Rules and Regulations.

 

None of the Credit Parties or their Subsidiaries or their respective Affiliates
(i) is a Sanctioned Person, (ii) has more than 15% of its assets in Sanctioned
Countries, or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries.
No part of the proceeds of any Extension of Credit hereunder will be used
directly or indirectly to fund any operations in, finance any investments or
activities in or make any payments to, a Sanctioned Person or a Sanctioned
Country.

 

Section 3.26 VoiceStream Wireless.

 

The Uniform Commercial Code financing statements referenced in Schedule 6.2
naming a Credit Party as debtor and Voicestream Wireless Corp. as secured party
relate to amounts currently in dispute by Voicestream Wireless Corp. and the
Credit Parties. All amounts owed to Voicestream Wireless Corp. relating to such
financing statements will not exceed $50,000 at any time.

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

Section 4.1 Conditions to Closing Date and Initial Loans.

 

This Credit Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans and the Term Loan on the Closing Date
is subject to, the satisfaction of the following conditions precedent:

 

(a) Execution of Agreement. The Administrative Agent shall have received
(i) counterparts of this Credit Agreement for the Credit Parties, the
Administrative Agent and each Lender, (ii) for the account of each Revolving
Lender and Term Loan Lender, a Revolving Note and Term Note, as applicable,
(iii) for the account of the Swingline Lender, the Swingline Note, and
(iv) counterparts of the Security Agreement, the Pledge Agreement, each Mortgage
to be entered into as of the Closing Date and each other Security Document, in
each case conforming to the requirements of this Credit Agreement and executed
by a duly authorized officer of each party thereto

 

(b) Authority Documents. The Administrative Agent shall have received the
following, together with a secretary’s certificate in substantially the form of
Schedule 4.1-1 annexed hereto:

 

(i) Certificates of Incorporation; Charter Documents. Copies of the certificates
of incorporation or other charter documents, as applicable, of each Credit Party
certified to be true and complete as of a recent date by the appropriate
governmental authority of the state of its incorporation and by a secretary or
assistant secretary of such Credit Party as of the Closing Date to be true and
correct and in force and effect as of the Closing Date

 

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(ii) Resolutions. Copies of resolutions of the board of directors or comparable
managing body of each Credit Party approving and adopting the Credit Documents,
the transactions contemplated therein and authorizing execution and delivery
thereof, certified by an officer of such Credit Party as of the Closing Date to
be true and correct and in force and effect as of such date.

 

(iii) Bylaws. A copy of the bylaws or comparable operating agreement of each
Credit Party certified by an officer of such Credit Party as of the Closing Date
to be true and correct and in force and effect as of such date.

 

(iv) Good Standing. Copies of (A) certificates of good standing, existence or
its equivalent with respect to each Credit Party certified as of a recent date
by the appropriate governmental authorities of the state of incorporation and
each other state in which the failure to so qualify and be in good standing
could reasonably be expected to have a Material Adverse Effect on the business
or operations of the Borrower and its Subsidiaries in such state and (B) to the
extent available, a certificate indicating payment of all corporate franchise
taxes certified as of a recent date by the appropriate governmental taxing
authorities.

 

(v) Incumbency. An incumbency certificate of each Credit Party certified by a
secretary or assistant secretary to be true and correct as of the Closing Date.

 

(c) Legal Opinions of Counsel. The Administrative Agent shall have received
opinions of legal counsel for the Credit Parties, dated the Closing Date and
addressed to the Administrative Agent and the Lenders, which opinions shall
provide, among other things, that the execution and delivery of the Credit
Documents by the Credit Parties and the consummation of the transactions
contemplated thereby will not violate the corporate instruments and material
agreements of the Credit Parties, and shall otherwise be in form and substance
acceptable to the Administrative Agent and the Lenders.

 

(d) Personal Property Collateral. The Administrative Agent shall have received,
in form and substance satisfactory to the Administrative Agent:

 

(i) searches of Uniform Commercial Code filings in the jurisdiction of the chief
executive office of each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to perfect the
Lenders’ security interest in the Collateral, copies of the financing statements
on file in such jurisdictions and evidence that no Liens exist other than
Permitted Liens;

 

(ii) Uniform Commercial Code financing statements for each appropriate
jurisdiction as is necessary, in the Administrative Agent’s sole discretion, to
perfect the Lenders’ security interests in the Collateral; and

 

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(iii) duly executed consents as are necessary, in the Administrative Agent’s
sole discretion, to perfect the Lenders’ security interest in the Collateral.

 

(e) Real Property Collateral. The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent and the Lenders:

 

(i) fully executed and notarized mortgage instruments (amendments or new deeds
of trust, as applicable) encumbering the Real Property Assets Schedule 4.1-2;

 

(ii) a title commitment or title report obtained by the Credit Parties in
respect of each of the mortgaged Real Property Assets listed on Schedule 4.1-2;
and

 

(iii) an opinion of counsel to the Credit Parties for each jurisdiction in which
the mortgaged Real Property Assets listed Schedule 4.1-2 are located.

 

(f) Liability, Casualty, Business Interruption and Environmental Insurance. The
Administrative Agent shall have received copies of insurance policies or
certificates of insurance evidencing liability, casualty, business interruption
and environmental insurance meeting the requirements set forth herein or in the
Security Documents. The Administrative Agent shall be named as loss payee,
mortgagee and/or additional insured, as its interest may appear, on all such
insurance policies for the benefit of the Lenders.

 

(g) Fees. The Administrative Agent and the Lenders shall have received all fees,
if any, owing pursuant to the Fee Letter and Section 2.6.

 

(h) Litigation. There shall not exist any pending, ongoing or threatened
litigation or investigation affecting or relating (i) to the Credit Parties or
any of their Subsidiaries, or (ii) this Credit Agreement or the other Credit
Documents that has not been settled, dismissed, vacated, discharged or
terminated prior to the Closing Date which, in the case of clause (i), could be
reasonably expected to have a Material Adverse Effect.

 

(i) Solvency Certificate. The Administrative Agent shall have received an
officer’s certificate for the Credit Parties prepared by the chief financial
officer of the Borrower as to the financial condition, solvency and related
matters of the Borrower and of the Credit Parties taken as a whole, in each case
after giving effect to the initial borrowings under the Credit Documents, in
substantially the form of Schedule 4.1-3 hereto.

 

(j) Account Designation Letter. The Administrative Agent shall have received the
executed Account Designation Letter in the form of Schedule 1.1-1 hereto.

 

(k) Consents. The Administrative Agent shall have received evidence that all
governmental, shareholder and material third party consents and approvals
necessary in connection with the financings and other transactions contemplated
hereby have been obtained and all applicable waiting periods have expired
without any action being taken by any authority that could restrain, prevent or
impose any material adverse conditions on such transactions or that could seek
or threaten any of such transactions.

 

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(l) Compliance with Laws. The financings and other transactions contemplated
hereby shall be in compliance in all material respects with all applicable laws
and regulations (including all applicable securities and banking laws, rules and
regulations).

 

(m) Bankruptcy. There shall be no bankruptcy or insolvency proceedings with
respect to any Credit Party.

 

(n) Material Adverse Effect. Since September 29, 2005, no event has had, or
could reasonably be expected to have, a material adverse change in the business,
properties, prospects, operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole.

 

(o) Financial Statements. The Administrative Agent shall have received copies of
the financial statements referred to in Section 3.3 hereof, each in form and
substance satisfactory to it.

 

(p) Termination of Existing Indebtedness. All existing Indebtedness (except for
Indebtedness permitted by the terms of this Credit Agreement and the Existing
Credit Agreement which is amended and restated hereby) for borrowed money of the
Borrower and its Subsidiaries shall have been repaid in full and all commitments
relating thereto shall have been terminated and all Liens relating thereto shall
have been terminated.

 

(q) Officer’s Certificates. The Administrative Agent shall have received a
certificate or certificates executed by a responsible officer of the Borrower as
of the Closing Date stating that (i) no action, suit, investigation or
proceeding is pending, ongoing or, to the knowledge of any Credit Party,
threatened in any court or before any other Governmental Authority that purports
to affect any Credit Party or any other transaction contemplated by the Credit
Documents, which action, suit, investigation or proceeding could be reasonably
expected to have a Material Adverse Effect and (ii) immediately after giving
effect to this Credit Agreement, the other Credit Documents, and all the
transactions contemplated therein to occur on such date, (A) no Default or Event
of Default exists, (B) all representations and warranties contained herein and
in the other Credit Documents are true and correct in all material respects, and
(C) the Credit Parties are in compliance with each of the financial covenants
set forth in Section 6.6.

 

(r) Consolidated Pro Forma Leverage Ratio. The Administrative Agent shall have
received evidence reasonably satisfactory thereto provided by the Borrower that,
after giving effect to the closing of this Agreement and the Extensions of
Credit and the other transactions contemplated hereby, Consolidated Pro Forma
Leverage Ratio shall be no greater than 4.25 to 1.0.

 

(s) Patriot Act Certificate. The Administrative Agent shall have received, at
least five (5) Business Days prior to the Closing Date, a certificate
satisfactory thereto, for benefit of itself and the Lenders, provided by the
Borrower that sets forth information required by the Patriot Act (as defined in
Section 9.18) including, without limitation, the identity of the Borrower, the
name and address of the Borrower and other information that will allow the
Administrative Agent or any Lender, as applicable, to identify the Borrower in
accordance with the Patriot Act.

 

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(t) Additional Matters. All other documents and legal matters in connection with
the transactions contemplated by this Credit Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel.

 

Section 4.2 Conditions to All Extensions of Credit.

 

The obligation of each Lender to make any Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:

 

(a) Representations and Warranties. The representations and warranties made by
the Credit Parties herein, in the Security Documents or which are contained in
any certificate furnished at any time under or in connection herewith shall be
true and correct on and as of the date of such Extension of Credit as if made on
and as of such date except to the extent such representations and warranties
specifically relate to any earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date.

 

(b) No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Extension
of Credit to be made on such date unless such Default or Event of Default shall
have been waived in accordance with this Credit Agreement.

 

(c) Compliance with Commitments. Immediately after giving effect to the making
of any such Extension of Credit (and the application of the proceeds thereof),
the sum of outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
Obligations shall not exceed the Revolving Committed Amount.

 

(d) Additional Conditions to Revolving Loans. If a Revolving Loan is requested,
all conditions set forth in Section 2.1 shall have been satisfied.

 

(e) Additional Conditions to Letters of Credit. If the issuance of a Letter of
Credit is requested, all conditions set forth in Section 2.4 shall have been
satisfied.

 

(f) Additional Conditions to Swingline Loans. If a Swingline Loan is requested,
all conditions set forth in Section 2.5 shall have been satisfied.

 

Each request for an Extension of Credit and each acceptance by the Borrower of
any such Extension of Credit shall be deemed to constitute representations and
warranties by the Borrower as of the date of such Extension of Credit that the
applicable conditions in paragraphs (a) through (f) of this Section have been
satisfied.

 

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ARTICLE V

 

AFFIRMATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Credit Agreement is in effect and until the
Commitments have terminated, no Note remains outstanding and unpaid and the
Credit Party Obligations (other than inchoate indemnification and reimbursement
obligations) together with interest, Commitment Fees and all other amounts owing
to the Administrative Agent or any Lender hereunder and under the other Credit
Documents, are paid in full, the Credit Parties shall, and shall cause each of
their Subsidiaries, to perform the covenants set forth in this Article V.

 

Section 5.1 Financial Statements and Other Reports.

 

The Borrower will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. The Borrower will deliver to the Administrative Agent and the
Lenders:

 

(a) Quarterly Financials. As soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year and
within 90 days after the end of the fourth Fiscal Quarter of each Fiscal Year,
(i) the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the related consolidated
and consolidating statements of income, stockholders’ equity and cash flows of
the Borrower and its Subsidiaries for such Fiscal Quarter and for the period
from the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year, all
in reasonable detail and certified by the chief financial officer of the
Borrower that they fairly present, in all material respects, the financial
condition of the Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(ii) a narrative report describing the operations of the Borrower and its
Subsidiaries in the form prepared for presentation to senior management for such
Fiscal Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter;

 

(b) Year-End Financials. As soon as available and in any event within 90 days
after the end of each Fiscal Year, (i) the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated and consolidating statements of income,
stockholders’ equity and cash flows of the Borrower and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief financial
officer of the Borrower that they fairly present, in all material respects, the
financial condition of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, (ii) a narrative report

 

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describing the operations of the Borrower and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Year, and
(iii) in the case of such consolidated financial statements, a report thereon of
Deloitte & Touche LLP or other independent certified public accountants of
recognized national standing selected by the Borrower, which report shall be
unqualified, shall express no doubts about the ability of the Borrower and its
Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present, in all material respects, the
consolidated financial position of the Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except as otherwise disclosed in such financial statements) and
that the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;

 

(c) Officers’ and Compliance Certificates. (i) Together with each delivery of
financial statements of the Borrower and its Subsidiaries pursuant to
subsections (a) and (b) above, an Officers’ Certificate of the Borrower stating
that the signers have reviewed the terms of this Agreement and have made, or
caused to be made under their supervision, a review in reasonable detail of the
transactions and condition of the Borrower and its Subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that the signers do not have knowledge of the existence as at the date of such
Officers’ Certificate, of any condition or event that constitutes a Default or
an Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Borrower has taken, is taking and proposes to take with respect thereto; and
(ii) together with each delivery of financial statements of the Borrower and its
Subsidiaries pursuant to subsections (b) and (c) above, a Officer’s Certificate
of the Borrower demonstrating in reasonable detail compliance during and at the
end of the applicable accounting periods with the negative covenants contained
in Article VI;

 

(d) Reconciliation Statements. If, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements referred to in Section 3.3, the consolidated financial
statements of the Borrower and its Subsidiaries delivered pursuant to
subsections (a), (b) or (l) of this Section 5.1 will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such subsections had no such change in accounting
principles and policies been made, then (i) together with the first delivery of
financial statements pursuant to subsections (a), (b) or (l) of this Section 5.1
following such change, consolidated financial statements of the Borrower and its
Subsidiaries for (A) the current Fiscal Year to the effective date of such
change and (B) the two full Fiscal Years immediately preceding the Fiscal Year
in which such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (ii) together with each
delivery of financial statements pursuant to subsections (a), (b) or (l) of this
Section 5.1 following such change, a written statement of the chief accounting
officer or chief financial officer of the Borrower setting forth the differences
(including any differences that would affect any calculations relating to the
financial covenants set forth in Section 6.6) which would have resulted if such
financial statements had been prepared without giving effect to such change;

 

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(e) Accountants’ Certification. Beginning with the Fiscal Year ending September,
2006, together with each delivery of consolidated financial statements of the
Borrower and its Subsidiaries pursuant to subsection (b) above, a written
statement by the independent certified public accountants giving the report
thereon (i) stating that their audit examination has included a review of the
terms of this Agreement and the other Credit Documents as they relate to
accounting matters, (ii) stating whether, in connection with their audit
examination, any condition or event that constitutes a Default or an Event of
Default has come to their attention and, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of their audit examination, and (iii) stating that based
on their audit examination nothing has come to their attention that causes them
to believe either or both that the information contained in the certificates
delivered therewith pursuant to subsection (c) above is not correct or that the
matters set forth in the Officer’s Certificates delivered therewith pursuant to
clause (ii) of subsection (c) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;

 

(f) Accountants’ Reports. Promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports submitted to the
Borrower by independent certified public accountants in connection with each
annual, interim or special audit of the financial statements of the Borrower and
its Subsidiaries made by such accountants, including any management
recommendation letter submitted by such accountants to the Audit Committee of
the Borrower’s board of directors in connection with their annual audit;

 

(g) SEC Filings and Press Releases. Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent or made available generally by the Borrower to its security holders or by
any Subsidiary of the Borrower to its security holders other than the Borrower
or another Subsidiary of the Borrower, (ii) all regular and periodic reports and
all registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by the Borrower or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
Governmental Authority or private regulatory authority, and (iii) all press
releases and other statements made available generally by the Borrower or any of
its Subsidiaries to the public concerning material developments in the business
of the Borrower or any of its Subsidiaries; provided, however, the Borrower
shall not be required to deliver the foregoing information to (A) the
Administrative Agent and the Lenders if such information is readily available to
such Persons through an online service such as EDGAR, unless specifically
required by the Administrative Agent and (B) the Lenders to the extent such
information has been delivered to the Administrative Agent and the Borrower has
confirmed that such information has been made available to the Lenders by the
Administrative Agent through an online service such as IntraLinks or otherwise
distributed by the Administrative Agent to the Lenders;

 

(h) Events of Default, etc. Promptly (but in any event within two (2) Business
Days thereof) upon any officer of a Credit Party obtaining knowledge (i) of any
condition or event that constitutes a Default or an Event of Default, or
becoming aware that any Lender has given any

 

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notice (other than to the Administrative Agent) or taken any other action with
respect to a claimed Default or Event of Default, (ii) that any Person has given
any notice to the Borrower or any of its Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type referred to
in Section 7.1(b) or (iii) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers’ Certificate specifying the nature and period of existence
of such condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Default or Event of
Default, default, event or condition, and what action the Credit Parties have
taken, are taking and propose to take with respect thereto;

 

(i) Litigation or Other Proceedings. Promptly upon any officer of any Credit
Party obtaining knowledge of (i) the institution of, or non-frivolous threat of,
any action, suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting the Borrower or
any of its Subsidiaries or any property of the Borrower or any of its
Subsidiaries (collectively, “Proceedings”) not previously disclosed in writing
by a Credit Party to the Lenders or (ii) any material development in any
Proceeding that, in any case:

 

(A) if adversely determined, has a reasonable possibility of giving rise to a
Material Adverse Effect; or

 

(B) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;

 

written notice thereof together with such other information as may be reasonably
available to the Credit Parties to enable the Lenders and their counsel to
evaluate such matters;

 

(j) ERISA Events. Promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event that could reasonably be expected to
result in a material liability, a written notice specifying the nature thereof,
what action the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;

 

(k) ERISA Notices. With reasonable promptness, copies of (i) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (ii) all
notices received by the Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
ERISA Event that could reasonably be expected to result in a material liability;
and (iii) copies of such other documents or governmental reports or filings
relating to any Employee Benefit Plan as the Administrative Agent shall
reasonably request;

 

(l) Financial Plans. As soon as practicable and in any event no later than 45
days after the beginning of each Fiscal Year, a consolidated plan and financial
forecast for such Fiscal Year (the “Financial Plan” for such Fiscal Year),
including (i) forecasted consolidated balance

 

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sheet and forecasted consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such Fiscal Year (prepared on a quarterly
basis), together with an explanation of the assumptions on which such forecasts
are based, and (ii) such other information and projections as any Lender may
reasonably request;

 

(m) Insurance. As soon as practicable and in any event by the last day of each
Fiscal Year, a report in form and substance satisfactory to the Administrative
Agent outlining all material insurance coverage maintained as of the date of
such report by the Borrower and its Subsidiaries and all material insurance
coverage planned to be maintained by the Borrower and its Subsidiaries in the
immediately succeeding Fiscal Year;

 

(n) Board of Directors. With reasonable promptness, written notice of any change
in the board of directors of the Borrower;

 

(o) New Subsidiaries. Promptly upon any Person becoming a Subsidiary of the
Borrower, a written notice setting forth with respect to such Person (a) the
date on which such Person became a Subsidiary of the Borrower and (b) all of the
data required to be set forth in Schedule 3.1-2 annexed hereto with respect to
all Subsidiaries of the Borrower (it being understood that such written notice
shall be deemed to supplement Schedule 3.1-2 annexed hereto for all purposes of
this Agreement);

 

(p) Material Contracts. Promptly, and in any event within 10 Business Days after
any Material Contract of the Borrower or any of its Subsidiaries is terminated
or amended in a manner that is materially adverse to the Borrower or such
Subsidiary, as the case may be, a written statement describing such event with
copies of such material amendments, and an explanation of any actions being
taken with respect thereto;

 

(q) Uniform Commercial Code Search Report. As promptly as practicable after the
filing by the Administrative Agent of any Uniform Commercial Code financing
statement pursuant to the terms hereof or the Security Documents, upon the
request of the Administrative Agent, copies of completed Uniform Commercial Code
searches evidencing the proper filing, recording and indexing of all such
Uniform Commercial Code financing statement and listing all other effective
financing statements that name such Credit Party as debtor, together with copies
of all such other financing statements not previously delivered to the
Administrative Agent by or on behalf of the Borrower or such Credit Party;

 

(r) Collateral Information. Upon the reasonable request of the Administrative
Agent, the Borrower shall provide to the Administrative Agent (i) an updated
list of all locations of any Collateral and (ii) an updated list of any or all
of the Intellectual Property of the Borrower and its Subsidiaries.

 

(s) Asset Dispositions, Etc. Within 90 days after the end of each Fiscal Year of
the Borrower, a certificate containing information regarding the amount of all
Asset Dispositions, Debt Issuances, and Equity Issuances that were made during
the prior Fiscal Year and amounts received in connection with any Recovery Event
during the prior Fiscal Year together with a statement demonstrating a
calculation of Excess Cash Flow;

 

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(t) Environmental Report. As soon as practicable and in any event within 30 days
after the end of each Fiscal Year, a management report in form and substance
satisfactory to the Administrative Agent summarizing the status of any
environmental remediation actions taken by the Borrower and its Subsidiaries
during the previous Fiscal Year, any reserves established by the Borrower and
its Subsidiaries with respect to such remediation actions, all expenses incurred
by the Borrower and its Subsidiaries in connection with such remediation actions
and any change to the Borrower’s environmental insurance coverage;

 

(u) Other Information. With reasonable promptness, such other information and
data with respect to the Borrower or any of its Subsidiaries as from time to
time may be reasonably requested by any Lender through the Administrative Agent.

 

Section 5.2 Corporate Existence, Etc.

 

Except as permitted under Section 6.7, the Borrower will, and will cause each of
its Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its business;
provided, however that neither the Borrower nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the board of directors of
the Borrower or such Subsidiary shall determine that the preservation thereof is
no longer desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower, such Subsidiary or the Lenders.

 

Section 5.3 Payment of Taxes, Claims and Other Obligations; Tax Consolidation.

 

(a) The Borrower will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (i) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and (ii) in the case of a charge or claim which has or may become
a Lien against any of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim.

 

(b) The Borrower will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than the Borrower or any of its Subsidiaries).

 

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Section 5.4 Maintenance of Properties; Insurance.

 

(a) Maintenance of Properties. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of the Borrower and its Subsidiaries (including
all Intellectual Property) and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof.

 

(b) Insurance. The Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance, casualty
insurance and environmental insurance with respect to liabilities, losses or
damage in respect of the assets, properties and businesses of the Borrower and
its Subsidiaries as may customarily be carried or maintained under similar
circumstances by corporations of established reputation engaged in similar
businesses, in each case in such amounts (giving effect to self-insurance), with
such deductibles, covering such risks and otherwise on such terms and conditions
as shall be customary for corporations similarly situated in the industry;
provided that environmental insurance shall not be required for properties in a
state where any environmental liabilities or losses would be indemnified or
reimbursed by a trust fund established by such state and such trust fund is
solvent. Without limiting the generality of the foregoing, the Borrower will
maintain or cause to be maintained (i) to the extent not adequately self-insured
in a manner reasonably deemed adequate by the Administrative Agent and
consistent with the Borrower’s past practices of self-insurance, flood insurance
with respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System, and (ii) replacement value casualty insurance on the Collateral under
such policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times satisfactory to
the Administrative Agent in its commercially reasonable judgment. Each such
policy of insurance shall (A) name the Administrative Agent for the benefit of
the Lenders as an additional insured thereunder as its interests may appear and
(B) in the case of each business interruption and casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to the Administrative Agent, that names the Administrative Agent for the benefit
of the Lenders as the loss payee or mortgagee thereunder and provides for at
least 30 days prior written notice to the Administrative Agent of any
modification or cancellation of such policy.

 

Section 5.5 Books and Records; Inspection Rights.

 

The Borrower shall, and shall cause each of its Subsidiaries, to keep proper
books of records and account in which complete entries consistent with sound
business practices sufficient to support the preparation of financial statements
conforming with GAAP shall be made of its dealings and transactions in relation
to its businesses and activities. The Borrower shall, and shall cause each of
its Subsidiaries to, permit any authorized representatives designated by any
Lender to visit and inspect any of the properties of the Borrower or of any of
its Subsidiaries, to inspect, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public

 

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accountants (provided that the Borrower may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may reasonably be
requested.

 

Section 5.6 Compliance with Laws, Etc.

 

The Borrower shall comply, and shall cause each of its Subsidiaries to comply,
with the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority (including all Environmental Laws), noncompliance
with which could reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect.

 

Section 5.7 Environmental Review and Investigation, Disclosure, Etc.

 

(a) Environmental Review and Investigation. The Borrower agrees that the
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at the Borrower’s expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for the Borrower and (ii) in the event
(A) the Administrative Agent reasonably believes that the Borrower has breached
any representation, warranty or covenant contained in Sections 3.6, 3.13, 5.6,
5.7 or 5.8 or that there has been a material violation of Environmental Laws at
any Facility or by the Borrower or any of its Subsidiaries at any other location
or (B) an Event of Default has occurred and is continuing, subject to the terms
of any applicable lease, conduct its own investigation of any Facility; provided
that, in the case of any Facility no longer owned, leased, operated or used by
the Borrower or any of its Subsidiaries, the Borrower shall only be obligated to
use its best efforts to obtain permission for the Administrative Agent’s
professional consultant to conduct an investigation of such Facility. For
purposes of conducting such a review and/or investigation, subject to the terms
of any applicable lease, the Borrower hereby grants to the Administrative Agent
and its agents, employees, consultants and contractors the right to enter into
or onto any Facilities currently owned, leased, operated or used by the Borrower
or any of its Subsidiaries and to perform such tests on such property (including
taking samples of soil, groundwater and suspected asbestos-containing materials)
as are reasonably necessary in connection therewith. Any such investigation of
any Facility shall be conducted, unless otherwise agreed to by the Borrower and
the Administrative Agent, during normal business hours and, to the extent
reasonably practicable, shall be conducted so as not to interfere with the
ongoing operations at such Facility or to cause any damage or loss to any
property at such Facility. The Borrower and the Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of the Administrative Agent pursuant to this Section will be obtained
and shall be used by the Administrative Agent and the Lenders for the purposes
of the Lenders’ internal credit decisions, to monitor and police the Loans and
to protect the Lenders’ security interests created by the Credit Documents. The
Administrative Agent agrees to deliver a copy of any such report to the Borrower
with the understanding that the Borrower acknowledges and agrees that (1) it
will indemnify and hold harmless the Administrative Agent and each Lender from
any costs, losses or liabilities relating to the Borrower’s use of or reliance
on such report, (2) neither the Administrative Agent nor any Lender makes any
representation or warranty with respect to such report, and (3) by delivering
such report to the Borrower, neither the Administrative Agent nor any Lender is
requiring or recommending the implementation of any suggestions or
recommendations contained in such report.

 

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(b) Environmental Disclosure. The Borrower will deliver to the Administrative
Agent and the Lenders:

 

(i) Environmental Audits and Reports. As soon as practicable following receipt
thereof, copies of all environmental audits, investigations, analyses and
reports of any kind or character, whether prepared by personnel of the Borrower
or any of its Subsidiaries or by independent consultants, Governmental
Authorities or any other Persons, with respect to significant environmental
matters at any Facility which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or with respect to
any Environmental Claims which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;

 

(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the
occurrence thereof, written notice describing in reasonable detail (A) any
Release required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws the existence of which
has a reasonable possibility of resulting in one or more Environmental Claims
having, individually or in the aggregate, a material adverse effect on the
facility or facilities where the Release occurred, and (B) any remedial action
taken by the Borrower or any other Person in response to (1) any Hazardous
Materials Activities the existence of which has a reasonable possibility of
resulting in one or more Environmental Claims having, individually or in the
aggregate, a material adverse effect on the facility or facilities where the
Hazardous Materials Activities occurred, or (2) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of resulting in
a material adverse effect on the facility or facilities to which the
Environmental Claims relate;

 

(iii) Written Communications Regarding Environmental Claims, Releases, Etc. As
soon as practicable following the sending or receipt thereof by the Borrower or
any of its Subsidiaries, a copy of any and all written communications with
respect to (A) any Environmental Claims that, individually or in the aggregate,
have a reasonable possibility of resulting in a material adverse effect on the
facility or facilities to which such Environmental Claims relate, (B) any
Release required to be reported to any federal, state or local governmental or
regulatory agency the existence of which has a reasonable possibility of
resulting in one or more Environmental Claims having, individually or in the
aggregate, a material adverse effect on the facility or facilities to which the
Environmental Claims relate, and (C) any request for information from any
governmental agency that suggests such agency is investigating whether the
Borrower or any of its Subsidiaries may be potentially responsible for any
Hazardous Materials Activity that, individually or in the aggregate, have a
reasonable possibility of resulting in a material adverse effect on the facility
or facilities at which the Hazardous Materials Activity occurred;

 

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(iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt
written notice describing in reasonable detail (A) any proposed acquisition of
stock, assets, or property by the Borrower or any of its Subsidiaries that could
reasonably be expected to (1) expose the Borrower or any of its Subsidiaries to,
or result in, Environmental Claims that, individually or in the aggregate, have
a reasonable possibility of resulting in a material adverse effect on the
facility or facilities to which the Environmental Claims relate or (2) affect
the ability of the Borrower or any of its Subsidiaries to maintain in full force
and effect all material Governmental Authorizations required under any
Environmental Laws for their respective operations and (b) any proposed action
to be taken by the Borrower or any of its Subsidiaries to modify current
operations in a manner that could reasonably be expected to subject the Borrower
or any of its Subsidiaries to any material additional obligations or
requirements under any Environmental Laws; and

 

(v) Other Information. With reasonable promptness, such other documents and
information as from time to time may be reasonably requested by the
Administrative Agent in relation to any matters disclosed pursuant to this
Section.

 

Section 5.8 Hazardous Materials Activities; Environmental Claims/Violations.

 

(a) Remedial Actions Relating to Hazardous Materials Activities. The Borrower
shall, to the extent required by applicable law and orders of Governmental
Authorities having jurisdiction, promptly undertake, and shall cause each of its
Subsidiaries promptly to undertake, any and all investigations, studies,
sampling, testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or abate any Hazardous
Materials Activity on, under or about any Facility that is in violation of any
Environmental Laws. In the event the Borrower or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials, the Borrower
or such Subsidiary shall conduct and complete such action in compliance with all
applicable Environmental Laws and in accordance with the policies, orders and
directives of all federal, state and local Governmental Authorities except when,
and only to the extent that, the Borrower’s or such Subsidiary’s liability with
respect to such Hazardous Materials Activity is being contested in good faith by
the Borrower or such Subsidiary.

 

(b) Actions with Respect to Environmental Claims and Violations of Environmental
Laws. The Borrower shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all actions necessary to (i) cure any material
violation of applicable Environmental Laws by the Borrower or its Subsidiaries
except when, and only to the extent that, the Borrower’s or such Subsidiary’s
liability with respect to such Hazardous Materials Activity is being contested
in good faith by the Borrower or such Subsidiary and (ii) make an appropriate
response to any Environmental Claim against the Borrower or any of its
Subsidiaries and discharge any obligations it may have to any Person thereunder.

 

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Section 5.9 Additional Guarantors.

 

The Credit Parties will cause each of their Domestic Subsidiaries with assets in
excess of $100,000 or current annualized revenues in excess of $100,000, whether
newly formed, after acquired or otherwise existing, to promptly (and in any
event within 30 days (or such longer period of time as agreed to by the
Administrative Agent) after its formation or acquisition) become a Guarantor
hereunder by way of execution of a Joinder Agreement. The guaranty obligations
of any such Additional Credit Party shall be secured by, among other things, the
Collateral (subject to prohibitions on the granting of security interests
imposed by state gaming laws and regulations with regard to any gaming license
and related assets used by the Credit Parties) of the Additional Credit Party
and a pledge of 100% of the Capital Stock or other equity interest of its
Domestic Subsidiaries and a pledge by the Borrower or other Credit Party which
is the owner of the Capital Stock or other equity interest in such Subsidiary of
100% of such Capital Stock or other equity interest. In connection with the
foregoing, the Credit Parties shall deliver to the Administrative Agent, with
respect to each new Guarantor to the extent applicable, substantially the same
documentation required pursuant to Sections 4.1(b)-(e), 5.10 and 5.11 and such
other documents or agreements as the Administrative Agent may reasonably
request.

 

Section 5.10 Pledged Assets.

 

Each Credit Party will grant a First Priority Lien (subject in each case to
Permitted Liens) in favor of the Administrative Agent in its real and personal
property pursuant to the terms and conditions of the Security Documents or such
other security documents as the Administrative Agent shall reasonably request,
provided, no Lien shall be granted by any Credit Party in favor of the
Administrative Agent (a) if any such security interest is prohibited by
applicable state gaming laws and regulations with regard to any gaming license
and related assets used by such Credit Party, (b) on any leasehold interest held
by a Credit Party in any leased store property or (c) on any property subject to
a sale leaseback transaction permitted by Section 6.8. Each Credit Party shall
adhere to the covenants regarding personal property as set forth in the Security
Documents.

 

Section 5.11 Matters Relating to Additional Real Property Collateral.

 

(a) Additional Real Property Collateral. From and after the Closing Date, in the
event that (i) the Borrower or any Guarantor acquires any fee interest in real
property or (ii) at the time any Person becomes a Guarantor, such Person owns or
holds any fee interest in real property, in either case excluding (x) any such
Real Property Asset held for sale as approved by the Administrative Agent,
(y) any such Real Property Asset the encumbrancing of which requires the consent
of any applicable then-existing senior lienholder, where the Borrower and its
Subsidiaries are unable to obtain such senior lienholder’s consent and (z) so
long as no Event of Default shall have occurred and be continuing, any such Real
Property Asset that the Borrower or such Guarantor intends to sell and lease
back in accordance with Section 6.8 within 270 days of the date of acquisition
of such Real Property Asset or the date such Person becomes a Guarantor, as the
case may be (any such non-excluded Real Property Asset described in the
foregoing clauses (i) or (ii) being an “Additional Mortgaged Property”), the
Borrower will promptly notify the Administrative Agent of that fact and the
Borrower or such Guarantor shall

 

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deliver to the Administrative Agent, on or before the next Mortgage Delivery
Date which occurs at least 30 days after such Person acquires such Additional
Mortgaged Property or becomes a Guarantor (or such longer period of time as
agreed to by the Administrative Agent) or, in the case of any such Real Property
Asset which was excluded from being an Additional Mortgaged Property pursuant to
clause (y) above, and which was not sold and leased back within the applicable
270-day period, on or before the next Mortgage Delivery Date which occurs at
least 30 days after the expiration of such 270-day period, as the case may be,
the following:

 

(A) Additional Mortgage. A fully executed and notarized Mortgage (an “Additional
Mortgage”), duly recorded in all appropriate places in all applicable
jurisdictions, encumbering the interest of such Credit Party in such Additional
Mortgaged Property;

 

(B) Opinions of Counsel. Unless otherwise approved by the Administrative Agent,
with respect to each Additional Mortgaged Property with a fair market value of
$3,500,000 or more or which Additional Mortgaged Property is located in a
jurisdiction as to which the Administrative Agent, the Lenders or their
predecessors under the Existing Credit Agreement have not previously received an
opinion as to the enforceability of the form of Mortgage to be executed with
respect to such Mortgaged Property (1) a favorable opinion of counsel to such
Credit Party, in form and substance satisfactory to the Administrative Agent and
its counsel, as to the due authorization, execution and delivery by such Credit
Party of such Additional Mortgage and such other matters as the Administrative
Agent may reasonably request, and (2) an opinion of counsel (which counsel shall
be reasonably satisfactory to the Administrative Agent) in the state in which
such Additional Mortgaged Property is located with respect to the enforceability
of the form of Additional Mortgage to be recorded in such states and such other
matters (including any matters governed by the laws of such state regarding
personal property security interests in respect of any Collateral) as the
Administrative Agent may reasonably request, in each case in form and substance
reasonably satisfactory to the Administrative Agent;

 

(C) Title Insurance. Unless otherwise approved by the Administrative Agent, with
respect to each Additional Mortgaged Property with a fair market value of
$3,500,000 or more or if any Credit Party is purchasing title insurance or is
otherwise being provided with title insurance with respect to such Additional
Mortgaged Property, an ALTA mortgagee title insurance policy or an unconditional
commitment therefor (an “Additional Mortgage Policy”) with respect to such
Additional Mortgaged Property, in an amount satisfactory to the Administrative
Agent, insuring fee simple title to such Additional Mortgaged Property vested in
such Credit Party and assuring the Administrative Agent that such Additional
Mortgage creates a valid and enforceable First Priority mortgage Lien on such
Additional Mortgaged Property, subject only to a standard survey exception,
which Additional Mortgage Policy (1) shall include an endorsement for mechanics’
liens, for future advances under this Agreement and for any other matters
reasonably requested by the Administrative Agent and (2) shall provide for
affirmative insurance and such reinsurance as the Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent;

 

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(D) Title Report. Unless otherwise approved by the Administrative Agent, a title
report issued by a title company with respect thereto, in form and substance
satisfactory to the Administrative Agent, and copies of all recorded documents
listed as exceptions to title or otherwise referred to in such title report;

 

(E) Matters Relating to Flood Hazard Properties. (1) Evidence, which may be in
the form of a letter from an insurance broker or a municipal engineer, as to
(x) whether such Additional Mortgaged Property is a Flood Hazard Property and
(y) if so, whether the community in which such Flood Hazard Property is located
is participating in the National Flood Insurance Program, (2) if such Additional
Mortgaged Property is a Flood Hazard Property, such Credit Party’s written
acknowledgement of receipt of written notification from the Administrative Agent
(x) that such Additional Mortgaged Property is a Flood Hazard Property and
(y) as to whether the community in which such Flood Hazard Property is located
is participating in the National Flood Insurance Program, and (3) in the event
such Additional Mortgaged Property is a Flood Hazard Property that is located in
a community that participates in the National Flood Insurance Program, evidence
that the Borrower has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System; and

 

(F) Environmental Audit. Unless otherwise approved by the Administrative Agent,
reports and other information, in form, scope and substance satisfactory to the
Administrative Agent, concerning any environmental hazards or liabilities to
which the Borrower or any of its Subsidiaries may be subject with respect to
such Additional Mortgaged Property.

 

(b) Florida Real Property. In the event that the real property securing the
Credit Party Obligations located in the State of Florida increases in value
after the Closing Date by an amount that the Administrative Agent in the
exercise of its reasonable discretion deems to be material, then the Borrower
hereby agrees upon request by the Administrative Agent to amend the Mortgages on
the Florida real property to reflect such increase in value and to pay any
recording or other real property taxes or fees arising as a result of such
increased value and the recording of such amendments.

 

Section 5.12 Use of Proceeds.

 

The proceeds of the Extensions of Credit shall be used solely by the Borrower as
follows:

 

(a) with respect to the Loans, to (i) refinance certain existing indebtedness of
the Borrower, including indebtedness associated with the Existing Credit
Agreement, (ii) pay fees and expenses in connection with the Credit Documents,
and (iiiii) provide for working capital and other general corporate purposes of
the Borrower and its Subsidiaries, including Permitted Acquisitions.

 

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(b) the Letters of Credit shall be used only for or in connection with appeal
bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions entered into
by the applicable account party in the ordinary course of business.

 

Section 5.13 Further Assurances.

 

(a) Upon the request of the Administrative Agent promptly perform or cause to be
performed any and all acts and execute or cause to be executed any and all
documents for filing under the provisions of the Uniform Commercial Code or any
other Requirement of Law which are necessary or advisable to maintain in favor
of the Administrative Agent, for the benefit of the Lenders, Liens on the
Collateral that are duly perfected in accordance with all applicable
Requirements of Law. Without limitation of the foregoing, the Borrower shall
cause D. & D. Oil Co., Inc., a Georgia corporation and Domestic Subsidiary of
the Borrower, to take such action as is necessary to terminate, or cause to be
terminated, all Uniform Commercial Code financing statements not otherwise
permitted under the terms of this Agreement by March 31, 2006, unless an
extension of such period is approved by the Administrative Agent.

 

(b) Within fifteen (15) Business Days after the Closing Date (or such extended
period of time as agreed to by the Administrative Agent), the Borrower shall
deliver to the Administrative Agent, with respect to the fee property of the
Credit Parties located in Tennessee, a duly executed mortgage amendment that
extends the future advances clause to a date outside the Maturity Date and such
other real estate documentation as reasonably required by the Administrative
Agent, in each case in form and substance reasonably satisfactory to the
Administrative Agent, and shall pay any intangibles or taxes due and payable in
connection with the recording of such mortgage amendment.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Credit Agreement is in effect and until the
Commitments have terminated, no Note remains outstanding and unpaid and the
Credit Party Obligations (except for inchoate indemnification and reimbursement
obligations) together with interest, Commitment Fees and all other amounts owing
to the Administrative Agent or any Lender hereunder and under the other Credit
Documents, are paid in full, the Credit Parties and their Subsidiaries shall be
subject to the restrictions set forth in this Article VI.

 

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Section 6.1 Indebtedness.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:

 

(a) the Credit Parties may become and remain liable with respect to the Credit
Party Obligations (including, without limitation, the Incremental Facilities);

 

(b) the Borrower and its Subsidiaries may become and remain liable with respect
to Contingent Obligations permitted by Section 6.4 and, upon any matured
obligations actually arising pursuant thereto, the Indebtedness corresponding to
the Contingent Obligations so extinguished;

 

(c) the Borrower and its Subsidiaries may become and remain liable with respect
to Indebtedness in respect of Capital Leases and Indebtedness, including
Indebtedness recognized due to any sale and lease-back transaction permitted by
Section 6.8, incurred in the ordinary course of business to finance the cost of
acquisition or the cost of construction, improvement or remodeling of an asset
used in the business of the Borrower and its Subsidiaries; provided that (i) the
principal amount of such Indebtedness does not exceed the sum of 100% of such
cost of acquisition plus the reasonable fees and expenses incurred in connection
therewith and (ii) any lien or encumbrance securing such Indebtedness is placed
on such asset not more than 90 days after its acquisition or the completion of
construction, improvement or remodeling, as the case may be;

 

(d) the Borrower may become and remain liable with respect to Indebtedness to
any Guarantor, and any Guarantor may become and remain liable with respect to
Indebtedness to the Borrower or any other Guarantor; provided that (i) all such
intercompany Indebtedness shall be evidenced by promissory notes and such
promissory notes shall be delivered to the Administrative Agent together with
such allonges or endorsements as the Administrative Agent may require, (ii) all
such intercompany Indebtedness owed by the Borrower to any of the Guarantors
shall be subordinated in right of payment to the payment in full of the Credit
Party Obligations pursuant to the terms of the applicable promissory notes or an
intercompany subordination agreement and (iii) any payment by any Guarantor
under the Guaranty shall result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by such Guarantor to the Borrower or to any other
Guarantor for whose benefit such payment is made;

 

(e) the Borrower and its Subsidiaries, as applicable, may remain liable with
respect to Indebtedness described in Schedule 6.1 annexed hereto and renewals,
refinancings or extensions thereof in a principal amount not in excess of that
outstanding as of the Closing Date and as the date of such renewal, refinancing
or extension;

 

(f) the Borrower may become and remain liable with respect to unsecured
Subordinated Indebtedness and refinancings, exchanges, extensions and renewals
thereof, subject to Section 2.8(b)(iii), provided that (i) the terms and
conditions of such Subordinated Indebtedness shall be the same or substantially
the same as those of the Senior Subordinated

 

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Notes or as is otherwise approved by the Administrative Agent, (ii) after giving
effect to the incurrence of such Indebtedness and the application of the
proceeds thereof, the Consolidated Pro Forma Leverage Ratio shall be less than
or equal to the ratio that is 0.25 lower than the Consolidated Pro Forma
Leverage Ratio then applicable as set forth in Section 6.6(a) and (iii) after
giving effect to the incurrence of such Indebtedness and the application of the
proceeds thereof, the Borrower is in pro forma compliance with Section 6.6 and
no Event of Default has occurred and is continuing or would otherwise arise as a
result of the incurrence of the Indebtedness;

 

(g) the Borrower may become and remain liable with respect to unsecured
Subordinated Indebtedness incurred or assumed in connection with Permitted
Acquisitions, provided that (i) the terms and conditions of such Subordinated
Indebtedness shall be the same as those of the Senior Subordinated Notes or as
is otherwise approved by the Administrative Agent and (ii) after giving effect
to the incurrence of such Indebtedness and the application of the proceeds
thereof, the Borrower is in pro forma compliance with Section 6.6 and no Event
of Default has occurred and is continuing or would otherwise arise as a result
of the incurrence of the Indebtedness;

 

(h) the Borrower and its Subsidiaries may become and remain liable with respect
to other unsecured Indebtedness in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding; and

 

(i) the Borrower and its Subsidiaries may become and remain liable with respect
to other secured Indebtedness (including for this purpose any lease finance
obligations that are accounted for as Indebtedness by the Borrower) in an
aggregate principal amount not to exceed $10,000,000 at any time outstanding.

 

Section 6.2 Liens and Related Matters.

 

(a) Prohibition on Liens. The Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except the following Liens shall be permitted (the
“Permitted Liens”):

 

(i) Permitted Encumbrances;

 

(ii) Liens granted pursuant to the Security Documents;

 

(iii) Liens existing as of the Closing Date and described in Schedule 6.2
annexed hereto; provided that (A) no such Lien shall at any time be extended to
cover property or assets other than the property or assets subject thereto on
the Closing Date

 

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and (B) the principal amount of the Indebtedness secured by such Liens shall not
be increased, extended, renewed, refunded or refinanced except as permitted
pursuant to the terms of Section 6.1;

 

(iv) purchase money Liens securing Indebtedness (and refinancings thereof)
permitted under Section 6.1(c);

 

(v) Cash collateral securing letters of credit (other than Letters of Credit
issued hereunder) in an amount not to exceed $50,000,000; and

 

(vi) other Liens securing Indebtedness in an aggregate amount not to exceed
$10,000,000 at any time outstanding.

 

(b) Equitable Lien in Favor of the Lenders. If the Borrower or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Permitted Liens, it
shall make or cause to be made effective provision whereby the Credit Party
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness secured thereby as long as any such Indebtedness shall be so
secured; provided that, notwithstanding the foregoing, this covenant shall not
be construed as a consent by the Required Lenders to the creation or assumption
of any such Lien that is not a Permitted Lien.

 

(c) No Further Negative Pledges. Except with respect to (i) specific property
encumbered to secure Indebtedness permitted pursuant to the terms of
Section 6.1(c) or to be sold pursuant to an executed agreement with respect to
an asset sale permitted pursuant to the terms of Section 6.7, or (ii) subject to
compliance with Section 6.12, prohibitions on Liens imposed by the gaming laws
and regulations of the state of South Carolina with regard to Global
Communications, Inc.’s gaming license and assets related to its video poker and
lottery ticket sales activities in that state, or restrictions imposed by gaming
laws or regulations in other jurisdictions as such laws or regulations affect
the Borrower’s or its Subsidiaries’ assets used in their video poker and lottery
ticket sales activities, neither the Borrower nor any of its Subsidiaries shall
enter into any agreement (other than the Senior Subordinated Note Indenture, the
Senior Subordinated Convertible Note Indenture or any other agreement
prohibiting only the creation of Liens securing Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired.

 

(d) No Restrictions on Subsidiary Distributions to the Borrower or Other
Subsidiaries. Except as provided herein, the Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary’s Capital Stock owned by the Borrower or
any other Subsidiary of the Borrower, (ii) repay or prepay any Indebtedness owed
by such Subsidiary to the Borrower or any other Subsidiary of the Borrower,
(iii) make loans or advances to the Borrower or any other Subsidiary of the
Borrower, or (iv) transfer any of its property or assets to the Borrower or any
other Subsidiary of the Borrower; provided that the foregoing clause (iv) shall
not apply to (A) restrictions or conditions imposed by any agreement

 

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relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, (B) arising by virtue of any agreement, option or right with
respect to the sale or transfer of any asset permitted by Section 6.7 and
(C) customary provisions in leases, licenses or other contracts restricting the
assignment, subletting or sublicensing or transfer thereof.

 

Section 6.3 Investments; Joint Ventures.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make, own or hold any Investment in any Person,
including any Joint Venture, except the following Investments shall be permitted
(the “Permitted Investments”):

 

(a) the Borrower and its Subsidiaries may make and own Investments in Cash
Equivalents;

 

(b) the Borrower and its Subsidiaries may continue to own the Investments owned
by them as of the Closing Date, and may make additional Investments, in any
Subsidiaries of the Borrower;

 

(c) the Borrower and its Subsidiaries may make intercompany loans permitted
under subsection 6.1(d);

 

(d) [Reserved];

 

(e) the Borrower and its Subsidiaries may make and own Investments in connection
with Permitted Acquisitions made in accordance with Section 6.7(e); provided
that such Permitted Acquisitions shall at all times be Subsidiaries of the
Borrower;

 

(f) the Borrower and its Subsidiaries may continue to own the Investments owned
by them and described in Schedule 6.3 annexed hereto;

 

(g) the Borrower or any of its Subsidiaries may make loans to their employees
for the purpose of purchasing Capital Stock of the Borrower; provided that the
aggregate amount of such loans shall not exceed $2,000,000 at any time
outstanding and such loans are in compliance with all Requirements of Law
(including, without limitation, the Sarbanes-Oxley Act of 2002, as amended);

 

(h) the Credit Parties may enter into (i) Hedging Agreements relating to the
Loans hereunder and other Hedging Agreements entered into in order to manage
existing or anticipated interest rate, exchange rate or commodity price risks in
the ordinary course of business and not for speculative purposes and
(ii) Convertible Hedging Agreements; and

 

(i) the Borrower and its Subsidiaries may make and own other Investments in an
aggregate amount not to exceed at any time $10,000,000; provided that such
Investments are in compliance with all Requirements of Law (including, without
limitation, the Sarbanes-Oxley Act of 2002, as amended).

 

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Section 6.4 Contingent Obligations.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:

 

(a) Subsidiaries of the Borrower may become and remain liable with respect to
Contingent Obligations in respect of the Guaranty;

 

(b) the Credit Parties may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit, surety bonds issued in the ordinary
course that are required by applicable law or regulation and Hedging Agreements
permitted pursuant to Section 6.3(h);

 

(c) the Borrower and its Subsidiaries may become and remain liable with respect
to Contingent Obligations in respect of customary indemnification and purchase
price adjustment obligations incurred in connection with asset sales permitted
pursuant to Section 6.7;

 

(d) the Borrower and its Subsidiaries may become and remain liable with respect
to Contingent Obligations under guarantees in the ordinary course of business of
the obligations of suppliers, customers, franchisees and licensees of the
Borrower and its Subsidiaries in an aggregate amount not to exceed at any time
$5,000,000;

 

(e) the Borrower and its Subsidiaries, as applicable, may remain liable with
respect to Contingent Obligations described in Schedule 6.4 annexed hereto;

 

(f) Guarantors may become and remain liable with respect to Contingent
Obligations arising under guarantees of Subordinated Indebtedness to the extent
such Subordinated Indebtedness is issued pursuant to and in accordance with the
terms of Section 6.1(f) hereof;

 

(g) the Borrower may become and remain liable with respect to Contingent
Obligations under guarantees in respect of Capital Leases and Operating Leases
permitted hereunder that are entered into by the Borrower’s Subsidiaries in the
ordinary course of business or under guarantees in respect of obligations of the
Borrower’s Subsidiaries (other than Indebtedness for borrowed money) permitted
hereunder that are incurred in the ordinary course of business;

 

(h) the Borrower and its Subsidiaries may become and remain liable with respect
to other Contingent Obligations; provided that the maximum aggregate liability,
contingent or otherwise, of the Borrower and its Subsidiaries in respect of all
such Contingent Obligations shall at no time exceed $10,000,000; and

 

(i) the Borrower and its Subsidiaries may become and remain liable with respect
to Contingent Obligations with respect to Indebtedness of a Credit Party under
Permitted Sale Leaseback Transactions.

 

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Section 6.5 Restricted Junior Payments.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that (a) the Borrower may make regularly
scheduled payments of interest in respect of the Senior Subordinated Notes, the
Senior Subordinated Convertible Notes and of any Subordinated Indebtedness
issued in accordance with Section 6.1(f) and (g) hereof in accordance with the
terms of, and only to the extent required by, and subject to the subordination
provisions contained in, the Senior Subordinated Indenture, the Senior
Subordinated Convertible Note Indenture or the indenture pursuant to which such
other Subordinated Indebtedness is issued, as the case may be, in each case, as
such indenture may be amended from time to time to the extent permitted under
Section 6.13(b), (b) the Borrower may make Restricted Junior Payments pursuant
to and in accordance with stock option plans, stock purchase plans or other
benefit plans for management or employees of the Borrower or any Subsidiary
including the redemption or purchase of shares of common stock of the Borrower
held by former employees of the Borrower or any Subsidiary following the
termination of their employment, in an amount not to exceed $500,000 (plus any
amounts received by the Borrower after the Closing Date and prior to making such
Restricted Junior Payment from the issuance of additional shares of its common
stock to members of management or employees of the Borrower and its
Subsidiaries), (c) the Borrower may make cash dividends and repurchase Capital
Stock of the Borrower in an aggregate amount not to exceed, without duplication,
(i) $20,000,000 per Fiscal Year so long as the Consolidated Pro Forma Leverage
Ratio shall not exceed 3.00 to 1.0 both before and after giving pro forma effect
to each such Restricted Junior Payment, and (ii) $40,000,000 per Fiscal Year so
long as the Consolidated Pro Forma Leverage Ratio shall not exceed 2.50 to 1.0
both before and after giving pro forma effect to each such Restricted Junior
Payment, (d) the Borrower may make Restricted Junior Payments with proceeds from
an Equity Issuance or from the issuance of Subordinated Indebtedness, in each
case, in replacement of, or exchange for, Subordinated Indebtedness permitted
under Section 6.1(f) to the extent such Equity Issuance or Subordinated
Indebtedness is issued on terms reasonably satisfactory to the Administrative
Agent; provided that in each case (i) the Borrower shall be in pro forma
compliance with Section 6.6 both before and after giving pro forma effect to
each such Restricted Junior Payment and (ii) no Event of Default shall have
occurred and be continuing or would otherwise arise as a result of any such
Restricted Junior Payment and (e) so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the Borrower
may make payments of fractional shares upon conversion of the Senior
Subordinated Convertible Notes on or after the Closing Date if required to do so
by the holders thereof; provided that the payments referred to in clauses
(e) shall be permitted only to the extent the Borrower can demonstrate (A) that
the Senior Consolidated Leverage Ratio would be at least 0.50 lower than the
applicable covenant level set forth in Section 6.6(b) on a pro forma basis after
giving effect to such payment and (B) Availability of at least $20,000,000 after
giving effect to such payment.

 

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Section 6.6 Financial Covenants.

 

Commencing on the day immediately following the Closing Date, the Credit Parties
shall, and shall cause their Subsidiaries to, comply with the following
financial covenants:

 

(a) Consolidated Pro Forma Leverage Ratio. The Consolidated Pro Forma Leverage
Ratio, as of the last day of each Fiscal Quarter of the Borrower occurring
during the periods indicated below, shall be less than or equal to the
following:

 

Period

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

   Ratio

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

Closing Date through September 25, 2008

   4.75 to 1.00

September 26, 2008 through September 30, 2010

   4.50 to 1.00

October 1, 2010 through September 29, 2011

   4.25 to 1.00

September 30, 2011 through September 27, 2012

   4.00 to 1.00

 

(b) Consolidated Senior Leverage Ratio. The Consolidated Senior Leverage Ratio,
as of the last day of each Fiscal Quarter of the Borrower occurring during the
periods indicated below, shall be less than or equal to the following:

 

Period

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

   Ratio

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

Closing Date through September 24, 2009

   3.25 to 1.00

September 25, 2009 through September 27, 2012

   3.00 to 1.00

 

(c) Consolidated Fixed Charge Coverage Ratio. The Consolidated Fixed Charge
Coverage Ratio, as of the last day of each Fiscal Quarter of the Borrower, shall
be greater than or equal to 1.10 to 1.00.

 

Section 6.7 Restriction on Fundamental Changes, Asset Sales and Acquisitions.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of the Borrower or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or Capital Stock or
other evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:

 

(a) so long as no Default or Event of Default shall have occurred and be
continuing or shall be caused thereby, (i) any Guarantor or other Subsidiary of
the Borrower may be merged with or into the Borrower or any wholly-owned
Guarantor, or be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to the
Borrower or any wholly-owned Guarantor and (ii) in connection with any Permitted
Acquisition, the Borrower or any Guarantor may merge into or consolidate with
any other Person or permit any other Person to merge into or consolidate with
it; provided that (A) if such merger involves

 

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the Borrower, the Borrower shall be the continuing or surviving corporation and
(B) if such a merger involves a wholly-owned Guarantor, such wholly-owned
Guarantor shall be the continuing or surviving corporation or such continuing or
surviving corporation shall be a wholly-owned Subsidiary of the Borrower and
shall comply with Sections 5.9, 5.10 and 5.11 hereof;

 

(b) the Borrower and its Subsidiaries may sell inventory in the ordinary course
of business and dispose of obsolete, worn out or surplus property in the
ordinary course of business;

 

(c) subject to Section 6.11, the Borrower and its Subsidiaries may make asset
sales not otherwise permitted by this Section 6.7 of (i) assets having a fair
market value not in excess of $15,000,000 in the aggregate in any four Fiscal
Quarter period, or $75,000,000 in the aggregate during the term of this Credit
Agreement; provided that properties acquired in Permitted Acquisitions shall be
excluded from the foregoing baskets to the extent the sale of such properties is
contemplated at the time of such Permitted Acquisitions, and (ii) sale and
leasebacks permitted by Section 6.8; provided that (A) the consideration
received for such assets shall be in an amount at least equal to the fair market
value thereof, (B) at least 80% of the consideration received shall be Cash and
(C) the Net Cash Proceeds of such asset sales shall be applied as required by
Section 2.8(b)(ii);

 

(d) the Borrower or any Subsidiary of the Borrower may make acquisitions (each a
“Permitted Acquisition”) of assets and businesses (including acquisitions of the
Capital Stock or other equity interests of another Person); provided that:

 

(i) immediately prior to and after giving effect to any such acquisition, the
Borrower and its Subsidiaries shall be in compliance with the provisions of
Section 6.12 hereof;

 

(ii) such Person becomes a Subsidiary of the Borrower, or such business,
property or other assets are acquired by the Borrower or a Subsidiary of the
Borrower;

 

(iii) prior to the consummation of such acquisition, the Borrower shall deliver
to the Administrative Agent (A) an Officers’ Certificate (1) certifying that no
Default or Event of Default under this Agreement shall then exist or shall occur
as a result of such acquisition and (2) demonstrating, in a manner consistent
with past practices or otherwise acceptable to the Administrative Agent, that
after giving effect to such acquisition and to all Indebtedness to be incurred
or assumed or repaid in connection with or as consideration for such
acquisition, that the Borrower would be in pro forma compliance with the
financial covenants referred to in Section 6.6 for the four consecutive Fiscal
Quarter period ending immediately prior to the date of the proposed acquisition
(and demonstrating, in a manner consistent with past practices or otherwise
acceptable to the Administrative Agent, that the Consolidated Pro Forma Leverage
Ratio would be at least 0.25 lower than the applicable covenant level set forth
in Section 6.6(a) after giving effect to such acquisition on a pro forma basis);
provided that if such acquisition is consummated during the first 45 days after
the end of a Fiscal Quarter, then such pro forma compliance shall be determined
for the four consecutive Fiscal Quarter period

 

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ending on the last day of the penultimate Fiscal Quarter prior to the date of
such acquisition, (B) a copy of all environmental reports obtained in connection
with such acquisition and a copy of the principal documents (e.g., purchase
agreement, merger agreement) related to such acquisition, (C) for any
acquisition with total consideration in excess of $50,000,000, a copy, prepared
in conformity with GAAP or otherwise acceptable to the Administrative Agent, of
financial statements (audited financial statements to the extent available) of
the Person or business so acquired for the immediately preceding four
consecutive Fiscal Quarter period corresponding to the calculation period for
the financial covenants in the preceding clause (A) (and, if an asset purchase,
pro forma financial statements on a historical basis), (D) for any acquisition
with total consideration in excess of $200,000,000, copies, prepared in
conformity with GAAP or otherwise acceptable to the Administrative Agent, of
audited financial statements of the Person or business so acquired for the most
recent available Fiscal Year, and of unaudited financial statements prepared in
a manner consistent with such Person’s most recent audited financial statements
for the four consecutive Fiscal Quarter period corresponding to the calculation
period for the financial covenants in the preceding clause (A) (and, if an asset
purchase, pro forma financial statements on a historical basis); provided that,
if audited financial statements are not available for a period exceeding two
Fiscal Quarters following the date of the most recent audited financial
statements provided for the Person or business so acquired, then the Borrower
also will provide a due diligence report in form and substance acceptable to the
Administrative Agent from a third party auditor acceptable to the Administrative
Agent and (E) such other information as the Administrative Agent may reasonably
request;

 

(iv) the Borrower shall, and shall cause its Subsidiaries to, comply with the
requirements of Sections 5.9, 5.10 and 5.11 hereof with respect to such
acquisitions;

 

(v) after giving effect to such acquisition, there shall be at least $20,000,000
of borrowing availability under the Revolving Committed Amount;

 

(vi) such acquisition is not a “hostile” acquisition and has been approved by
the board of directors and/or shareholders of the Borrower and the Person that
is the subject of the acquisition; and

 

(vii) with respect to any single acquisition (or series of related acquisitions)
of 20 or more stores or any single acquisition (or series of related
acquisitions) where the purchase price is equal to or greater than $10,000,000,
such Person has EBITDA for the twelve month period ending as of the most recent
fiscal quarter end of such Person prior to the acquisition date in an amount
greater than $0, after giving effect to all adjustments to EBITDA permitted
pursuant to Regulation S-X and any cost savings or synergies acceptable to the
Administrative Agent;

 

provided, however, to the extent an acquisition fails to meet the requirements
set forth in Section 6.7(d)(iii)(A)(2) or Section 6.7(d)(v) above, but otherwise
satisfies the other requirements set forth in this Section 6.7(d), the Borrower
and its Subsidiaries may make such acquisition (each an “Additional
Acquisition”) subject to the following conditions: (1) no more

 

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than 10 stores may be acquired in any Fiscal Year pursuant to Additional
Acquisitions, (2) the total consideration paid for Additional Acquisitions in
any Fiscal Year shall not exceed $10,000,000 in the aggregate, (3) for purposes
of this Credit Agreement, any such Additional Acquisition shall be treated as a
capital expenditure rather than a Permitted Acquisition and shall be included in
the calculation of Consolidated Capital Expenditures for the relevant period and
(4) each such Additional Acquisition shall be subject to the approval of the
Administrative Agent, not to be unreasonably withheld.

 

(e) the Borrower may amend its Certificate of Incorporation to create and issue
classes or series of preferred stock pursuant thereto; provided that any class
or series of preferred stock issued under such authorized “blank check”
preferred stock shall not be Disqualified Capital Stock;

 

(f) the Borrower may terminate any Hedging Agreement permitted pursuant to
Section 6.3(h); and

 

(g) the Borrower and its Subsidiaries may make transfers of any of their
properties or assets to another Person in transactions in which 80% of the
consideration received by the transferor consists of properties or assets (other
than Cash) that will be used in the business of the transferor; provided that
(i) the aggregate fair market value (as determined in good faith by the board of
directors of the Borrower) of the property or assets being transferred by the
Borrower or such Subsidiary is not greater than the aggregate fair market value
(as determined in good faith by the board of directors of the Borrower) of the
property or assets received by the Borrower or such Subsidiary in such exchange,
(ii) the aggregate fair market value (as determined in good faith by the board
of directors of the Borrower) of all property or assets transferred by the
Borrower and any of its Subsidiaries in connection with such exchanges in any
Fiscal Year shall not exceed $20,000,000 and (iii) the terms of any such
transaction shall be reasonably satisfactory to the Administrative Agent.

 

Section 6.8 Sales and Lease-Backs.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (a) which the Borrower or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person (other than the
Borrower or any of its Subsidiaries) or (b) which the Borrower or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by the Borrower or any
of its Subsidiaries to any Person (other than the Borrower or any of its
Subsidiaries) in connection with such lease; provided that (i) the Borrower and
its Subsidiaries may remain liable as lessee or as a guarantor or other surety
with respect to any lease entered into by the Borrower or any such Subsidiary
prior to the Closing Date and set forth on Schedule 6.8-1 annexed hereto,
(ii) to the extent such sale and lease-back transaction relates to properties or
assets owned by the Borrower or any of its Subsidiaries as of the Closing Date
and set forth on Schedule 6.8-2 or acquired by the Borrower or any of its
Subsidiaries after the Closing Date, the Borrower and its Subsidiaries may
become liable as lessee, guarantor or other

 

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surety with respect to new leases that would otherwise be prohibited by this
Section 6.8 to the extent that (A) such lease, if a Capital Lease, is permitted
pursuant to Section 6.1(c), (B) the consideration received is at least equal to
the fair market value of the property sold as determined in good faith by the
Borrower’s board of directors or a duly-appointed executive committee thereof,
(C) such sale and lease-back transaction occurs within 270 days of the
acquisition or completion of construction, improvement or remodeling, as the
case may be, of such property or asset by the Borrower or any of its
Subsidiaries; (D) the aggregate amount of assets sold pursuant to all sales and
lease-backs (excluding the properties listed on Schedule 6.8-2 and properties
acquired in Permitted Acquisitions that are made subject to sale leaseback
transactions contemplated at the time of such Permitted Acquisitions with
respect to such properties) made after the Closing Date shall not exceed
$20,000,000 and (E) the Net Cash Proceeds derived from the sale and leaseback of
such sold properties or assets owned by the Borrower and its Subsidiaries shall
be applied in accordance with Section 2.8(b)(ii) and (iii) without limiting the
foregoing terms of this Section 6.8, the Borrower and its Subsidiaries shall
have the right to subject existing properties of the Borrower and its
Subsidiaries or properties acquired in Permitted Acquisitions to Permitted Sale
Leaseback Transactions in exchange for properties that are already subject to
such Permitted Sale Leaseback Transactions in an aggregate amount not to exceed
$5,000,000 in value for the exchanged properties during any fiscal year and
$15,000,000 in value for the exchanged properties during the term of this
Agreement.

 

Section 6.9 Sale or Discount of Receivables.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.

 

Section 6.10 Transactions with Shareholders and Affiliates.

 

The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of Capital Stock of the
Borrower or with any Affiliate of the Borrower or of any such holder
(collectively “Related Persons”) on terms that are less favorable to the
Borrower or that Subsidiary, as the case may be, than those that might be
obtained at the time in an arm’s length transaction from Persons who are not
Related Persons; provided that the foregoing restriction shall not apply to
(a) any transaction between the Borrower and any of its wholly-owned
Subsidiaries or between any of its wholly-owned Subsidiaries, (b) reasonable and
customary fees paid to members of the board of directors of the Borrower,
(c) compensation arrangements and benefit plans for officers and other employees
of the Borrower and its Subsidiaries entered into or maintained or established
in the ordinary course of business and in accordance with historic practices of
the Borrower and its Subsidiaries, (d) any Investment made in accordance with
Section 6.3 or (e) any payment of cash dividends or repurchase of Capital Stock
of the Borrower to the extent permitted by Section 6.5.

 

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Section 6.11 Disposal of Subsidiary Capital Stock; Formation of New
Subsidiaries.

 

(a) Disposal of Subsidiary Capital Stock. Except for any sale of 100% of the
Capital Stock of any of its Subsidiaries in compliance with the provisions of
Section 6.7(d), the Borrower shall not:

 

(i) directly or indirectly sell, assign, pledge or otherwise encumber or dispose
of any shares of Capital Stock of any of its Subsidiaries, except to qualify
directors if required by applicable law; or

 

(ii) permit any of its Subsidiaries directly or indirectly to sell, assign,
pledge or otherwise encumber or dispose of any shares of Capital Stock of any of
its Subsidiaries (including such Subsidiary), except to the Borrower, another
Subsidiary of the Borrower, or to qualify directors if required by applicable
law.

 

(b) Formation of New Subsidiaries. The Borrower will not, nor will it permit any
Subsidiary to, create, form or acquire any Subsidiaries, except for Domestic
Subsidiaries which are joined as Additional Credit Parties if required in
accordance with the terms hereof.

 

Section 6.12 Conduct of Business.

 

From and after the Closing Date, the Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than the businesses
engaged in by the Borrower and its Subsidiaries on the Closing Date and similar
or related businesses. The fair market value of the consolidated assets utilized
by the Borrower and its Subsidiaries in gaming activities and the revenue
derived by the Borrower and its Subsidiaries from gaming activities shall not
exceed an amount equal to 4% of the consolidated assets and 4% of the
consolidated revenues, respectively, of the Borrower and its Subsidiaries.

 

Section 6.13 Restrictions on Certain Amendments; Senior Debt Status.

 

(a) Amendments or Waivers of Certain Related Agreements. Neither the Borrower
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreement (other than any Related
Agreement evidencing or governing any Subordinated Indebtedness) after the
Closing Date without in each case obtaining the prior written consent of
Required Lenders to such amendment or waiver.

 

(b) Amendments of Documents Relating to Subordinated Indebtedness. The Borrower
shall not, and shall not permit any of its Subsidiaries to, amend or otherwise
change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or

 

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change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to the Borrower or the Lenders.

 

(c) Designation of “Designated Senior Indebtedness”. The Borrower shall not
designate any Indebtedness as “Designated Senior Indebtedness” (as defined in
the Senior Subordinated Note Indenture, the Senior Convertible Note Indenture or
the indenture pursuant to which any Subordinated Indebtedness permitted under
Section 6.1(f) is issued) for purposes of the Senior Subordinated Note
Indenture, Senior Convertible Note Indenture or such other Indenture without the
prior written consent of Required Lenders.

 

(d) Amendments to Organizational Documents. The Borrower shall not, and shall
not permit any of its Subsidiaries to, amend, modify or change its certificate
of incorporation, certificate of designation (or corporate charter or other
similar organizational document) operating agreement or bylaws (or other similar
document) in any respect that is materially adverse to the interests of the
Lenders.

 

Section 6.14 Fiscal Year.

 

No Credit Party shall change its Fiscal Year-end from the last Thursday in
September without the consent of the Administrative Agent.

 

Section 6.15 Management Fees.

 

The Borrower shall not, nor shall they permit any of its Subsidiaries, directly
or indirectly, to pay any management, consulting or similar fees to any
Affiliate or to any manager, director, officer or employee of the Borrower or
any of its Subsidiaries.

 

Section 6.16 Letters of Credit.

 

The maximum amount of all letters of credit issued (including Letters of Credit
issued hereunder) or bankers’ acceptances facilities created for the account of
the Borrower and its Subsidiaries and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), shall not exceed $90,000,000 in the
aggregate at any one time.

 

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ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1 Events of Default.

 

An Event of Default shall exist upon the occurrence of any of the following
specified events (each an “Event of Default”):

 

(a) Payment Default. Failure by the Borrower to pay any installment of principal
of any Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by the
Borrower to pay when due any amount payable to the Issuing Lender in
reimbursement of any drawing under a Letter of Credit (it being understood that
the payment of such amount with the proceeds of Revolving Loans in accordance
with Section 2.4(d) hereof shall not be a failure by the Borrower to pay when
due such amount); or failure by the Borrower to pay any interest on any Loan or
any fee or any other amount due under this Agreement within five days after the
date due; or

 

(b) Defaults in Other Agreements. (i) Failure of the Borrower or any of its
Subsidiaries to pay when due any principal of or interest on or any other amount
payable in respect of one or more items of Indebtedness (other than Indebtedness
referred to in Section 7.1(a)) or Contingent Obligations with an aggregate
principal amount of $10,000,000 or more, in each case beyond the end of any
grace period provided therefor; or (ii) breach or default by the Borrower or any
of its Subsidiaries with respect to any other material term of (A) one or more
items of Indebtedness or Contingent Obligations in the aggregate principal
amounts referred to in clause (i) above or (B) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness or
Contingent Obligation(s), if the effect of such breach or default is to cause,
or to permit the holder or holders of such Indebtedness or Contingent
Obligation(s) or the beneficiary or beneficiaries of such Indebtedness or
Contingent Obligation(s) (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to its
stated maturity or the stated maturity of any underlying obligation, as the case
may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or (iii) breach or default of any Secured Hedging Agreement; or

 

(c) Breach of Certain Covenants. Failure of the Borrower to perform or comply
with any term or condition contained in Sections 5.1(c), 5.1(h), 5.12 or
Article VI of this Agreement; or

 

(d) Breach of Representation and Warranty. Any representation, warranty,
certification or other statement made by the Borrower or any of its Subsidiaries
in any Credit Document or in any statement or certificate at any time given by
the Borrower or any of its Subsidiaries in writing pursuant hereto or thereto or
in connection herewith or therewith shall be false or misleading in any material
respect on the date as of which made or deemed made; or

 

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(e) Other Defaults Under Credit Documents. Any Credit Party shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Credit Documents, other than any such term referred to in any other
subsections of this Section, and such default shall not have been remedied or
waived within 30 days after its occurrence; or

 

(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) A court having
jurisdiction in the premises shall enter a decree or order for relief in respect
of the Borrower or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state law;
or (ii) an involuntary case shall be commenced against the Borrower or any of
its Subsidiaries under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Borrower or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or (iii) there shall
have occurred the involuntary appointment of an interim receiver, trustee or
other custodian of the Borrower or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of the Borrower or any of its Subsidiaries, and any such event
described in clause (ii) or (iii) shall continue for 60 days unless dismissed,
bonded or discharged; or

 

(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) The Borrower or any
of its Subsidiaries shall have an order for relief entered with respect to it or
commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or the
Borrower or any of its Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) the Borrower or any of its Subsidiaries shall be unable, or
shall fail generally, or shall admit in writing its inability, to pay its debts
as such debts become due; or (iii) the Board of Directors of the Borrower or any
of its Subsidiaries (or any committee thereof) shall adopt any resolution or
otherwise authorize any action to approve any of the actions referred to in
clauses (i) or (ii) above; or

 

(h) Judgments and Attachments. Any money judgment, writ or warrant of attachment
or similar process involving in the aggregate at any time an amount in excess of
$10,000,000 (except to the extent adequately covered by insurance as to which a
solvent and unaffiliated insurance company has not denied coverage) shall be
entered or filed against the Borrower or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 90 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or

 

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(i) Dissolution. Any order, judgment or decree shall be entered against the
Borrower or any of its Subsidiaries decreeing the dissolution or split up of the
Borrower or that Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or

 

(j) Employee Benefit Plans. There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably be expected to
result in liability of the Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates in excess of $2,000,000 during the term of this
Agreement; or there shall exist an amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which exceeds
$2,000,000; or

 

(k) Change of Control. There shall occur a Change of Control;

 

(l) Invalidity of Guaranty; Failure of Security; Repudiation of Credit Party
Obligations. At any time after the execution and delivery thereof, (i) the
Guaranty for any reason, other than the satisfaction in full of all Credit Party
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Security Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Credit Party Obligations or any
other termination of such Security Document in accordance with the terms hereof
or thereof) or shall be declared null and void, or the Administrative Agent
shall not have or shall cease to have a valid and perfected First Priority Lien
in any Collateral purported to be covered thereby, in each case for any reason
other than the failure of the Administrative Agent or any Lender to take any
action within its control, or (iii) any Credit Party shall contest the validity
or enforceability of any Credit Document in writing or deny in writing that it
has any further liability, including with respect to future advances by the
Lenders, under any Credit Document to which it is a party; or

 

(m) Seniority of Credit Party Obligations. Any default (which is not waived or
cured within the applicable period of grace) or event of default shall occur
under any of the Senior Subordinated Notes or Senior Subordinated Convertible
Notes, or the subordination provisions contained therein shall cease to be in
full force and effect or to give the Lenders the rights, powers and privileges
purported to be created thereby, or the Credit Party Obligations shall fail to
be deemed senior Indebtedness under the terms of the Senior Subordinated Notes
or Senior Subordinated Convertible Notes.

 

Section 7.2 Acceleration; Remedies.

 

Upon the occurrence of an Event of Default, then, and in any such event, (a) if
such event is an Event of Default specified in Section 7.1(f) or Section 7.1(g)
above, automatically the Commitments shall immediately terminate and the Loans
(with accrued interest thereon) and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall immediately become due and payable, and (b) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the written consent of the Required Lenders, the
Administrative Agent may, or

 

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upon the written request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and
(ii) (x) the Administrative Agent may, or upon the written request of the
Required Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Credit Agreement and the Notes to be due and payable
forthwith and (y) direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the same
shall immediately become due and payable. In addition to the foregoing rights
and remedies, upon the occurrence of an Event of Default, the Administrative
Agent and the Lenders shall have to right to exercise any or all of their rights
and remedies under the Credit Documents and applicable law. Any amounts
described in clause (b)(ii)(y) above, when received by Administrative Agent,
shall be held by Administrative Agent pursuant to the terms of the Collateral
Account Agreement.

 

ARTICLE VIII

 

THE AGENT

 

Section 8.1 Appointment.

 

Each Lender hereby designates and appoints Wachovia as the Administrative Agent
of such Lender under this Credit Agreement, and each such Lender irrevocably
authorizes Wachovia, as the Administrative Agent for such Lender, to take such
action on its behalf under the provisions of this Credit Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Credit Agreement, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Credit Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or otherwise exist against the Administrative Agent.

 

Section 8.2 Delegation of Duties.

 

The Administrative Agent may execute any of its duties under this Credit
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint one of its
Affiliates as its agent to perform its the functions of the Administrative Agent
hereunder relating to the advancing of funds to the Borrower and distribution of
funds to the Lenders and to perform such other related functions of the
Administrative Agent hereunder as are reasonably incidental to such functions.

 

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Section 8.3 Exculpatory Provisions.

 

Neither the Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Credit Agreement (except for its or such Person’s own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Credit Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this Credit
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform their obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Credit Agreement, or to inspect the properties, books
or records of the Borrower.

 

Section 8.4 Reliance by Administrative Agent.

 

The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it in good faith
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless
(a) a written notice of assignment, negotiation or transfer thereof shall have
been filed with the Administrative Agent and (b) the Administrative Agent shall
have received the written agreement of such assignee to be bound hereby as fully
and to the same extent as if such assignee were an original Lender party hereto,
in each case in form satisfactory to the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
by the Lenders in acting, or in refraining from acting, under any of the Credit
Documents in accordance with a request of the Required Lenders or all of the
Lenders, as may be required under this Credit Agreement, and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
Lenders and all future holders of the Notes.

 

Section 8.5 Notice of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has

 

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received notice from a Lender or the Borrower referring to this Credit
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”. In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Credit Agreement expressly requires that such action be taken, or not
taken, only with the consent or upon the authorization of the Required Lenders,
or all of the Lenders, as the case may be.

 

Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.

 

Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

 

Section 8.7 Indemnification.

 

The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this Section, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of any Credit Document or any

 

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documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the Administrative
Agent’s gross negligence or willful misconduct, as determined by a court of
competent jurisdiction. The agreements in this Section shall survive the
termination of this Credit Agreement and payment of the Notes and all other
amounts payable hereunder.

 

Section 8.8 Administrative Agent in Its Individual Capacity.

 

The Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not the Administrative Agent hereunder. With
respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Credit
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms “Lender” and “Lenders” shall include the
Administrative Agent in its individual capacity.

 

Section 8.9 Successor Administrative Agent.

 

The Administrative Agent may resign as the Administrative Agent upon 30 days’
prior notice to the Borrower and the Lenders. If the Administrative Agent shall
resign as the Administrative Agent under this Credit Agreement and the Notes,
then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall be approved by the Borrower with
such approval not to be unreasonably withheld (provided, however if an Event of
Default shall exist at such time, no approval of the Borrower shall be required
hereunder), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Agent’s rights, powers and duties as the Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Credit Agreement
or any holders of the Notes. After any retiring Agent’s resignation as the
Administrative Agent, the provisions of this Section shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Credit Agreement.

 

Section 8.10 Nature of Duties.

 

Except as otherwise expressly stated herein, any agent listed on the cover page
to this Agreement (other than the Administrative Agent) shall have no
obligations, responsibilities or duties under this Credit Agreement or under any
other Credit Document other than obligations, responsibilities and duties
applicable to all Lenders in their capacity as the Lenders; provided, however,
that any such agent shall be entitled to the same rights, protections,
exculpations, notices and indemnifications granted to the Administrative Agent
under this Article VIII in their capacity as an agent hereunder.

 

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Section 8.11 Security Documents.

 

Each Lender hereby further authorizes Administrative Agent, on behalf of and for
the benefit of Lenders, to enter into each Security Document as secured party
and to be the agent for and representative of Lenders thereunder, and each
Lender agrees to be bound by the terms of each Security Documents; provided that
Administrative Agent shall not (a) enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Security
Document unless approved in accordance with the terms of Section 9.1 or
(b) release any Collateral (except as otherwise expressly permitted or required
pursuant to the terms of this Agreement or the applicable Security Document), in
each case without the prior written consent of the Required Lenders (or, if
required pursuant to Section 9.1, all Lenders); provided further, however, that,
without further written consent or authorization from the Lenders, the
Administrative Agent may execute any documents or instruments necessary to
(i) release or subordinate any Lien encumbering any item of Collateral that is
the subject of a financing, sale, sale and lease back or other disposition of
assets permitted by this Agreement or to which the Required Lenders (or, if
required pursuant to Section 9.1, all Lenders) have otherwise consented in
writing or (ii) release any Guarantor from the Guaranty if all of the Capital
Stock of such Guarantor is sold to any Person (other than an Affiliate of the
Borrower) pursuant to a sale or other disposition to which the Required Lenders
(or, if required pursuant to Section 9.1, all Lenders) have consented in
writing. Anything contained in any of the Credit Documents to the contrary
notwithstanding, the Borrower, the Administrative Agent and each Lender hereby
agree that no Lender shall have any right individually to realize upon any of
the Collateral under any Security Document or to enforce the Guaranty, it being
understood and agreed that all powers, rights and remedies under the Security
Documents and the Guaranty may be exercised solely by the Administrative Agent
for the benefit of Lenders in accordance with the terms thereof and hereof.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1 Amendments, Waivers and Release of Collateral.

 

Neither this Credit Agreement, nor any of the Notes, nor any of the other Credit
Documents, nor any terms hereof or thereof may be amended, supplemented, waived
or modified except in accordance with the provisions of this Section nor may the
Collateral be released except as specifically provided herein or in the Security
Documents or in accordance with the provisions of this Section. The Required
Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Credit Agreement or
the other Credit Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders may specify in such instrument, any of the
requirements of this Credit Agreement or the other Credit Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, waiver, supplement, modification or release
shall:

 

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(i) without the written consent of each Lender directly affected thereby:
(A) reduce or forgive the principal amount, or extend the scheduled date of
payment or maturity, of any Loan or Note or any installment thereon; or
(B) reduce the stated rate of or forgive any interest or fee payable hereunder
(other than interest at the increased post-default rate) or extend or waive the
scheduled date of any payment of interest or fee; or (C) provide for Interest
Periods greater than six months; or (D) increase the amount or extend the
expiration date of any Lender’s Commitment, or

 

(ii) amend, modify or waive any provision of this Section or change the
percentage specified in the definition of Required Lenders without the written
consent of all of the Lenders, or

 

(iii) amend, modify or waive any provision of Section 2.13 or any other term
with respect to the priority of any Loan or the pro rata treatment of payments
without the written consent of each Lender directly affected thereby, or

 

(iv) except as otherwise permitted by this Agreement, release all or
substantially all of the Guarantors from their obligations under the Guaranty
without the written consent of all of the Lenders and Hedging Agreement
Providers, or

 

(v) release all or substantially all of the Collateral without the written
consent of all of the Lenders and Hedging Agreement Providers, or

 

(vi) amend, modify or waive any provision of the Credit Documents requiring
consent, approval or request of the Required Lenders or all Lenders, without the
written consent of all of the Required Lenders or the Lenders as appropriate, or

 

(vii) amend, modify or waive any provision of the Credit Documents affecting the
rights or duties of the Administrative Agent (including Article VIII) or the
Issuing Lender without the written consent of the Administrative Agent or the
Issuing Lender, as applicable, in addition to the Lenders required herein to
take such action, or

 

(viii) without the consent of the Revolving Lenders holding in the aggregate
more than 50% of the Revolving Commitments (or if the Revolving Commitments have
been terminated, the outstanding Revolving Loans), amend, modify or waive any
provision in Section 4.2 or waive any Default or Event of Default (or amend any
Credit Document to effectively waive any existing Default or Event of Default)
if the effect of such amendment, modification or waiver is that the Revolving
Lenders shall be required to fund Revolving Loans when such Revolving Lenders
would otherwise not be required to so fund pursuant to the terms of Section 4.2,
or

 

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(ix) amend or modify the definition of Credit Party Obligations to delete or
exclude any obligation or liability described therein without the written
consent of each Lender and each Hedging Agreement Provider directly affected
thereby, or

 

(x) amend, modify or waive the order in which Credit Party Obligations are paid
in Section 2.8(b) or Section 2.13(b) without the written consent of each Lender
and each Hedging Agreement Provider directly affected thereby.

 

Any such waiver, any such amendment, supplement or modification and any such
release shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the other Credit Parties, the Lenders, the Issuing Lender, the
Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the other Credit Parties, the Lenders, the Issuing Lender
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the outstanding Loans and Notes and other Credit
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

 

Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9 and 8.11);
provided, however, that the Administrative Agent will provide written notice to
the Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Credit Agreement by unilaterally amending or supplementing Section 9.2 from
time to time in the manner requested by the Borrower, the Administrative Agent
or any Lender in order to reflect any assignments or transfers of the Loans as
provided for hereunder; provided, however, that the Administrative Agent shall
promptly deliver a copy of any such modification to the Borrower and each
Lender.

 

Notwithstanding the fact that the consent of all Lenders is required in certain
circumstances as set forth above, (x) each Lender is entitled to vote as such
Lender sees fit on any bankruptcy reorganization plan that affects the Loans,
and each Lender acknowledges that the provisions of Section 1126(c) of the
Bankruptcy Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use Cash
collateral in the context of a bankruptcy or insolvency proceeding.

 

Section 9.2 Notices.

 

Except as otherwise provided in Article II, all notices, requests and demands to
or upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) when
transmitted via telecopy (or other facsimile device) to the number set out
herein, (c) the next Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case, addressed as
follows in the case of the Borrower, the other Credit Parties and the

 

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Administrative Agent, and at the addresses provided to the Borrower in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:

 

The Borrower and the        other Credit Parties:      The Pantry, Inc.       
1801 Douglas Drive        Sanford, North Carolina        Attention: Chief
Financial Officer        Telecopier: (919) 774-3329        Telephone: (919)
774-6700 Administrative Agent:      Wachovia Bank, National Association, as
Administrative Agent Charlotte Plaza        201 South College Street, CP8       
Charlotte, North Carolina 28288-0680        Attention: Syndication Agency
Services        Telecopier: (704) 383-0288        Telephone: (704) 374-2698  
     with a copy to:        Wachovia Bank, National Association        One
Wachovia Center, TW-5        Charlotte, North Carolina 28288-0760       
Attention: Michael Jordan        Telecopier: (704) 383-6647        Telephone:
(704) 383-8155

 

Section 9.3 No Waiver; Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, 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.

 

Section 9.4 Survival of Representations and Warranties.

 

All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Credit Agreement and the Notes
and the making of the Loans, provided that all such representations and
warranties shall terminate on the date upon which the Commitments have been
terminated and all amounts owing hereunder and under any Notes have been paid in
full.

 

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Section 9.5 Payment of Expenses and Taxes.

 

The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation, negotiation, printing and execution of, and any
amendment, supplement or modification to, this Credit Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, together with the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
the Administrative Agent and, after the occurrence of an Event of Default, the
Lenders for all costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Credit Agreement, the Notes and any
such other documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and to the Lenders
(including reasonable allocated costs of in-house legal counsel), provided, that
the Borrower shall be obligated to pay reasonable fees and expenses of only one
law firm to act as counsel for the Lenders (other than counsel to the
Administrative Agent) in each applicable jurisdiction in connection with the
enforcement of the Facilities, and (c) on demand, to pay, indemnify, and hold
each Lender and the Administrative Agent harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective Affiliates, parents, subsidiaries,
officers, directors, employees, agents, trustees, advisors and attorneys-in-fact
harmless from and against, any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of the Credit Documents and any such
other documents and the use, or proposed use, of proceeds of the Loans (all of
the foregoing, collectively, the “indemnified liabilities”); provided, however,
that the Borrower shall not have any obligation hereunder to the Administrative
Agent or any Lender with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of the Administrative Agent or any such
Lender, as determined by a court of competent jurisdiction. The agreements in
this Section shall survive repayment of the Loans, Notes and all other amounts
payable hereunder.

 

Section 9.6 Successors and Assigns; Participations; Purchasing Lenders.

 

(a) This Credit Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the Notes
and their respective successors and assigns, except that the Borrower and the
Guarantors may not assign or transfer any of their rights or obligations under
this Credit Agreement or the other Credit Documents without the prior written
consent of each Lender.

 

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(b) Any Lender may, in accordance with applicable law, at any time sell to one
or more banks or other entities (“Participants”) participating interests in any
Loan owing to such Lender, any Note held by such Lender, any Commitment of such
Lender, or any other interest of such Lender hereunder. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender’s
obligations under this Credit Agreement to the other parties to this Credit
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Credit Agreement, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Credit
Agreement. No Lender shall transfer or grant any participation under which the
Participant shall have rights to approve any amendment to or waiver of this
Credit Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the scheduled maturity of any Loan or Note
or any installment thereon in which such Participant is participating, or reduce
the stated rate or extend the time of payment of interest or fees thereon
(except in connection with a waiver of interest at the increased post-default
rate) or reduce the principal amount thereof, or increase the amount of the
Participant’s participation over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default shall not constitute
a change in the terms of such participation, and that an increase in any
Commitment or Loan shall be permitted without consent of any participant if the
Participant’s participation is not increased as a result thereof), (ii) except
as otherwise permitted by this Agreement, release all or substantially all of
the Guarantors from their obligations under the Guaranty, (iii) release all or
substantially all of the Collateral, or (iv) consent to the assignment or
transfer by the Borrower or the Guarantors of any of their rights and
obligations under this Credit Agreement. In the case of any such participation,
the Participant shall not have any rights under this Credit Agreement or any of
the other Credit Documents (the Participant’s rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the Participant relating thereto) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, provided that each Participant shall be entitled to the
benefits of Sections 2.16, 2.17, 2.19 and 9.5 with respect to its participation
in the Commitments and the Loans outstanding from time to time; provided, that
no Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.

 

(c) Any Lender may, in accordance with applicable law, at any time sell or
assign to (i) any Lender or any Affiliate or Related Fund of any Lender (each an
“Existing Purchasing Lender”) and (ii) with the consent of the Administrative
Agent and, so long as no Event of Default has occurred and is continuing, the
Borrower (in each case, which consent shall not be unreasonably withheld or
delayed), to one or more additional banks or financial institutions or entities
(each a “New Purchasing Lender”; together with the Existing Purchasing Lenders,
the “Purchasing Lenders”), all or any part of its rights and obligations under
this Credit Agreement and the Notes in minimum amounts of $1,000,000 (or such
lesser amount as approved by the Administrative Agent) with respect to its
Revolving Commitment, its Revolving Loans or its Term Loan (or, if less, the
entire amount of such transferor Lender’s interests and obligations), pursuant
to a Commitment Transfer Supplement executed by such Purchasing Lender, such

 

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transferor Lender, the Administrative Agent and, so long as no Event of Default
has occurred and is continuing, the Borrower, and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided,
however, that (i) any sale or assignment by Wachovia of the Term Loan in
connection with the primary syndication thereof shall not require the consent of
the Borrower or the Administrative Agent and (ii) any sale or assignment to an
Existing Purchasing Lender shall not require the consent of the Administrative
Agent or the Borrower nor shall any such sale or assignment be subject to the
minimum assignment amounts specified herein. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Closing Date specified in
such Commitment Transfer Supplement, (x) the Purchasing Lender thereunder shall
be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (y) the transferor Lender thereunder shall,
to the extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Credit Agreement (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a transferor
Lender’s rights and obligations under this Credit Agreement, such transferor
Lender shall cease to be a party hereto). Such Commitment Transfer Supplement
shall be deemed to amend this Credit Agreement to the extent, and only to the
extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Credit Agreement and the Notes. On or prior to the
Transfer Closing Date specified in such Commitment Transfer Supplement, the
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the Notes delivered to the Administrative Agent pursuant
to such Commitment Transfer Supplement new Notes to the order of such Purchasing
Lender in an amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, unless the transferor Lender has not
retained a Commitment hereunder, new Notes to the order of the transferor Lender
in an amount equal to the Commitment retained by it hereunder. Such new Notes
shall be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby. The Notes surrendered by the transferor Lender shall be
returned by the Administrative Agent to the Borrower marked “canceled”.

 

(d) The Administrative Agent shall maintain at its address referred to in
Section 9.2 a copy of each Commitment Transfer Supplement delivered to it and a
register (the “Register”) for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Credit Agreement.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.

 

(e) Upon its receipt of a duly executed Commitment Transfer Supplement, together
with payment to the Administrative Agent by the transferor Lender or the
Purchasing Lender, as agreed between them, of a registration and processing fee
of $3,500.00 for each Purchasing Lender (other than an Affiliate or Related Fund
of a Lender to the extent of the Commitment of such Lender that is assigned to
such Affiliate or Related Fund and provided that, in the case of

 

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contemporaneous assignments by a Lender to more than one Affiliate or Related
Fund of a Person, only a single such $3,500 fee shall be payable for all such
contemporaneous assignments) listed in such Commitment Transfer Supplement and
the Notes subject to such Commitment Transfer Supplement, the Administrative
Agent shall (i) accept such Commitment Transfer Supplement, (ii) record the
information contained therein in the Register and (iii) give prompt notice of
such acceptance and recordation to the Lenders and the Borrower.

 

(f) The Borrower authorizes each Lender to disclose to any Participant, pledgee
or Purchasing Lender (each, a “Transferee”) and any prospective Transferee any
and all financial information in such Lender’s possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Credit Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in connection with such
Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming
a party to this Credit Agreement, in each case subject to Section 9.15.

 

(g) At the time of each assignment pursuant to this Section to a Person which is
not already a Lender hereunder and which is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, the respective assignee Lender shall provide to the Borrower and the
Administrative Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a 2.19 Certificate) described in Section 2.19.

 

(h) Nothing herein shall prohibit any Lender from pledging or assigning any of
its rights under this Credit Agreement (including, without limitation, any right
to payment of principal and interest under any Note) to secure obligations of
such Lender, including without limitation, (i) any pledge or assignment to
secure obligations to a Federal Reserve Bank and (ii) in the case of any Lender
that is a fund, any pledge or assignment to any holders of obligations owed, or
securities issued, by such Lender including to any trustee for, or any other
representative of, such holders; it being understood that the requirements for
assignments set forth in this Section 9.6 shall not apply to any such pledge or
assignment of a security interest, except with respect to any foreclosure or
similar action taken by such pledgee or assignee with respect to such pledge or
assignment; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.

 

Section 9.7 Adjustments; Set-off.

 

(a) Each Lender agrees that if any Lender (a “benefited Lender”) shall at any
time receive any payment of all or part of its Loans, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 7.1(f) or Section 7.1(g), or otherwise) in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender’s Loans, or interest thereon, such benefited Lender shall
purchase for Cash from the other Lenders a participating interest in such
portion of each such other Lender’s Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that

 

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if all or any portion of such excess payment or benefits is thereafter recovered
from such benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender’s Loans may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

 

(b) In addition to any rights and remedies of the Lenders provided by law
(including, without limitation, other rights of set-off), each Lender shall have
the right, without prior notice to the applicable Credit Party, any such notice
being expressly waived by the applicable Credit Party to the extent permitted by
applicable law, upon the occurrence of any Event of Default, to setoff and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
applicable Credit Party, or any part thereof in such amounts as such Lender may
elect, against and on account of the Credit Party Obligations and claims of
every nature and description of the Administrative Agent and the Lenders against
the Credit Parties, in any currency, whether arising hereunder, under the Notes
or under any documents contemplated by or referred to herein or therein, whether
or not such Lender, the Administrative Agent or any other Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured; provided that any amount received by a Lender pursuant
to this Section 9.7(b) shall be transferred to the Administrative Agent and
distributed in accordance with the terms of Section 2.13(b). The aforesaid right
of set-off may be exercised by such Lender against the applicable Credit Party
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
such Credit Party, or against anyone else claiming through or against such
Credit Party or any such trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or attachment
creditor, notwithstanding the fact that such right of set-off shall not have
been exercised by such Lender prior to the occurrence of any Event of Default.
Each Lender agrees promptly to notify the applicable Credit Party 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.

 

Section 9.8 Table of Contents and Section Headings.

 

The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Credit
Agreement.

 

Section 9.9 Counterparts.

 

This Credit Agreement may be executed by one or more of the parties to this
Credit Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Credit Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

 

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Section 9.10 Effectiveness.

 

This Credit Agreement shall become effective on the date on which all of the
parties hereto have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Administrative Agent pursuant to
Section 9.2 or, in the case of the Lenders, shall have given to the
Administrative Agent written, telecopied or telex notice (actually received) at
such office that the same has been signed and mailed to it. Upon this Credit
Agreement becoming effective, the Existing Credit Agreement shall be deemed
amended and restated by this Credit Agreement and all obligations of the lenders
under the Existing Credit Agreement to make extensions of credit thereunder
shall terminate.

 

Section 9.11 Severability.

 

Any provision of this Credit Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 9.12 Integration.

 

This Credit Agreement and the Notes represent the agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent, the Borrower or any Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the Notes.

 

Section 9.13 Governing Law.

 

This Credit Agreement and the Notes and the rights and obligations of the
parties under this Credit Agreement and the Notes shall be governed by, and
construed and interpreted in accordance with, the law of the State of North
Carolina (without giving effect to any conflicts of laws principals of such
state).

 

Section 9.14 Consent to Jurisdiction and Service of Process.

 

All judicial proceedings brought against the Borrower and/or any other Credit
Party with respect to this Credit Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent jurisdiction
in the State of North Carolina, and, by execution and delivery of this Credit
Agreement, each of the Borrower and the other Credit Parties accepts, for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Credit
Agreement from which no appeal has

 

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been taken or is available. Each of the Borrower and the other Credit Parties
irrevocably agrees that all service of process in any such proceedings in any
such court may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto, such service
being hereby acknowledged by the Borrower and the other Credit Parties to be
effective and binding service in every respect. Each of the Borrower, the other
Credit Parties, the Administrative Agent and the Lenders irrevocably waives any
objection, including, without limitation, 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 such action or proceeding in any such jurisdiction.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Administrative Agent or any
Lender to bring proceedings against the Borrower or the other Credit Parties in
the court of any other jurisdiction.

 

Section 9.15 Confidentiality.

 

The Administrative Agent and each of the Lenders agrees that it will use its
best efforts not to disclose without the prior consent of the Borrower (other
than to its employees, Affiliates, auditors or counsel (provided that any such
parties shall have been made aware of this Section) or to another Lender) any
information with respect to the Borrower and its Subsidiaries which is furnished
pursuant to this Credit Agreement, any other Credit Document or any documents
contemplated by or referred to herein or therein and which is designated by the
Borrower to the Lenders in writing as confidential or as to which it is
otherwise reasonably clear such information is not public (collectively, the
“Confidential Information”), except that any Lender may disclose any such
Confidential Information (a) as has become generally available to the public
other than by a breach of this Section, (b) as may be required or appropriate in
any report, statement or testimony submitted to any municipal, state or federal
regulatory body having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or the
OCC or the NAIC or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required in response to any
summons or subpoena or any law, order, regulation or ruling applicable to such
Lender, (d) to any prospective Participant or assignee (including any assignee
or pledgee of a Lender’s obligations pursuant to Section 9.6(h)) in connection
with any contemplated transfer pursuant to Section 9.6, provided that such
prospective transferee shall have been made aware of this Section and shall have
agreed to be bound by its provisions as if it were a party to this Credit
Agreement, (e) to Gold Sheets and other similar bank trade publications; such
information to consist of deal terms and other information regarding the credit
facilities evidenced by this Credit Agreement customarily found in such
publications (f) to any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrower and its obligations,
provided that such prospective counterparty shall have been made aware of this
Section and shall have agreed to be bound by its provisions as if it were a
party to this Credit Agreement and (g) in connection with any suit, action or
proceeding for the purpose of defending itself, reducing its liability, or
protecting or exercising any of its claims, rights, remedies or interests under
or in connection with the Credit Documents or any Hedging Agreement.
Notwithstanding anything herein to the contrary, Confidential Information shall
not include, and the Administrative Agent and each Lender may disclose without
limitation of any kind, any information with respect to the

 

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“tax treatment” and “tax structure” (in each case, with the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analysis) that are
provided to the Administrative Agent or such Lender relating to such tax
treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transaction as well as other information, this
sentence shall only apply to such portions of the document or similar item that
relate to the tax treatment or tax structure of the Loans, Letters of Credit and
transactions contemplated hereby.

 

Section 9.16 Acknowledgments.

 

The Borrower and the other Credit Parties each hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
each Credit Document;

 

(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Credit Agreement and the relationship between the
Administrative Agent and the Lenders, on one hand, and the Borrower and the
other Credit Parties, on the other hand, in connection herewith is solely that
of debtor and creditor; and

 

(c) no joint venture exists among the Lenders or among the Borrower or the other
Credit Parties and the Lenders.

 

Section 9.17 Waivers of Jury Trial.

 

THE BORROWER, THE OTHER CREDIT PARTIES, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 9.18 USA Patriot Act Notice.

 

Each Lender 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.

 

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ARTICLE X

 

GUARANTY

 

Section 10.1 The Guaranty.

 

In order to induce the Lenders to enter into this Credit Agreement and to extend
credit hereunder and in recognition of the direct benefits to be received by the
Guarantors from the Extensions of Credit hereunder, each of the Guarantors
hereby agrees with the Administrative Agent and the Lenders as follows: such
Guarantor hereby unconditionally and irrevocably jointly and severally
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all Credit Party Obligations. If any or all of the Credit Party Obligations
becomes due and payable hereunder, each Guarantor unconditionally promises to
pay such indebtedness to the Administrative Agent and the Lenders, on order, or
demand, together with any and all reasonable expenses which may be incurred by
the Administrative Agent or the Lenders in collecting any of the Credit Party
Obligations.

 

Notwithstanding any provision to the contrary contained herein or in any other
of the Credit Documents, to the extent the obligations of a Guarantor would
otherwise be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).

 

Section 10.2 Bankruptcy.

 

Additionally, each of the Guarantors unconditionally and irrevocably guarantees
jointly and severally the payment of any and all indebtedness of the Borrower to
the Lenders whether or not due or payable by the Borrower upon the occurrence of
any of the events specified in Section 7.1(f) or Section 7.1(g), and
unconditionally promises to pay such Credit Party Obligations to the
Administrative Agent for the account of the Lenders, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that to
the extent that the Borrower or a Guarantor shall make a payment or a transfer
of an interest in any property to the Administrative Agent or any Lender, which
payment or transfer or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, or otherwise is avoided, and/or required to be
repaid to the Borrower or a Guarantor, the estate of the Borrower or a
Guarantor, a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
avoidance or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.

 

Section 10.3 Nature of Liability.

 

The liability of each Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the indebtedness of the Borrower whether
executed by any such

 

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Guarantor, any other guarantor or by any other party, and no Guarantor’s
liability hereunder shall be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the indebtedness of the Borrower, or (c) any payment on
or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower or any other Guarantor, or (e) any payment made to the Administrative
Agent or the Lenders on the indebtedness which the Administrative Agent or such
Lenders repay the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each of the Guarantors waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.

 

Section 10.4 Independent Obligation.

 

The obligations of each Guarantor hereunder are independent of the obligations
of any other guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other guarantor or the Borrower and whether or not any other
Guarantor or the Borrower is joined in any such action or actions.

 

Section 10.5 Authorization.

 

Each of the Guarantors authorizes the Administrative Agent and each Lender
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to (a) renew, compromise, extend, increase, accelerate or
otherwise change the time for payment of, or otherwise change the terms of the
indebtedness or any part thereof in accordance with this Credit Agreement,
including any increase or decrease of the rate of interest thereon, (b) take and
hold security from any guarantor or any other party for the payment of this
Guaranty or the indebtedness and exchange, enforce waive and release any such
security, (c) apply such security and direct the order or manner of sale thereof
as the Administrative Agent and the Lenders in their discretion may determine
and (d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors.

 

Section 10.6 Reliance.

 

It is not necessary for the Administrative Agent or the Lenders to inquire into
the capacity or powers of the Borrower or the officers, directors, members,
partners or agents acting or purporting to act on their behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.

 

Section 10.7 Waiver.

 

(a) Each of the Guarantors waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative Agent or
any Lender to (i) proceed against the Borrower, any other guarantor or any other
party, (ii) proceed against or exhaust any

 

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security held from the Borrower, any other guarantor or any other party, or
(iii) pursue any other remedy in the Administrative Agent’s or any Lender’s
power whatsoever. Each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower, any other guarantor or any other party other
than payment in full of the indebtedness, including without limitation any
defense based on or arising out of the disability of the Borrower, any other
guarantor or any other party, or the unenforceability of the indebtedness or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower other than payment in full of the indebtedness. The Administrative
Agent or any of the Lenders may, at their election, foreclose on any security
held by the Administrative Agent or a Lender by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Administrative Agent and any Lender may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the indebtedness has been paid. Each of the Guarantors waives any defense
arising out of any such election by the Administrative Agent and each of the
Lenders, even though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of the Guarantors against
the Borrower or any other party or any security.

 

(b) Each of the Guarantors waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notice of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the indebtedness and
the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any
Lender shall have any duty to advise such Guarantor of information known to it
regarding such circumstances or risks.

 

(c) Each of the Guarantors hereby agrees it will not exercise any rights of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the U.S. Bankruptcy Code, or
otherwise) to the claims of the Lenders against the Borrower or any other
guarantor of the indebtedness of the Borrower owing to the Lenders
(collectively, the “Other Parties”) and all contractual, statutory or common law
rights of reimbursement, contribution or indemnity from any Other Party which it
may at any time otherwise have as a result of this Guaranty, until the Credit
Party Obligations have been paid in full and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to exercise any
right to enforce any other remedy which the Administrative Agent and the Lenders
now have or may hereafter have against any Other Party, any endorser or any
other guarantor of all or any part of the indebtedness of the Borrower and any
benefit of, and any right to participate in, any security or collateral given to
or for the benefit of the Lenders to secure payment of the indebtedness of the
Borrower.

 

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Section 10.8 Limitation on Enforcement.

 

The Lenders agree that this Guaranty may be enforced only by the action of the
Administrative Agent acting upon the instructions of the Required Lenders and
that no Lender shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Lenders under the terms of this Credit Agreement. The Lenders further agree that
this Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.

 

Section 10.9 Confirmation of Payment.

 

The Administrative Agent and the Lenders will, upon request after payment of the
indebtedness and obligations which are the subject of this Guaranty and
termination of the Commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that the such indebtedness and obligations have
been paid and the Commitments relating thereto terminated, subject to the
provisions of Section 10.2.

 

Section 10.10 Release of Guarantor.

 

A Guarantor shall be released from all of its obligations under this Guaranty at
any time (i) such Guarantor sells all of its assets and ceases to exist,
(ii) the Borrower sells all of the Capital Stock of such Guarantor to a Person
that is not a Credit Party, or (iii) such Guarantor ceases to hold assets in
excess of $100,000 or to have annualized revenues in excess of $100,000, in each
case in a transaction in permitted by the terms of this Agreement; provided that
at any one time the value of assets and annualized revenues of all Domestic
Subsidiaries of the Borrower that are not Credit Parties shall not exceed
$1,000,000 in the aggregate.

 

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

 

BORROWER:  

THE PANTRY, INC.,

a Delaware corporation

        By:  

/s/ Daniel J. Kelly

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

    Name:   Daniel J. Kelly     Title:   Chief Financial Officer, Vice
President–Finance and Secretary GUARANTORS:  

R & H MAXXON, INC.,

a South Carolina corporation

    By:  

/s/ Daniel J. Kelly

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

    Name:   Daniel J. Kelly     Title:   Executive Vice President and Assistant
Secretary    

KANGAROO, INC.,

a Georgia corporation

    By:  

/s/ Daniel J. Kelly

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

    Name:   Daniel J. Kelly     Title:   Executive Vice President and Assistant
Secretary

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

ADMINISTRATIVE AGENT AND LENDERS:  

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent and a Lender

    By:  

/s/ Michael R. Jordan

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

    Name:   Michael R. Jordan     Title:   Managing Director

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

LENDER:   REGIONS BANK     By:  

/s/ Elaine B. Passman

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

    Name:   Elaine B. Passman     Title:   Vice President

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

LENDER:   WELLS FARGO BANK, NATIONAL ASSOCIATION     By:  

/s/ S. Michael St. Geme

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

    Name:   S. Michael St. Geme     Title:   Vice President

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

LENDER:   HARRIS N.A.     By:  

/s/ Graeme Robertson

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

    Name:   Graeme Robertson     Title:   Vice President

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

LENDER:   COOPERATIEVE CENTRALE RAIFFEISEN-BORENLEENBANK, B.A. “RABOBANK
INTERNATIONAL”, NEW YORK BRANCH     By:  

/s/ Theodore Cox

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

    Name:   Theodore Cox     Title:   Executive Director     By:  

/s/ Rebecca Morrow

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

    Name:   Rebecca Morrow     Title:   Executive Director

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

LENDER:   NORTH FORK BUSINESS CAPITAL CORP.     By:  

/s/ Robert Capasso

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

    Name:   Robert Capasso     Title:   Senior Vice President

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

LENDER:   CREDIT INDUSTRIEL ET COMMERCIAL,     By:  

/s/ Anthony Rock

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

    Name:   Anthony Rock     Title:   Vice President     By:  

/s/ Marcus Edward

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

    Name:   Marcus Edward     Title:   Vice President

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

LENDER:   NATIONAL CITY BANK     By:  

/s/ Amanda M. Hannah

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

    Name:   Amanda M. Hannah     Title:   Relationship Manager

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

LENDER:   SOVEREIGN BANK     By:  

/s/ Elisabet C. Hayes

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

    Name:   Elisabet C. Hayes     Title:   Vice President

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

LENDER:   THE CIT GROUP/BUSINESS CREDIT, INC.     By:  

/s/ Albert J. Forzano

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

    Name:   Albert J. Forzano     Title:   Vice President

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

LENDER:   GUARANTY BANK     By:  

/s/ Michael Ansolabehere

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

    Name:   Michael Ansolabehere     Title:   Vice President

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

   

RAYMOND JAMES BANK, FSB,

as a Lender

    By:  

/s/ Thomas F. Macina

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

    Name:   Thomas F. Macina     Title:   Senior Vice President

 

[signature pages continue]

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

LENDER:   CAROLINA FIRST BANK     By:  

/s/ Charles D. Chamberlain

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

    Name:   Charles D. Chamberlain     Title:   Executive Vice President

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

LENDER:   ISRAEL DISCOUNT BANK OF NEW YORK     By:  

/s/ Patrick Doran

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

    Name:   Patrick Doran     Title:   Assistant Vice President     By:  

/s/ Kevin Corbett

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

    Name:   Kevin Corbett     Title:   Senior Vice President

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

LENDER:   CREDIT SUISSE, CAYMAN ISLANDS BRANCH     By:  

/s/ Vanessa Gomez

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

    Name:   Vanessa Gomez     Title:   Vice President     By:  

/s/ Jay Chall

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

    Name:   Jay Chall     Title:   Director

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

LENDER:   RZB FINANCE LLC     By:  

/s/ John A. Valiska

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

    Name:   John A. Valiska     Title:   First Vice President     By:  

/s/ Christopher Hoedl

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

    Name:   Christopher Hoedl     Title:   Group Vice President

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

LENDER:   STATE BANK OF INDIA     By:  

/s/ Rakesh Chandra

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

    Name:   Rakesh Chandra     Title:   Vice President & Head (Credit)

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

LENDER:   ALLIED IRISH BANKS, PLC     By:  

/s/ Rima Terradista

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

    Name:   Rima Terradista     Title:   Co-Head Leverage Finance, Director of
Corporate Banking North America     By:  

/s/ Gregory J. Wiske

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

    Name:   Gregory J. Wiske     Title:   Vice President