Exhibit 10.5

 

EXECUTION COPY

 

 

 

CREDIT AGREEMENT

 

Dated as of October 6, 2005

 

Among

 

THE FINANCIAL INSTITUTIONS PARTY HERETO

 

as the Lenders

 

and

 

CREDIT SUISSE

 

as Administrative Agent and Collateral Agent,

 

and

 

NEWTON ACQUISITION, INC.,

 

and

 

NEWTON ACQUISITION MERGER SUB, INC. (to be merged with and into The Neiman
Marcus Group, Inc.)

 

and

 

The subsidiaries of The Neiman Marcus Group, Inc. from time to time party hereto

 

CREDIT SUISSE
DEUTSCHE BANK SECURITIES INC.
as Joint Lead Arrangers

 

BANC OF AMERICA SECURITIES LLC
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Co-Arrangers

 

CREDIT SUISSE
DEUTSCHE BANK SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Joint Bookrunners

 

and

 

DEUTSCHE BANK SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Co-Syndication Agents

 

 

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

 

TABLE OF CONTENTS

 

ARTICLE I

 

 

 

 

 

Definitions

 

 

 

 

 

SECTION 1.01. Defined Terms

 

 

SECTION 1.02. Classification of Loans and Borrowings
[a05-17347_1ex10d5.htm#Section1_02_052920]

 

 

SECTION 1.03. Terms Generally [a05-17347_1ex10d5.htm#Section1_03_053001]

 

 

SECTION 1.04. Effectuation of Transactions
[a05-17347_1ex10d5.htm#Section1_04_053003]

 

 

 

 

 

ARTICLE II [a05-17347_1ex10d5.htm#ArticleiiTheCredits_044619]

 

 

 

 

 

The Credits [a05-17347_1ex10d5.htm#TheCredits_053724]

 

 

 

 

 

SECTION 2.01. Commitments [a05-17347_1ex10d5.htm#Section2_01_053004]

 

 

SECTION 2.02. Loans and Borrowings [a05-17347_1ex10d5.htm#Section2_02_053004]

 

 

SECTION 2.03. Request for Borrowing on the Closing Date
[a05-17347_1ex10d5.htm#Section2_03_053011]

 

 

SECTION 2.04. Funding of the Borrowing on the Closing Date
[a05-17347_1ex10d5.htm#Section2_04_053012]

 

 

SECTION 2.05. Type; Interest Elections
[a05-17347_1ex10d5.htm#Section2_05_053013]

 

 

SECTION 2.06. Termination of Commitments
[a05-17347_1ex10d5.htm#Section2_06_053014]

 

 

SECTION 2.07. Repayment of Loans; Evidence of Debt
[a05-17347_1ex10d5.htm#Section2_07_053015]

 

 

SECTION 2.08. Optional Prepayment of Loans
[a05-17347_1ex10d5.htm#Section2_08_053015]

 

 

SECTION 2.09. Mandatory Prepayment of Loans
[a05-17347_1ex10d5.htm#Section2_09_053016]

 

 

SECTION 2.10. Fees [a05-17347_1ex10d5.htm#Section2_10_053017]

 

 

SECTION 2.11. Interest [a05-17347_1ex10d5.htm#Section2_11_053018]

 

 

SECTION 2.12. Alternate Rate of Interest
[a05-17347_1ex10d5.htm#Section2_12_053019]

 

 

SECTION 2.13. Increased Costs [a05-17347_1ex10d5.htm#Section2_13_053020]

 

 

SECTION 2.14. Break Funding Payments [a05-17347_1ex10d5.htm#Section2_14_053021]

 

 

SECTION 2.15. Taxes [a05-17347_1ex10d5.htm#Section2_15_053022]

 

 

SECTION 2.16. Payments Generally; Allocation of Proceeds; Sharing of Set-offs
[a05-17347_1ex10d5.htm#Section2_16_053023]

 

 

SECTION 2.17. Mitigation Obligations; Replacement of Lenders
[a05-17347_1ex10d5.htm#Section2_17_053031]

 

 

SECTION 2.18. Illegality [a05-17347_1ex10d5.htm#Section2_18_053032]

 

 

SECTION 2.19. Change of Control [a05-17347_1ex10d5.htm#Section2_19_053033]

 

 

SECTION 2.20. Asset Sale Offer [a05-17347_1ex10d5.htm#Section2_20_053034]

 

 

SECTION 2.21. Repricing Protection [a05-17347_1ex10d5.htm#Section2_21_053034]

 

 

 

 

 

ARTICLE III [a05-17347_1ex10d5.htm#Articleiii_053419]

 

 

 

 

 

Representations and Warranties
[a05-17347_1ex10d5.htm#RepresentationsAndWarranties_053725]

 

 

 

 

 

SECTION 3.01. Organization; Powers [a05-17347_1ex10d5.htm#Section3_01_053035]

 

 

SECTION 3.02. Authorization; Enforceability
[a05-17347_1ex10d5.htm#Section3_02_053036]

 

 

SECTION 3.03. Governmental Approvals; No Conflicts
[a05-17347_1ex10d5.htm#Section3_03_053037]

 

 

SECTION 3.04. Financial Condition; No Material Adverse Change
[a05-17347_1ex10d5.htm#Section3_04_053038]

 

 

SECTION 3.05. Properties [a05-17347_1ex10d5.htm#Section3_05_053039]

 

 

 

i

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

 

SECTION 3.06. Litigation and Environmental Matters
[a05-17347_1ex10d5.htm#Section3_06_053040]

 

 

SECTION 3.07. Compliance with Laws and Agreements; Licenses and Permits
[a05-17347_1ex10d5.htm#Section3_07_053041]

 

 

SECTION 3.08. Investment and Holding Company Status
[a05-17347_1ex10d5.htm#Section3_08_053042]

 

 

SECTION 3.09. Taxes [a05-17347_1ex10d5.htm#Section3_09_053043]

 

 

SECTION 3.10. ERISA [a05-17347_1ex10d5.htm#Section3_10_053046]

 

 

SECTION 3.11. Disclosure [a05-17347_1ex10d5.htm#Section3_11_053047]

 

 

SECTION 3.12. Material Agreements [a05-17347_1ex10d5.htm#Section3_12_053048]

 

 

SECTION 3.13. Solvency [a05-17347_1ex10d5.htm#Section3_13_053049]

 

 

SECTION 3.14. Insurance [a05-17347_1ex10d5.htm#Section3_14_053050]

 

 

SECTION 3.15. Capitalization and Subsidiaries
[a05-17347_1ex10d5.htm#Section3_15_053051]

 

 

SECTION 3.16. Security Interest in Collateral
[a05-17347_1ex10d5.htm#Section3_16_053052]

 

 

SECTION 3.17. Labor Disputes [a05-17347_1ex10d5.htm#Section3_17_053053]

 

 

SECTION 3.18. Federal Reserve Regulations
[a05-17347_1ex10d5.htm#Section3_18_053054]

 

 

SECTION 3.19. Transaction Documents [a05-17347_1ex10d5.htm#Section3_19_053213]

 

 

SECTION 3.20. Senior Indebtedness [a05-17347_1ex10d5.htm#Section3_20_053214]

 

 

 

 

 

ARTICLE IV [a05-17347_1ex10d5.htm#Articleiv_053430]

 

 

 

 

 

Conditions [a05-17347_1ex10d5.htm#Conditions_053728]

 

 

 

 

 

ARTICLE V [a05-17347_1ex10d5.htm#Article_053647]

 

 

 

 

 

Affirmative Covenants [a05-17347_1ex10d5.htm#AffirmativeCovenants_053729]

 

 

 

 

 

SECTION 5.01. Financial Statements and Other Information
[a05-17347_1ex10d5.htm#Section5_01_053215]

 

 

SECTION 5.02. Notices of Material Events
[a05-17347_1ex10d5.htm#Section5_02_053216]

 

 

SECTION 5.03. Existence; Conduct of Business
[a05-17347_1ex10d5.htm#Section5_03_053217]

 

 

SECTION 5.04. Payment of Obligations [a05-17347_1ex10d5.htm#Section5_04_053218]

 

 

SECTION 5.05. Maintenance of Properties
[a05-17347_1ex10d5.htm#Section5_05_053218]

 

 

SECTION 5.06. Books and Records; Inspection Rights
[a05-17347_1ex10d5.htm#Section5_06_053219]

 

 

SECTION 5.07. Maintenance of Ratings [a05-17347_1ex10d5.htm#Section5_07_053220]

 

 

SECTION 5.08. Compliance with Laws [a05-17347_1ex10d5.htm#Section5_08_053221]

 

 

SECTION 5.09. Use of Proceeds [a05-17347_1ex10d5.htm#Section5_09_053222]

 

 

SECTION 5.10. Insurance [a05-17347_1ex10d5.htm#Section5_10_053222]

 

 

SECTION 5.11. Additional Collateral; Further Assurances
[a05-17347_1ex10d5.htm#Section5_11_053223]

 

 

SECTION 5.12. Maintenance of Corporate Separateness
[a05-17347_1ex10d5.htm#Section5_12_053224]

 

 

SECTION 5.13. 2008 Notes Redemption [a05-17347_1ex10d5.htm#Section5_13_053227]

 

 

 

 

 

ARTICLE VI [a05-17347_1ex10d5.htm#Articlevi_053533]

 

 

 

 

 

Negative Covenants [a05-17347_1ex10d5.htm#NegativeCovenants_053731]

 

 

 

 

 

SECTION 6.01. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock
[a05-17347_1ex10d5.htm#Section6_01_053227]

 

 

SECTION 6.02. Limitation on Liens [a05-17347_1ex10d5.htm#Section6_02_053228]

 

 

SECTION 6.03. Merger, Consolidation or Sale of All or Substantially All Assets
[a05-17347_1ex10d5.htm#Section6_03_053229]

 

 

SECTION 6.04. Limitation on Restricted Payments
[a05-17347_1ex10d5.htm#Section6_04_053230]

 

 

SECTION 6.05. Limitations on Transactions with Affiliates
[a05-17347_1ex10d5.htm#Section6_05_053231]

 

 

 

iii

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

 

SECTION 6.06. Limitations on Asset Sales
[a05-17347_1ex10d5.htm#Section6_06_053232]

 

 

SECTION 6.07. Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries [a05-17347_1ex10d5.htm#Section6_07_053233]

 

 

SECTION 6.08. Limitations on Guarantees of Indebtedness by Restricted
Subsidiaries [a05-17347_1ex10d5.htm#Section6_08_053234]

 

 

SECTION 6.09. Limitations on Sale and Lease-Back Transactions
[a05-17347_1ex10d5.htm#Section6_09_053235]

 

 

SECTION 6.10. Amendments to Subordination Provisions
[a05-17347_1ex10d5.htm#Section6_10_053235]

 

 

SECTION 6.11. Obligations of the Borrower and the Restricted Subsidiaries
Relating to Kate Spade [a05-17347_1ex10d5.htm#Section6_11_053236]

 

 

SECTION 6.12. Impairment of Security Interest
[a05-17347_1ex10d5.htm#Section6_12_053237]

 

 

SECTION 6.13. Business of Borrower and Restricted Subsidiaries
[a05-17347_1ex10d5.htm#Section6_13_053238]

 

 

 

 

 

ARTICLE VII [a05-17347_1ex10d5.htm#Articlevii_053541]

 

 

 

 

 

Events of Default [a05-17347_1ex10d5.htm#EventsOfDefault_053733]

 

 

 

 

 

ARTICLE VIII [a05-17347_1ex10d5.htm#Article_053651]

 

 

 

 

 

The Agent [a05-17347_1ex10d5.htm#TheAgent_053734]

 

 

 

 

 

ARTICLE IX [a05-17347_1ex10d5.htm#Articleix_053621]

 

 

 

 

 

Miscellaneous [a05-17347_1ex10d5.htm#Miscellaneous_053736]

 

 

 

 

 

SECTION 9.01. Notices [a05-17347_1ex10d5.htm#Section9_01_053239]

 

 

SECTION 9.02. Waivers; Amendments [a05-17347_1ex10d5.htm#Section9_02_053240]

 

 

SECTION 9.03. Expenses; Indemnity; Damage Waiver
[a05-17347_1ex10d5.htm#Section9_03_053241]

 

 

SECTION 9.04. Successors and Assigns [a05-17347_1ex10d5.htm#Section9_04_053241]

 

 

SECTION 9.05. Survival [a05-17347_1ex10d5.htm#Section9_05_053242]

 

 

SECTION 9.06. Counterparts; Integration; Effectiveness
[a05-17347_1ex10d5.htm#Section9_06_053243]

 

 

SECTION 9.07. Severability [a05-17347_1ex10d5.htm#Section9_07_053244]

 

 

SECTION 9.08. Right of Setoff [a05-17347_1ex10d5.htm#Section9_08_053245]

 

 

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
[a05-17347_1ex10d5.htm#Section9_09_053249]

 

 

SECTION 9.10. WAIVER OF JURY TRIAL [a05-17347_1ex10d5.htm#Section9_10_053250]

 

 

SECTION 9.11. Headings [a05-17347_1ex10d5.htm#Section9_11_053251]

 

 

SECTION 9.12. Confidentiality [a05-17347_1ex10d5.htm#Section9_12_053252]

 

 

SECTION 9.13. Several Obligations; Nonreliance; Violation of Law
[a05-17347_1ex10d5.htm#Section9_13_053253]

 

 

SECTION 9.14. USA PATRIOT Act [a05-17347_1ex10d5.htm#Section9_14_053254]

 

 

SECTION 9.15. Disclosure [a05-17347_1ex10d5.htm#Section9_15_053254]

 

 

SECTION 9.16. Appointment for Perfection
[a05-17347_1ex10d5.htm#Section9_16_053255]

 

 

SECTION 9.17. Interest Rate Limitation
[a05-17347_1ex10d5.htm#Section9_17_053309]

 

 

SECTION 9.18. Effectiveness of the Merger
[a05-17347_1ex10d5.htm#Section9_18_053309]

 

 

SECTION 9.19. INTERCREDITOR AGREEMENT [a05-17347_1ex10d5.htm#Section9_19_053310]

 

 

 

 

 

ARTICLE X [a05-17347_1ex10d5.htm#Articlex_053630]

 

 

 

 

 

Loan Guaranty [a05-17347_1ex10d5.htm#LoanGuaranty_053737]

 

 

 

 

 

SECTION 10.01. Guaranty [a05-17347_1ex10d5.htm#Section10_01_063648]

 

 

SECTION 10.02. Guaranty of Payment [a05-17347_1ex10d5.htm#Section10_02_063650]

 

 

 

iv

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

 

SECTION 10.03. No Discharge or Diminishment of Loan Guaranty
[a05-17347_1ex10d5.htm#Section10_03_063651]

 

 

SECTION 10.04. Defenses Waived [a05-17347_1ex10d5.htm#Section10_04_063652]

 

 

SECTION 10.05. Rights of Subrogation [a05-17347_1ex10d5.htm#Section10_05_063653]

 

 

SECTION 10.06. Reinstatement; Stay of Acceleration
[a05-17347_1ex10d5.htm#Section10_06_063654]

 

 

SECTION 10.07. Information [a05-17347_1ex10d5.htm#Section10_07_063654]

 

 

SECTION 10.08. Taxes [a05-17347_1ex10d5.htm#Section10_08_063655]

 

 

SECTION 10.09. Maximum Liability [a05-17347_1ex10d5.htm#Section10_09_063656]

 

 

SECTION 10.10. Contribution [a05-17347_1ex10d5.htm#Section10_10_063657]

 

 

SECTION 10.11. Liability Cumulative [a05-17347_1ex10d5.htm#Section10_11_063658]

 

 

SECTION 10.12. Release of Loan Guarantors
[a05-17347_1ex10d5.htm#Section10_12_063658]

 

 

 

 

 

SCHEDULES:

 

 

 

Commitment Schedule

Schedule 1.01(a)

—

Immaterial Subsidiaries

Schedule 1.01(b)

—

Mortgaged Properties

Schedule 3.05(a)

—

Properties

Schedule 3.05(g)

—

Intellectual Property

Schedule 3.06

—

Disclosed Matters

Schedule 3.14

—

Insurance

Schedule 3.15

—

Capitalization and Subsidiaries

Schedule 3.17

—

Labor Disputes

Schedule 4.01(b)

—

Local Counsel

Schedule 6.01

—

Existing Indebtedness

Schedule 9.01

—

Borrower’s Website for Electronic Delivery

 

 

 

EXHIBITS:

 

 

 

Exhibit A

—

Form of Administrative Questionnaire

Exhibit B

—

Form of Assignment and Assumption

Exhibit C

—

Form of Compliance Certificate

Exhibit D

—

Joinder Agreement

Exhibit E

—

Form of Borrowing Request

Exhibit F

—

Form of Promissory Note

 

v

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

 

CREDIT AGREEMENT dated as of October 6, 2005 (this “Agreement”), among NEWTON
ACQUISITION MERGER SUB, INC. (“Merger Sub” and, prior to the Merger (as defined
below), the “Borrower”), a Delaware corporation to be merged with and into THE
NEIMAN MARCUS GROUP, INC., a Delaware corporation (“Neiman Marcus” and, after
the Merger, the “Borrower”), NEWTON ACQUISITION, INC., a Delaware corporation
(“Holdings”), each subsidiary of Neiman Marcus from time to time party hereto,
the Lenders (as defined in Article I) and CREDIT SUISSE, as administrative agent
and collateral agent for the Lenders hereunder (in such capacities, the
“Agent”).

 

Pursuant to or in connection with the Merger Agreement (such term and each other
capitalized term used but not defined in this introductory statement having the
meaning given it in Article I), (a) Merger Sub will merge (the “Merger”) with
and into Neiman Marcus, with (i) the outstanding capital stock of Neiman Marcus
being converted into (and certain outstanding options to purchase, and
outstanding stock unit awards representing the right to receive, shares of
capital stock of Neiman Marcus being canceled in exchange for) the right to
receive an aggregate amount of approximately $5,110,800,000 in cash (the “Merger
Consideration”), subject to dissenters’ rights,  (ii) Neiman Marcus surviving as
a Wholly-Owned Subsidiary of Holdings and (iii) Neiman Marcus assuming by
operation of law all of the Obligations of Merger Sub under this Agreement and
the other Loan Documents, (b) the Borrower will obtain the Senior Secured
Asset-Based Revolving Credit Facility in an aggregate principal amount of up to
$600,000,000, (c) the Borrower will issue, in a public offering or in a
Rule 144A or other private placement, (i) $700,000,000 aggregate principal
amount of its Senior Notes and (ii) $500,000,000 aggregate principal amount of
its Senior Subordinated Notes, (d) the Equity Contribution will be made, (e) the
Existing Bank Debt Refinancing will be effected, (f) the 2008 Notes Call for
Redemption will be effected, (g) the 2028 Debentures and the 2008 Notes will be
secured by the Pari Passu Liens and (h) the Transaction Costs will be paid.

 

In connection with the foregoing, the Borrower has requested the Lenders to
extend credit in the form of Loans on the Closing Date, in an aggregate
principal amount not in excess of $1,975,000,000. The proceeds of the Loans are
to be used solely to finance, in part, the Merger Consideration, the Existing
Bank Debt Refinancing, the redemption after the Closing Date of the 2008 Notes
and the Transaction Costs.

 

The Lenders are willing to extend such credit to the Borrower on the terms and
subject to the conditions set forth herein.  Accordingly, the parties hereto
agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.  DEFINED TERMS.  AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS
HAVE THE MEANINGS SPECIFIED BELOW:

 

“ABL Security Documents” means any and all security agreements, pledge
agreements, mortgages and other agreements and documents pursuant to which any
Liens are granted to secure any Indebtedness or other obligations in respect of
the Senior Secured Asset-Based Revolving Credit Facility.

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

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

 

“Acquired Indebtedness” means, with respect to any specified Person,
(a) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into, or becoming a Restricted Subsidiary of such
specified Person, and (b) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.

 

“Additional Assets” means (a) any property, plant or equipment used or useful in
a Similar Business, including any such asset acquired through any capital
expenditure, (b) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Borrower
or another Restricted Subsidiary or is merged with or into the Borrower or
another Restricted Subsidiary and that is primarily engaged in a Similar
Business, (c) Capital Stock constituting a minority interest in any Person that
at such time is a Restricted Subsidiary that is primarily engaged in a Similar
Business, (d) all or substantially all of the assets of a Similar Business or
(e) other assets that are not classified as current assets under GAAP and that
are used or useful in a Similar Business.

 

“Additional Interest” means all liquidated damages then owing pursuant to the
Registration Rights Agreement.

 

“Adjusted LIBOR Rate” means, for any Interest Period, the rate obtained by
dividing (a) the LIBOR Rate for such Interest Period by (b) a percentage equal
to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if
any, required to be maintained against “Eurocurrency liabilities” as specified
in Regulation D (including any marginal, emergency, special or supplemental
reserves).

 

“Administrative Questionnaire” means an Administrative Questionnaire in the form
of Exhibit A.

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.  For purposes of this Agreement, “control”
(including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

 

“Affiliate Transaction” has the meaning assigned to such term in Section 6.05.

 

“Agent” has the meaning assigned to such term in the preamble to this Agreement.

 

“Alternate Base Rate” means, 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 ½ of 1%.  Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage” means, with respect to any Lender, a percentage equal to
a fraction the numerator of which is the aggregate outstanding principal amount
of the Loans (or, if no Loans are then outstanding, the Commitment) of such
Lender and the denominator of which is the aggregate outstanding principal
amount of the Loans (or, if no Loans are then outstanding, the Commitments) of
all Lenders.

 

2

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

 

“Applicable Rate” means, for any day, (a) with respect to any ABR Loan, 1.50%,
or (b) with respect to any LIBOR Rate Loan, 2.50%.

 

“Approved Fund” means any Person (other than an natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers, advises or manages a Lender.

 

“Asset Sale” means (a) the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related transactions, of property
or assets (including by way of a Sale and Lease-Back Transaction) of the
Borrower or any Restricted Subsidiary (each referred to in this definition as a
“disposition”), and (b) the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a series of related
transactions, in each case, other than:

 

(i) a disposition of cash, Cash Equivalents or Investment Grade Securities or
obsolete or worn out equipment, vehicles or other similar assets in the ordinary
course of business or any disposition of inventory or goods held for sale in the
ordinary course of business;

 

(ii) the disposition of all or substantially all of the assets of the Borrower
in a manner permitted pursuant to Section 6.03 or any disposition that
constitutes a Change of Control;

 

(iii) the making of any Permitted Investment or the making of any Restricted
Payment that is not prohibited by Section 6.04;

 

(iv) any disposition of assets or issuance or sale of Equity Interests of any
Restricted Subsidiary, in each case that do not or would not upon issuance
constitute Term Loan First Lien Collateral, in any transaction or series of
transactions with an aggregate fair market value of less than $25,000,000;

 

(v) any disposition of Term Loan First Lien Collateral in any transaction or
series of transactions with an applicable fair market value of less than
$10,000,000;

 

(vi) any disposition of property or assets or issuance of securities by a
Restricted Subsidiary to the Borrower or by the Borrower or a Restricted
Subsidiary to a Restricted Subsidiary;

 

(vii) to the extent allowable under Section 1031 of the Code, any exchange of
like property (excluding any boot thereon) for use in a Similar Business;

 

(viii) the lease, assignment or sub-lease of any real or personal property in
the ordinary course of business;

 

(ix) any issuance or sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary (other than any sale of Equity
Interests in, or Indebtedness or other securities of, Kate Spade held by the
Borrower or any Restricted Subsidiary);

 

(x) foreclosures on assets;

 

(xi) sales of accounts receivable, or participations therein, in connection with
any Receivables Facility; and

 

3

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

 

(xii) the unwinding of any Hedging Obligations.

 

“Asset Sale Offer” has the meaning assigned to such term in Section 2.20(d).

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Agent, in the form of Exhibit B or any
other form approved by the Agent.

 

“Attributable Debt” in respect of a Sale and Lease-Back Transaction means, as at
the time of determination, the present value (discounted at the interest rate
then borne by the Loans, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale and Lease-Back Transaction (including any period for which such lease
has been extended); provided, however, that if such Sale and Lease-Back
Transaction results in a Capitalized Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of “Capitalized Lease Obligation”.

 

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

 

“Board of Directors” means (a) with respect to a corporation, the board of
directors of the corporation, (b) with respect to a partnership, the board of
directors of the general partner of the partnership and (c) with respect to any
other Person, the board or committee of such Person serving a similar function.

 

“Board Resolution” means, with respect to the Borrower, a duly adopted
resolution of the Board of Directors of the Borrower or any committee thereof.

 

“Borrower” has the meaning assigned to such term in the preamble to this
Agreement; provided that when used in the context of determining the fair market
value of an asset or liability under this Agreement, “Borrower” shall, unless
otherwise expressly stated, be deemed to mean the Board of Directors of the
Borrower when the fair market value of such asset or liability is equal to or in
excess of $100,000,000.

 

“Borrowing” means any Loans of the same Type made, converted or continued on the
same date and, in the case of LIBOR Rate Loans, as to which a single Interest
Period is in effect.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03 and substantially in the form attached hereto as
Exhibit E, or such other form as shall be approved by the Agent.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a LIBOR Rate Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures” means, for any period, the aggregate of (a) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower
and the Restricted Subsidiaries during such period that, in conformity with
GAAP, are or are required to be included as additions during such period to
property, plant or equipment reflected in the consolidated balance sheet of the
Borrower and the Restricted Subsidiaries and (b) the value of all assets under
Capitalized Lease Obligations incurred by the

 

4

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

 

Borrower and its Restricted Subsidiaries during such period; provided that the
term “Capital Expenditures” shall not include:

 

(i) expenditures made in connection with the replacement, substitution,
restoration or repair of assets to the extent financed with (x) insurance
proceeds paid on account of the loss of or damage to the assets being replaced,
restored or repaired or (y) awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced,

 

(ii) the purchase price of equipment that is purchased simultaneously with the
trade-in of existing equipment to the extent that the gross amount of such
purchase price is reduced by the credit granted by the seller of such equipment
for the equipment being traded in at such time,

 

(iii) the purchase of plant, property or equipment to the extent financed with
the proceeds of Asset Sales that are not applied to prepay Loans pursuant to
Section 2.20,

 

(iv) expenditures that constitute Consolidated Lease Expense,

 

(v) expenditures that are accounted for as capital expenditures by the Borrower
or any Restricted Subsidiary and that actually are paid for by a Person other
than the Borrower or any Restricted Subsidiary and for which neither the
Borrower nor any Restricted Subsidiary has provided or is required to provide or
incur, directly or indirectly, any consideration or obligation to such Person or
any other Person (whether before, during or after such period),

 

(vi) the book value of any asset owned by the Borrower or any Restricted
Subsidiary prior to or during such period to the extent that such book value is
included as a capital expenditure during such period as a result of such Person
reusing or beginning to reuse such asset during such period without a
corresponding expenditure actually having been made in such period, provided
that (x) any expenditure necessary in order to permit such asset to be reused
shall be included as a Capital Expenditure during the period in which such
expenditure actually is made and (y) such book value shall have been included in
Capital Expenditures when such asset was originally acquired, or

 

(vii) expenditures that constitute acquisitions of Persons or business units
permitted hereunder.

 

“Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) 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.

 

“Capitalized Lease Obligation” means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance with GAAP.

 

5

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

 

“Cash Equivalents” means:

 

(a) Dollars;

 

(b) Canadian dollars, Japanese yen, pounds sterling, euro or, in the case of any
Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held
by it from time to time in the ordinary course of business;

 

(c) securities issued or directly and fully and unconditionally guaranteed or
insured by the government of the United States of America or any agency or
instrumentality thereof the securities of which are unconditionally guaranteed
as a full faith and credit obligation of such government with maturities of 24
months or less from the date of acquisition;

 

(d) certificates of deposit, time deposits and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any commercial bank having capital and surplus in excess of
$250,000,000;

 

(e) repurchase obligations for underlying securities of the types described in
clauses (c) and (d) above entered into with any financial institution meeting
the qualifications specified in clause (d) above;

 

(f) commercial paper rated at least “P-1” by Moody’s or at least “A-1” by S&P
and in each case maturing within 12 months after the date of issuance thereof;

 

(g) investment funds investing at least 95% of their assets in securities of the
types described in clauses (a) through (f) above;

 

(h) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Moody’s or S&P with maturities
of 24 months or less from the date of acquisition; and

 

(i) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or
higher from S&P or “A2” or higher from Moody’s with maturities of 12 months or
less from the date of acquisition.

 

Notwithstanding the foregoing, Cash Equivalents shall include amounts
denominated in currencies other than those set forth in clauses (a) and
(b) above; provided that such amounts are converted into one or more of the
currencies set forth in clauses (a) and (b) above as promptly as practicable and
in any event within ten (10) Business Days following the receipt of such
amounts.

 

“Change of Control” means the occurrence of (a) the sale, lease or transfer, in
one or a series of related transactions, of all or substantially all of the
assets of the Borrower and its subsidiaries, taken as a whole, to any Person
other than a Permitted Holder or (b) the Borrower becomes aware of (by way of a
report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy,
vote, written notice or otherwise) the acquisition by any Person or group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
or any successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), other than
the Permitted Holders, in a single transaction or in a series of related
transactions, by way of merger, consolidation or other business combination or

 

6

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

 

purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of 50% or more of the total voting
power of the Voting Stock of the Borrower or any of its direct or indirect
parent companies.

 

“Change of Control Offer” has the meaning assigned to such term in
Section 2.19(b).

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.13(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement (other than any such request, guideline or directive
to comply with any law, rule or regulation that was in effect on the date of
this Agreement).

 

“Closing Date” means the date on which the conditions specified in Article IV
are satisfied (or waived in accordance with Section 9.02).

 

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

 

“Co-Investors” means the investment funds associated with each of Credit Suisse
First Boston and Leonard Green & Partners, L.P., which are making a portion of
the Equity Contribution, and their respective Affiliates.

 

“Collateral” means any and all property owned, leased or operated by a Person
subject to a security interest or Lien under the Collateral Documents and any
and all other property of any Loan Party, now existing or hereafter acquired,
that may at any time be or become subject to a security interest or Lien in
favor of Agent, on behalf of itself and the Lenders, to secure the Secured
Obligations; provided, however, that Collateral shall not at any time include
any Margin Stock.

 

“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages and any other documents granting a Lien upon the Collateral as
security for payment of the Secured Obligations.

 

“Commitment” means (a) with respect to each Lender, the commitment of such
Lender to make Loans as set forth in the Commitment Schedule or in the most
recent Assignment and Assumption executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Loans, which aggregate
commitment shall be $1,975,000,000 on the Closing Date.

 

“Commitment Schedule” means the Schedule attached hereto identified as such.

 

“Consolidated Depreciation and Amortization Expense” means with respect to any
Person for any period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees and other related
noncash charges of such Person and its Restricted Subsidiaries for such period
on a consolidated basis and otherwise determined in accordance with GAAP.

 

“Consolidated Interest Expense” means, with respect to any Person for any
period, the sum, without duplication, of (a) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
(i) amortization of original issue discount resulting from the issuance of
Indebtedness

 

7

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

 

at less than par, (ii) all commissions, discounts and other fees and charges
owed with respect to letters of credit or bankers’ acceptances, (iii) noncash
interest payments (but excluding any noncash interest expense attributable to
the movement in the mark-to-market valuation of Hedging Obligations or other
derivative instruments pursuant to GAAP), (iv) the interest component of
Capitalized Lease Obligations and (v) net payments, if any, pursuant to interest
rate Hedging Obligations with respect to Indebtedness, and excluding (A) any
expense resulting from the discounting of the 2028 Debentures as a result of the
application of purchase accounting in connection with the Transactions,
(B) Additional Interest, (C) amortization of deferred financing fees, debt
issuance costs, commissions, fees and expenses, (D) any expensing of bridge,
commitment and other financing fees, (E) commissions, discounts, yield and other
fees and charges (including any interest expense) related to any Receivables
Facility and (F) any redemption premiums paid in connection with the redemption
of the 2008 Notes), plus (b) consolidated capitalized interest of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued, less
(c) interest income for such period. For purposes of this definition, interest
on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.

 

“Consolidated Lease Expense” means for any period, all rental expenses of the
Borrower and its Restricted Subsidiaries during such period under operating
leases for real or personal property (including in connection with Sale and
Lease-Back Transactions permitted hereunder), excluding real estate taxes,
insurance costs and common area maintenance charges and net of sublease income,
other than (a) obligations under vehicle leases entered into in the ordinary
course of business, (b) all such rental expenses associated with assets acquired
pursuant to an acquisition of a Person or business unit to the extent such
rental expenses relate to operating leases in effect at the time of (and
immediately prior to) such acquisition and related to periods prior to such
acquisition and (c) all Capitalized Lease Obligations, all as determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Leverage Ratio”, with respect to any Person as of any date of
determination, means the ratio of (a) Consolidated Total Indebtedness of such
Person as of the end of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the date on which such
event for which such calculation is being made shall occur to (b) the aggregate
amount of EBITDA of such Person for the period of the most recently ended four
full consecutive fiscal quarters for which internal financial statements are
available immediately preceding the date on which such event for which such
calculation is being made shall occur, in each case with such pro forma
adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and
consistent with the pro forma adjustment provisions set forth in the definition
of “Fixed Charge Coverage Ratio”.

 

“Consolidated Net Income” means, with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, and otherwise determined in accordance
with GAAP; provided that, without duplication:

 

(A) ANY NET AFTER-TAX EXTRAORDINARY, NON-RECURRING OR UNUSUAL GAINS OR LOSSES
(LESS ALL FEES AND EXPENSES RELATING THERETO) OR EXPENSES (INCLUDING RELATING TO
SEVERANCE, RELOCATION, ONE-TIME COMPENSATION CHARGES AND THE TRANSACTIONS) SHALL
BE EXCLUDED,

 

(B) THE NET INCOME FOR SUCH PERIOD SHALL NOT INCLUDE THE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING PRINCIPLES DURING SUCH PERIOD, WHETHER EFFECTED THROUGH A
CUMULATIVE EFFECT ADJUSTMENT OR A RETROACTIVE APPLICATION IN EACH CASE IN
ACCORDANCE WITH GAAP,

 

(C) ANY NET AFTER-TAX INCOME (LOSS) FROM DISPOSED OR DISCONTINUED OPERATIONS AND
ANY NET AFTER-TAX GAINS OR LOSSES ON DISPOSAL OF DISPOSED OR DISCONTINUED
OPERATIONS SHALL BE EXCLUDED,

 

8

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

 

(D) ANY NET AFTER-TAX GAINS OR LOSSES (LESS ALL FEES AND EXPENSES RELATING
THERETO) ATTRIBUTABLE TO ASSET DISPOSITIONS OR THE SALE OR OTHER DISPOSITION OF
ANY CAPITAL STOCK OF ANY PERSON OTHER THAN IN THE ORDINARY COURSE OF BUSINESS,
AS DETERMINED IN GOOD FAITH BY THE BORROWER, SHALL BE EXCLUDED,

 

(E) THE NET INCOME FOR SUCH PERIOD OF ANY PERSON THAT IS NOT A SUBSIDIARY, OR IS
AN UNRESTRICTED SUBSIDIARY, OR THAT IS ACCOUNTED FOR BY THE EQUITY METHOD OF
ACCOUNTING, SHALL BE EXCLUDED; PROVIDED THAT CONSOLIDATED NET INCOME OF THE
BORROWER SHALL BE INCREASED BY THE AMOUNT OF DIVIDENDS OR DISTRIBUTIONS OR OTHER
PAYMENTS THAT ARE ACTUALLY PAID IN CASH (OR TO THE EXTENT CONVERTED INTO CASH)
TO THE REFERENT PERSON OR A RESTRICTED SUBSIDIARY THEREOF IN RESPECT OF SUCH
PERIOD (SUBJECT IN THE CASE OF DIVIDENDS, DISTRIBUTIONS OR OTHER PAYMENTS MADE
TO A RESTRICTED SUBSIDIARY TO THE LIMITATIONS CONTAINED IN CLAUSE (F) BELOW),

 

(F) SOLELY FOR THE PURPOSE OF DETERMINING THE AMOUNT AVAILABLE FOR RESTRICTED
PAYMENTS UNDER SECTION 6.04(A)(III)(A), THE NET INCOME FOR SUCH PERIOD OF ANY
RESTRICTED SUBSIDIARY (OTHER THAN ANY SUBSIDIARY GUARANTOR) SHALL BE EXCLUDED IF
THE DECLARATION OR PAYMENT OF DIVIDENDS OR SIMILAR DISTRIBUTIONS BY THAT
RESTRICTED SUBSIDIARY OF ITS NET INCOME IS NOT AT THE DATE OF DETERMINATION
WHOLLY PERMITTED WITHOUT ANY PRIOR GOVERNMENTAL APPROVAL (WHICH HAS NOT BEEN
OBTAINED) OR, DIRECTLY OR INDIRECTLY, BY THE OPERATION OF THE TERMS OF ITS
CHARTER OR ANY AGREEMENT, INSTRUMENT, JUDGMENT, DECREE, ORDER, STATUTE, RULE, OR
GOVERNMENTAL REGULATION APPLICABLE TO THAT RESTRICTED SUBSIDIARY OR ITS
STOCKHOLDERS, UNLESS SUCH RESTRICTION WITH RESPECT TO THE PAYMENT OF DIVIDENDS
OR SIMILAR DISTRIBUTIONS HAS BEEN LEGALLY WAIVED; PROVIDED THAT CONSOLIDATED NET
INCOME OF THE BORROWER WILL BE INCREASED BY THE AMOUNT OF DIVIDENDS OR OTHER
DISTRIBUTIONS OR OTHER PAYMENTS ACTUALLY PAID IN CASH (OR TO THE EXTENT
CONVERTED INTO CASH) TO THE BORROWER OR A RESTRICTED SUBSIDIARY THEREOF IN
RESPECT OF SUCH PERIOD, TO THE EXTENT NOT ALREADY INCLUDED THEREIN,

 

(G) ANY INCREASE IN AMORTIZATION OR DEPRECIATION OR OTHER NONCASH CHARGES
RESULTING FROM THE APPLICATION OF PURCHASE ACCOUNTING IN RELATION TO THE
TRANSACTIONS OR ANY ACQUISITION THAT IS CONSUMMATED AFTER THE CLOSING DATE, NET
OF TAXES, SHALL BE EXCLUDED,

 

(H) ANY NET AFTER-TAX INCOME (LOSS) FROM THE EARLY EXTINGUISHMENT OF
INDEBTEDNESS OR HEDGING OBLIGATIONS OR OTHER DERIVATIVE INSTRUMENTS SHALL BE
EXCLUDED,

 

(I) ANY IMPAIRMENT CHARGE OR ASSET WRITE-OFF, IN EACH CASE PURSUANT TO GAAP, AND
THE AMORTIZATION OF INTANGIBLES ARISING PURSUANT TO GAAP SHALL BE EXCLUDED, AND

 

(J) ANY NONCASH COMPENSATION EXPENSE RECORDED FROM GRANTS OF STOCK APPRECIATION
OR SIMILAR RIGHTS, STOCK OPTIONS, RESTRICTED STOCK OR OTHER RIGHTS TO OFFICERS,
DIRECTORS OR EMPLOYEES SHALL BE EXCLUDED.

 

Notwithstanding the foregoing, for the purpose of Section 6.04 only (other than
clause (a)(iii)(D) thereof), there shall be excluded from Consolidated Net
Income any income arising from any sale or other disposition of Restricted
Investments made by the Borrower and the Restricted Subsidiaries, any
repurchases and redemptions of Restricted Investments from the Borrower and the
Restricted Subsidiaries, any repayments of loans and advances that constitute
Restricted Investments by the Borrower or any Restricted Subsidiary, any sale of
the stock of an Unrestricted Subsidiary or any distribution or dividend from an
Unrestricted Subsidiary, in each case only to the extent such amounts increase
the amount of Restricted Payments permitted under Section 6.04(a)(iii)(D);
provided, however, that any income arising from any sale or other disposition of
the Equity Interests in Kate Spade or any Extraordinary Distribution shall be
excluded from Consolidated Net Income for the purpose of Section 6.04 only.

 

9

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

 

“Consolidated Secured Debt Ratio” as of any date of determination means the
ratio of (a) Consolidated Total Indebtedness of the Borrower and the Restricted
Subsidiaries that is secured by Liens as of the end of the most recent fiscal
quarter for which internal financial statements are available immediately
preceding the date on which such event for which such calculation is being made
shall occur to (b) the aggregate amount of EBITDA of the Borrower and the
Restricted Subsidiaries for the period of the most recently ended consecutive
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such event for which such calculation is
being made shall occur, in each case with such pro forma adjustments to
Consolidated Total Indebtedness and EBITDA as are appropriate and consistent
with the pro forma adjustment provisions set forth in the definition of “Fixed
Charge Coverage Ratio”.

 

“Consolidated Total Indebtedness” means, as at any date of determination, an
amount equal to the sum of (a) the aggregate amount of all outstanding
Indebtedness of the Borrower and the Restricted Subsidiaries on a consolidated
basis consisting of Indebtedness for borrowed money, obligations in respect of
Capitalized Lease Obligations, Attributable Debt in respect of Sale and
Lease-Back Transactions and debt obligations evidenced by bonds, notes,
debentures or similar instruments or letters of credit or bankers’ acceptances
(and excluding (x) any undrawn letters of credit issued in the ordinary course
of business and (y) all obligations relating to Receivables Facilities) and
(b) the aggregate amount of all outstanding Disqualified Stock of the Borrower
and all Disqualified Stock and Preferred Stock of the Restricted Subsidiaries
(excluding items eliminated in consolidation), with the amount of such
Disqualified Stock and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase
Prices, in each case determined on a consolidated basis in accordance with
GAAP.  For purposes of this definition, the “Maximum Fixed Repurchase Price” of
any Disqualified Stock or Preferred Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were
purchased on any date on which Consolidated Total Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Stock or Preferred
Stock, such fair market value shall be determined reasonably and in good faith
by the Borrower.

 

“Consolidated Working Capital” means, at any date, the excess of (a) the sum of
all amounts (other than cash and Cash Equivalents) that would, in conformity
with GAAP, be set forth opposite the caption “total current assets” (or any like
caption) on a consolidated balance sheet of the Borrower and its Restricted
Subsidiaries at such date over (b) the sum of all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current
liabilities” (or any like caption) on a consolidated balance sheet of the
Borrower and its Restricted Subsidiaries on such date, including deferred
revenue but excluding, without duplication, (i) the current portion of any
Funded Debt, (ii) the current portion of interest and (iii) the current portion
of current and deferred income taxes.

 

“Contingent Obligations” means, with respect to any Person, any obligation of
such Person guaranteeing any leases, dividends or other obligations that do not
constitute Indebtedness (the “primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, or (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
against loss in respect thereof.

 

10

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

 

“Credit Card Sale” means the sale from the Borrower to HSBC Bank Nevada, N.A.,
of the private label credit card accounts of Neiman Marcus and related
receivables and other assets, pursuant to the HSBC Agreements (it being
understood that such sale was consummated on July 7, 2005).

 

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

 

“Derivative Transaction” means (a) an interest-rate transaction, including an
interest-rate swap, basis swap, forward rate agreement, interest rate option
(including a cap, collar, and floor), and any other instrument linked to
interest rates that gives rise to similar credit risks (including when-issued
securities and forward deposits accepted), (b) an exchange-rate transaction,
including a cross-currency interest-rate swap, a forward foreign-exchange
contract, a currency option, and any other instrument linked to exchange rates
that gives rise to similar credit risks, (c) an equity derivative transaction,
including an equity-linked swap, an equity-linked option, a forward
equity-linked contract, and any other instrument linked to equities that gives
rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or its subsidiaries shall be a Derivative Transaction.

 

“Designated Asset Sale Proceeds” means net cash proceeds in an aggregate amount
not to exceed $100,000,000 received by the Borrower or any Restricted Subsidiary
from the sale, transfer, lease or other disposition of any asset or assets so
designated as Designated Asset Sale Proceeds pursuant to an Officers’
Certificate delivered to the Agent on or prior to the date on which such asset
or assets are sold.

 

“Designated Noncash Consideration” means the fair market value of noncash
consideration received by the Borrower or a Restricted Subsidiary in connection
with an Asset Sale that is so designated as Designated Noncash Consideration
pursuant to an Officers’ Certificate, setting forth the basis of such valuation,
executed by an executive vice president and the principal financial officer of
the Borrower, less the amount of cash or Cash Equivalents received in connection
with a subsequent sale of such Designated Noncash Consideration.

 

“Designated Preferred Stock” means Preferred Stock of the Borrower or any parent
company thereof (in each case other than Disqualified Stock) that is issued for
cash (other than to a Restricted Subsidiary) and is so designated as Designated
Preferred Stock pursuant to an Officers’ Certificate executed by an executive
vice president and the principal financial officer of the Borrower or the
applicable parent company thereof, as the case may be, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in Section 6.04(a)(iii).

 

“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock of
such Person which, by its terms, or by the terms of any security into which it
is convertible or for which it is putable or exchangeable, or upon the happening
of any event, matures or is mandatorily redeemable (other than solely for
Capital Stock that is not Disqualified Stock), other than as a result of a
change of control or asset sale, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, other than as a
result of a change of control or asset sale, in whole or in part, in each case
prior to the date that is ninety-one (91) days after the earlier of the Maturity
Date and the date the Loans are no longer outstanding; provided that if such
Capital Stock is issued to any plan for the benefit of employees

 

11

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

 

of the Borrower or its subsidiaries or by any such plan to such employees, such
Capital Stock shall not constitute Disqualified Stock solely because it may be
required to be repurchased by the Borrower or its subsidiaries in order to
satisfy applicable statutory or regulatory obligations.

 

“Dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means, with respect to any Person, any Restricted
Subsidiary of such Person other than (a) a Foreign Subsidiary or (b) any
Domestic Subsidiary of a Foreign Subsidiary, but, in each case, including any
subsidiary that guarantees or otherwise provides direct credit support for any
indebtedness of the Borrower.

 

“EBITDA” means, with respect to any Person for any period, the Consolidated Net
Income of such Person for such period,

 

(a) increased by (without duplication): (i) provision for taxes based on income
or profits, plus franchise or similar taxes, of such Person for such period
deducted in computing Consolidated Net Income, plus (ii) consolidated Fixed
Charges of such Person for such period to the extent the same was deducted in
calculating Consolidated Net Income, plus (iii) Consolidated Depreciation and
Amortization Expense of such Person for such period to the extent such
depreciation and amortization were deducted in computing Consolidated Net
Income, plus (iv) any expenses or charges related to any Equity Offering,
Permitted Investment, acquisition, disposition, recapitalization or the
incurrence of Indebtedness permitted to be incurred hereunder including a
refinancing thereof (whether or not successful) and any amendment or
modification to the terms of any such transactions, including such fees,
expenses or charges related to the Transactions and the Credit Card Sale
(including any one-time costs associated with entering into any program
agreements or servicing agreements directly related to the Credit Card Sale, but
not any payments required or contemplated by such agreements , other than
payments in respect of transition services provided thereunder prior to the
first anniversary of the Credit Card Sale), in each case, deducted in computing
Consolidated Net Income, plus (v) the amount of any restructuring charge or
reserve deducted in such period in computing Consolidated Net Income, including
any one-time costs incurred in connection with (A) acquisitions after the
Closing Date or (B) the closing of any stores or distribution centers after the
Closing Date, plus (vi) any write offs, write downs or other noncash charges
reducing Consolidated Net Income for such period, excluding any such charge that
represents an accrual or reserve for a cash expenditure for a future period,
plus (vii) the amount of any minority interest expense deducted in calculating
Consolidated Net Income, plus (viii) the amount of management, monitoring,
consulting and advisory fees and related expenses paid (or any accruals related
to such fees or related expenses) during such period to the Sponsors to the
extent permitted under Section 6.05, plus (ix) the amount of net cost savings
projected by the Borrower in good faith to be realized as a result of specified
actions taken during such period (calculated on a pro forma basis as though such
cost savings had been realized on the first day of such period), net of the
amount of actual benefits realized during such period from such actions;
provided that (A) such cost savings are reasonably identifiable and factually
supportable, (B) such actions are taken within 36 months after the Closing Date
and (C) the aggregate amount of cost savings added pursuant to this clause
(ix) shall not exceed $50,000,000 for any four consecutive quarter period (which
adjustments may be incremental to pro forma adjustments made pursuant to the
second paragraph of the definition of “Fixed Charge Coverage Ratio”), plus
(x) any costs or expenses incurred by the Borrower or a Restricted Subsidiary
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any stock subscription or
stockholders agreement, to the extent that such costs or expenses are funded
with cash proceeds contributed to the capital of the Borrower or net cash
proceeds of issuance of Equity Interests of the Borrower

 

12

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

 

(other than Disqualified Stock that is Preferred Stock) in each case, solely to
the extent that such cash proceeds are excluded from the calculation set forth
in Section 6.04(a)(iii);

 

(b) decreased by (without duplication) noncash gains increasing Consolidated Net
Income of such Person for such period, excluding any gains that represent the
reversal of any accrual of, or cash reserve for, anticipated cash charges in any
prior period (other than such cash charges that have been added back to
Consolidated Net Income in calculating EBITDA in accordance with this
definition); and

 

(c) increased or decreased, as applicable, by (without duplication) (i) any net
gain or loss resulting in such period from Hedging Obligations and the
application of Statement of Financial Accounting Standards #133, (ii) any net
gain or loss resulting in such period from currency translation gains or losses
related to currency remeasurements of Indebtedness and (iii) the amount of gain
or loss resulting in such period from a sale of receivables and related assets
to a Receivables Subsidiary in connection with a Receivables Facility.

 

“Eligible Assignee” means (i) a Lender, (ii) a commercial bank, insurance
company, or company engaged in the business of making commercial loans or a
commercial finance company, which Person, together with its Affiliates, has a
combined capital and surplus in excess of $1,000,000,000, (iii) any Affiliate of
a Lender under common control with such Lender or (iv) an Approved Fund of a
Lender, provided that in any event, “Eligible Assignee” shall not include (w)
any natural person, (x) Holdings or the Borrower or any Affiliate (which for
this purpose shall not include the Agent or any of its branches or Affiliates
engaged in the business of making commercial loans) thereof, (y) any Sponsor or
any of their respective Affiliates or (z) any “creditor”, as defined in
Regulation T, or “foreign branch of a broker-dealer”, within the meaning of
Regulation X; provided, however, that upon the occurrence of an Event of
Default, no Person (other than a Lender) shall be an “Eligible Assignee” if the
assignment of any Commitment or Loan to such Person would cause such Person to
have Commitments or Loans in excess of twenty-five percent (25%) of the then
outstanding total aggregate Commitments or Loans, as the case may be.

 

“EMU” means the economic and monetary union contemplated by the Treaty of the
European Union.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

 

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

 

“Equity Contribution” means the contribution by the Sponsors, the Co-Investors
and the Management Stockholders and certain other Persons investing through
Newton Co-Invest I LLC or Newton Co-Invest II LLC, in an aggregate amount of not
less than 25% of the total consolidated capitalization of Holdings on the
Closing Date, after giving pro forma effect to the consummation of the

 

13

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

 

Transactions and the redemption after the Closing Date of the 2008 Notes, in
cash to Holdings (or any direct or indirect parent thereof) as common equity
and/or preferred equity having terms reasonably satisfactory to the Joint Lead
Arrangers, and the cash contribution by Holdings (or any direct or indirect
parent thereof) of the amount so received to Merger Sub (or if by a direct or
indirect parent of Holdings, by such parent to Holdings and by Holdings to
Merger Sub) in respect of Holdings’ common equity and/or preferred equity in
Merger Sub having terms reasonably satisfactory to the Joint Lead Arrangers or
in exchange for the issuance to Holdings of Equity Interests of Merger Sub.

 

“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock, but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock.

 

“Equity Offering” means any public or private sale of common stock or Preferred
Stock of the Borrower or any of its direct or indirect parent companies
(excluding Disqualified Stock), other than (a) public offerings with respect to
the Borrower’s or any direct or indirect parent company’s common stock
registered on Form S-4 or Form S-8, (b) any such public or private sale that
constitutes an Excluded Contribution and (c) an issuance to any subsidiary of
the Borrower.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice of an intent to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or
any of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

“euro” means the single currency of participating member states of the EMU.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excess Cash Flow” means, for any fiscal year of the Borrower (or, in the case
of the fiscal year of the Borrower ended July 30, 2006 (except for purposes of
determining changes in Consolidated Working Capital), the portion thereof
commencing on the Closing Date and ending on July 30, 2006), an amount equal to
the excess of:

 

(a) the sum, without duplication, of:

 

14

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

 

(i) Consolidated Net Income for such period,

 

(ii) an amount equal to the amount of all non-cash charges to the extent
deducted in arriving at such Consolidated Net Income,

 

(iii) decreases in Consolidated Working Capital and long-term account
receivables for such period (other than any such decreases arising from
acquisitions by the Borrower and its Restricted Subsidiaries completed during
such period), and

 

(iv) an amount equal to the aggregate net non-cash loss on the sale, lease,
transfer or other disposition of assets by the Borrower and its Restricted
Subsidiaries during such period (other than sales in the ordinary course of
business) to the extent deducted in arriving at such Consolidated Net Income;
over

 

(b) the sum, without duplication, of:

 

(i) an amount equal to the amount of all non-cash credits included in arriving
at such Consolidated Net Income and cash charges included in clauses (a) through
(j) of the definition of Consolidated Net Income,

 

(ii) without duplication of amounts deducted pursuant to clause (xi) below in
prior periods, the amount of Capital Expenditures made in cash during such
period, except to the extent that such Capital Expenditures were financed with
the proceeds of Indebtedness of the Borrower or its Restricted Subsidiaries,

 

(iii) the aggregate amount of all principal payments of Indebtedness of the
Borrower and its Restricted Subsidiaries (including (x) the principal component
of payments in respect of Capitalized Lease Obligations and (y) the amount of
any prepayment of Loans pursuant to Section 2.08 or 2.20 made with the proceeds
of an Asset Sale to the extent such Asset Sale resulted in an increase to
Consolidated Net Income and not in excess of the amount of such increase, but
excluding all other prepayments of the Loans) made during such period (other
than in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), except to the extent
financed with the proceeds of other Indebtedness of the Borrower or its
Restricted Subsidiaries,

 

(iv) an amount equal to the aggregate net non-cash gain on the sale, lease,
transfer or other disposition of assets by the Borrower and its Restricted
Subsidiaries during such period (other than sales in the ordinary course of
business) to the extent included in arriving at such Consolidated Net Income,

 

(v) increases in Consolidated Working Capital and long-term account receivables
for such period (other than any such increases arising from acquisitions of a
Person or business unit by the Borrower and its Restricted Subsidiaries during
such period),

 

(vi) cash payments by the Borrower and its Restricted Subsidiaries during such
period in respect of long-term liabilities of the Borrower and its Restricted
Subsidiaries other than Indebtedness,

 

(vii) without duplication of amounts deducted pursuant to clause (xi) below in
prior periods, the amount of Investments and acquisitions made during such
period to the extent

 

15

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

 

permitted under Section 6.04, to the extent that such Investments and
acquisitions were financed with internally generated cash flow of the Borrower
and its Restricted Subsidiaries,

 

(viii) the amount of Restricted Payments made during such period to the extent
permitted under Section 6.04(b)(xvi), to the extent that such Restricted
Payments were financed with internally generated cash flow of the Borrower and
its Restricted Subsidiaries,

 

(ix) the aggregate amount of expenditures actually made by the Borrower and the
Restricted Subsidiaries in cash during such period (including expenditures for
the payment of financing fees) to the extent that such expenditures are not
expensed during such period,

 

(x) the aggregate amount of any premium, make-whole or penalty payments actually
paid in cash by the Borrower and the Restricted Subsidiaries during such period
that are required to be made in connection with any prepayment of Indebtedness,

 

(xi) without duplication of amounts deducted from Excess Cash Flow in prior
periods, the aggregate consideration required to be paid in cash by the Borrower
or any of its Restricted Subsidiaries pursuant to binding contracts (the
“Contract Consideration”) entered into prior to or during such period relating
to acquisitions or Capital Expenditures to be consummated or made during the
period of four consecutive fiscal quarters of the Borrower following the end of
such period, provided that to the extent the aggregate amount of internally
generated cash actually utilized to finance such acquisitions or Capital
Expenditures during such period of four consecutive fiscal quarters is less than
the Contract Consideration, the amount of such shortfall shall be added to the
calculation of Excess Cash Flow at the end of such period of four consecutive
fiscal quarters, and

 

(xii) the amount of cash taxes paid in such period to the extent they exceed the
amount of tax expense deducted in determining Consolidated Net Income for such
period.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

 

“Excluded Contribution” means net cash proceeds, marketable securities or
Qualified Proceeds received by the Borrower from (a) contributions to its common
equity capital, and (b) the sale (other than to a subsidiary of the Borrower or
to any management equity plan or stock option plan or any other management or
employee benefit plan or agreement of the Borrower) of Capital Stock (other than
Disqualified Stock and Designated Preferred Stock) of the Borrower, in each case
designated as Excluded Contributions pursuant to an Officers’ Certificate
executed by an executive vice president and the principal financial officer of
the Borrower on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, which are excluded from the
calculation set forth in Section 6.04(a)(iii).

 

“Excluded Taxes” means, with respect to the Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower or any other Loan Party hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower or any other Loan Party is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.17(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign

 

16

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

 

Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower or any other Loan Party with
respect to such withholding tax pursuant to Section 2.15(a).

 

“Existing Bank Debt Refinancing” means the payment in full of all amounts, if
any, due or owing under the Existing Credit Agreement, the termination of all
commitments thereunder and the release and discharge of all guarantees thereof
(if any) and all security therefor (if any).

 

“Existing Credit Agreement” means the $350,000,000 Credit Agreement dated
June 9, 2004 among Neiman Marcus, the lenders party thereto, Bank of America,
N.A., as syndication agent, Wachovia Bank, N.A., Wells Fargo Bank National
Association and BNP Paribas, as documentation agents, and JPMorgan Chase Bank,
as administrative agent.

 

“Extraordinary Distribution” means any dividends, distributions or other
payments made by Kate Spade to the Borrower or a Restricted Subsidiary (a) to
the extent generated by (i) borrowings other than working capital borrowings,
(ii) the sale of debt or equity securities or (iii) sales or other dispositions
or assets, other than inventory, accounts receivable and other assets sold in
the ordinary course of business or as part of the normal retirement or
replacement of assets or (b) representing a liquidating distribution or payment
in connection with the liquidation or winding up of Kate Spade.

 

“Federal Funds Effective Rate” means, 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 for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means that certain Amended and Restated Fee Letter dated as of
May 26, 2005, by and among the Borrower, the Agent, Deutsche Bank Trust Company
Americas, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc.,
Bank of America, N.A., Banc of America Bridge LLC, Banc of America Securities
LLC and Goldman Sachs Credit Partners L.P.

 

“Financial Officer” means the chief financial officer, treasurer or controller
of the Borrower.

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of EBITDA of such Person for such period to the Fixed Charges of such
Person for such period.  In the event that the Borrower or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any
Indebtedness (other than Indebtedness incurred under any revolving credit
facility that has been permanently repaid and has not been replaced) or issues
or redeems Disqualified Stock or Preferred Stock subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to or simultaneously with the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption, retirement or extinguishing of Indebtedness,
or such issuance or redemption of Disqualified Stock or Preferred Stock, as if
the same had occurred at the beginning of the applicable four-quarter period
(the “reference period”).

 

17

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

 

For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations (as
determined in accordance with GAAP) that have been made by the Borrower or any
Restricted Subsidiary during the four-quarter reference period or subsequent to
such reference period and on or prior to or simultaneously with the Calculation
Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, mergers, consolidations and disposed
operations (and the change in any associated fixed charges and the change in
EBITDA resulting therefrom) had occurred on the first day of the reference
period.  If since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Borrower or any
Restricted Subsidiary since the beginning of such period) shall have made any
Investment, acquisition, disposition, merger, consolidation or disposed
operation that would have required adjustment pursuant to this definition, then
the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition, merger,
consolidation or disposed operation had occurred at the beginning of the
reference period.

 

For purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of the Borrower.  If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such
Indebtedness).  Interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or
accounting officer of the Borrower to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.  For purposes of making
the computation referred to above, interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be computed based
upon the average daily balance of such Indebtedness during the applicable
period.  Interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate chosen
as the Borrower may designate.

 

“Fixed Charges” means, with respect to any Person for any period, the sum of
(a) Consolidated Interest Expense of such Person for such period, (b) all cash
dividend payments (excluding items eliminated in consolidation) on any series of
Preferred Stock during such period, and (c) all cash dividend payments
(excluding items eliminated in consolidation) on any series of Disqualified
Stock made during such period.

 

“Foreign Lender” means a person that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code.

 

“Foreign Subsidiary” means, with respect to any Person, any Restricted
Subsidiary of such Person that is not organized or existing under the laws of
the United States of America, any state thereof, the District of Columbia, or
any territory thereof.

 

“Foreign Subsidiary Total Assets” means the total amount of all assets of
Foreign Subsidiaries of the Borrower and the Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP as shown on the most recent
balance sheet of the Borrower.

 

“Funded Debt” means all Indebtedness of the Borrower and its Restricted
Subsidiaries for borrowed money that matures more than one year from the date of
its creation or matures within one year from such date that is renewable or
extendable, at the option of such Person, to a date more than one year from such
date or arises under a revolving credit or similar agreement that obligates the
lender or lenders

 

18

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

 

to extend credit during a period of more than one year from such date, including
Indebtedness in respect of the Loans.

 

“GAAP” means generally accepted accounting principles in the United States of
America that are in effect on the Closing Date.

 

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

 

“guarantee” means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness or other
obligations, and, when used as a verb, shall have a corresponding meaning.

 

“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

 

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

 

“Hedge Agreement” means any agreement with respect to any Derivative Transaction
between the Borrower or any Subsidiary and any other Person.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such
Person under currency exchange, interest rate or commodity swap agreements,
currency exchange, interest rate or commodity cap agreements and currency
exchange, interest rate or commodity collar agreements and other agreements or
arrangements, in each case designed to protect such Person against fluctuations
in currency exchange, interest rates or commodity prices.

 

“Holdings” has the meaning assigned to such term in the preamble to this
Agreement.

 

“HSBC Agreements” means the Purchase, Sale and Servicing Transfer Agreement
dated as of June 8, 2005, among HSBC Bank Nevada, N.A., HSBC Finance Corporation
(together with their Affiliates, “HSBC”), Neiman Marcus and Bergdorf
Goodman, Inc., and all material agreements and instruments entered into in
connection therewith, including the Credit Card Program Agreement and the
related Services Agreement, in each case, as amended from time to time.

 

“HSBC Arrangements” means the private label credit card program between the
Borrower and HSBC pursuant to the terms of the HSBC Agreements.

 

“Immaterial Subsidiary” means, at any date of determination, any Restricted
Subsidiary designated as such in writing by the Borrower that (i) contributed
2.5% or less of EBITDA of the Borrower and the Restricted Subsidiaries for the
period of four fiscal quarters most recently ended more than forty-five (45)
days prior to the date of determination and (ii) had consolidated assets
representing 2.5% or less of Total Assets on the last day of the most recent
fiscal quarter ended more than forty-five (45) days prior to the date of
determination.  The Immaterial Subsidiaries as of the Closing Date are listed on
Schedule 1.01(a).

 

“incur” has the meaning set forth in Section 6.01.

 

19

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

 

“incurrence” has the meaning set forth in Section 6.01.

 

“Indebtedness” means, with respect to any Person, (a) any indebtedness
(including principal and premium) of such Person, whether or not contingent
(i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or
similar instruments or letters of credit or bankers’ acceptances (or, without
double counting, reimbursement agreements in respect thereof),
(iii) representing the balance deferred and unpaid of the purchase price of any
property (including Capitalized Lease Obligations), except any such balance that
constitutes a trade payable or similar obligation to a trade creditor, in each
case accrued in the ordinary course of business, or (iv) representing any
Hedging Obligations, if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet (excluding the footnotes thereto) of such Person
prepared in accordance with GAAP; (b) to the extent not otherwise included, any
obligation by such Person to be liable for, or to pay, as obligor, guarantor or
otherwise, on the obligations of the type referred to in clause (a) of another
Person (whether or not such items would appear upon the balance sheet of such
obligor or guarantor), other than by endorsement of negotiable instruments for
collection in the ordinary course of business; (c) to the extent not otherwise
included, the obligations of the type referred to in clause (a) of another
Person secured by a Lien on any asset owned by such Person, whether or not such
obligations are assumed by such Person and whether or not such obligations would
appear upon the balance sheet of such Person; provided that the amount of such
Indebtedness will be the lesser of the fair market value of such asset at the
date of determination and the amount of Indebtedness so secured; and
(d) Attributable Debt in respect of Sale and Lease-Back Transactions; provided,
however, that notwithstanding the foregoing, Indebtedness will be deemed not to
include (A) Contingent Obligations incurred in the ordinary course of business
and (B) Obligations under, or in respect of, Receivables Facilities.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Independent Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith judgment of the
Borrower, qualified to perform the task for which it has been engaged and that
is independent of the Borrower and its Affiliates.

 

“Information” has the meaning set forth in Section 3.11(a).

 

“Information Memorandum” means the Confidential Information Memorandum dated
September 2005, relating to the Borrower and the Transactions.

 

“Intercreditor Agreement” means the Lien Subordination and Intercreditor
Agreement dated the date hereof, among Holdings, the Borrower, the subsidiaries
of the Borrower party from time to time thereto, the Agent and the Revolving
Facility Agent (as defined therein).

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.05.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the first
Business Day of each January, April, July and October and the Maturity Date and
(b) with respect to any LIBOR Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
LIBOR Rate Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period
(or if such day is not a Business Day, the next succeeding Business Day).

 

20

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

 

“Interest Period” means (a) with respect to any LIBOR Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, to the extent available to each Lender, nine or twelve months) thereafter,
as the Borrower may elect; provided, that (i) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) any Interest Period that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period.  For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.

 

“Investment Grade Securities” means (a) securities issued or directly and fully
guaranteed or insured by the government of the United States of America or any
agency or instrumentality thereof (other than Cash Equivalents), (b) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by Moody’s or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Borrower and
its subsidiaries, (c) investments in any fund that invests exclusively in
investments of the type described in clauses (a) and (b), which fund may also
hold immaterial amounts of cash pending investment or distribution and
(d) corresponding instruments in countries other than the United States of
America customarily utilized for high quality investments.

 

“Investments” means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (including by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others, but excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and employees, in each case made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities issued by any other Person and investments that
are required by GAAP to be classified on the balance sheet (excluding the
footnotes) of such Person in the same manner as the other investments included
in this definition to the extent such transactions involve the transfer of cash
or other property.  For purposes of the definition of “Unrestricted Subsidiary”
and Section 6.04, (a) “Investments” shall include the portion (proportionate to
the Borrower’s equity interest in such subsidiary) of the fair market value of
the net assets of a subsidiary of the Borrower at the time that such subsidiary
is designated an Unrestricted Subsidiary; provided that upon a redesignation of
such subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to
continue to have a permanent “Investment” in an Unrestricted Subsidiary in an
amount (if positive) equal to (i) the Borrower’s “Investment” in such subsidiary
at the time of such redesignation, less (ii) the portion (proportionate to the
Borrower’s equity interest in such subsidiary) of the fair market value of the
net assets of such subsidiary at the time of such redesignation, and (b) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Borrower.

 

“Joinder Agreement” has the meaning assigned to such term in Section 5.11.

 

“Joint Lead Arrangers” means Credit Suisse and Deutsche Bank Securities Inc.

 

“Kate Spade” means Kate Spade LLC, a Delaware limited liability company.

 

21

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

 

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.

 

“LIBOR Rate” means, with respect to any Interest Period, (a) the rate per annum
determined by the Agent at approximately 11:00 a.m. (London time) on the date
that is two Business Days prior to the commencement of such Interest Period by
reference to the British Bankers’ Association Interest Settlement Rates for
deposits in dollars (as set forth by any service selected by the Agent that has
been nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the
“LIBOR Rate” shall be the interest rate per annum determined by the Agent to be
the average of the rates per annum at which deposits in dollars are offered for
such relevant Interest Period to major banks in the London interbank market in
London, England by the Agent at approximately 11:00 a.m. (London time) on the
date that is two Business Days prior to the beginning of such Interest Period.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the UCC (or
equivalent statutes) of any jurisdiction; provided that in no event shall an
operating lease be deemed to constitute a Lien.

 

“Loan Documents” means this Agreement, any promissory notes issued pursuant to
the Agreement, the Collateral Documents and the Intercreditor Agreement. Any
reference in this Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto.

 

“Loan Guarantor” means each Loan Party (other than the Borrower).

 

“Loan Guaranty” means Article X of this Agreement.

 

“Loan Parties” means Holdings, the Borrower, each Domestic Subsidiary (other
than (i) subject to compliance with Section 5.11, any Domestic Subsidiary that
is an Immaterial Subsidiary and (ii) any Unrestricted Subsidiary), and any other
Person who becomes a party to this Agreement as a Loan Party pursuant to a
Joinder Agreement, and their respective successors and assigns.

 

“Loans” means the term loans made by the Lenders pursuant to this Agreement.

 

“Management Services Agreement” means the agreement among Holdings, the Borrower
and the Sponsors dated as of October 6, 2005, as amended from time to time,
pursuant to which the Sponsors agree to provide certain services to Holdings and
the Borrower in exchange for certain fees.

 

“Management Stockholders” means the members of management of the Borrower (or
its direct parent) who are holders of Equity Interests of the Borrower (or any
of its direct or indirect parent companies) on the Closing Date.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or financial condition of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of

 

22

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

 

the Borrower and the other Loan Parties (taken as a whole) to perform their
obligations under the Loan Documents or (c) the rights of, or remedies available
to the Agent or the Lenders under, the Loan Documents.

 

“Material Indebtedness” means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedge Agreements, of any one or more of
the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$50,000,000.  For purposes of determining Material Indebtedness, the
“obligations” of the Borrower or any Subsidiary in respect of any Hedge
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required
to pay if such Hedge Agreement were terminated at such time.

 

“Maturity Date” means April 6, 2013.

 

“Maximum Liability” has the meaning assigned to such term in Section 10.09.

 

“Merger” has the meaning assigned to such term in the introductory statement to
this Agreement.

 

“Merger Agreement” means the Agreement and Plan of Merger dated as of May 1,
2005, among Holdings, Merger Sub and Neiman Marcus, as amended from time to
time.

 

“Merger Consideration” has the meaning assigned to such term in the introductory
statement to this Agreement.

 

“Merger Sub” has the meaning assigned to such term in the preamble to this
Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating
agency business.

 

“Mortgaged Properties” means, initially, the owned real properties and leasehold
and subleasehold interests of the Loan Parties specified on Schedule 1.01(b),
and shall include each other parcel of real property and improvements thereto
with respect to which a Mortgage is granted pursuant to Section 5.11.

 

“Mortgages” means any mortgage, deed of trust or other agreement which conveys
or evidences a Lien in favor of the Agent, for the benefit of the Agent and the
Lenders, on real property of a Loan Party, including any amendment, modification
or supplement thereto.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 3(37) or
4001(a)(3) of ERISA.

 

“Neiman Marcus” has the meaning assigned to such term in the preamble to this
Agreement.

 

“Net Income” means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of Preferred Stock dividends.

 

“Net Proceeds” means the aggregate cash proceeds received by the Borrower or any
Restricted Subsidiary in respect of any Asset Sale, including any cash received
upon the sale or other disposition of any Designated Noncash Consideration
received in any Asset Sale, net of the direct costs relating to such Asset Sale
and the sale or disposition of such Designated Noncash Consideration, including
legal, accounting and investment banking fees, and brokerage and sales
commissions, any

 

23

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

 

relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of principal, premium, if any, and interest on Indebtedness
required (other than as required by Section 2.20(a)(i) or Section 2.20(b)(i)(A))
to be paid as a result of such transaction and any deduction of appropriate
amounts to be provided by the Borrower as a reserve in accordance with GAAP
against any liabilities associated with the asset disposed of in such
transaction and retained by the Borrower after such sale or other disposition
thereof, including pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction.

 

“New Note Documents” means, collectively, the Senior Note Documents and the
Senior Subordinated Note Documents.

 

“New Notes” means, collectively, the Senior Notes and the Senior Subordinated
Notes.

 

“Non-Consenting Lender” has the meaning assigned to such term in
Section 9.02(e).

 

“Non-Paying Guarantor” has the meaning assigned to such term in Section 10.10.

 

“Obligated Party” has the meaning assigned to such term in Section 10.02.

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to the Lenders or to any
Lender, the Agent or any indemnified party arising under the Loan Documents.

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Executive Vice President, Senior
Vice President or Vice President, the Treasurer or the Secretary of the
Borrower.

 

“Officers’ Certificate” means a certificate signed on behalf of the Borrower by
two Officers of the Borrower, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Borrower.

 

“Other Information” has the meaning assigned to such term in Section 3.11(b).

 

“Other Pari Passu Lien Obligations” means (i) any Indebtedness constituting debt
securities incurred pursuant to an indenture with an institutional trustee or
loans incurred in the bank credit market (including institutional investor
participation therein) and (ii) all obligations with respect to such
Indebtedness.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

 

“Pari Passu Liens” means any Lien on the Collateral granted for the benefit of
the holders of the 2028 Debentures and the holders of the 2008 Notes, in each
case that is required by the terms of the indenture applicable thereto as a
result of the grant of security interests pursuant to any Loan Document, the ABL
Security Documents or otherwise.

 

“Participant” has the meaning assigned to such term in Section 9.04.

 

24

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

 

“Paying Guarantor” has the meaning assigned to such term in Section 10.10.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Perfection Certificate” shall mean a certificate in the form of Exhibit I to
the Security Agreement or any other form approved by the Agent.

 

“Permitted Asset Swap” means the concurrent purchase and sale or exchange of
Related Business Assets or a combination of Related Business Assets and cash or
Cash Equivalents between the Borrower or any of its Restricted Subsidiaries and
another Person that is not the Borrower or any of its Restricted Subsidiaries;
provided that any cash or Cash Equivalents received must be applied in
accordance with Section 2.20.

 

“Permitted Collateral Liens” means:

 

(a) Liens securing any Other Pari Passu Lien Obligations; provided, however,
that, at the time of incurrence and after giving pro forma effect thereto, the
Consolidated Secured Debt Ratio would be no greater than 3.75 to 1.00;

 

(b) Liens existing on the Closing Date;

 

(c) Pari Passu Liens;

 

(d) Liens described in clauses (c), (d), (f), (h), (i), (l), (m), (o), (q) (but
only with respect to clauses (h), (i) and (r) (but only with respect to
Section 6.01(b)(vi) referred to therein) referred to therein), (r) (but only
with respect to Sections 6.01(b)(vi) and (b)(xxii)(A) referred to therein), (t),
(u) and (aa) (but only with respect to obligations secured by Liens described in
clauses (a) or (c) set forth above) of the definition of “Permitted Liens”; and

 

(e) Liens on the Term Loan First Lien Collateral in favor of the Agent relating
to the Agent’s administrative expenses with respect to the Term Loan First Lien
Collateral.

 

“Permitted Debt” has the meaning assigned to such term in Section 6.01.

 

“Permitted Holders” means each of the Sponsors, the Co-Investors and Management
Stockholders and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision) of which any
of the foregoing are members; provided that, in the case of such group and
without giving effect to the existence of such group or any other group, the
Sponsors, the Co-Investors and Management Stockholders, collectively, have
beneficial ownership of more than 50% of the total voting power of the Voting
Stock of the Borrower or any of its direct or indirect parent companies.  Any
Person or group whose acquisition of beneficial ownership constitutes a Change
of Control in respect of which a Change of Control Offer is made in accordance
with Section 2.19 will thereafter, together with its Affiliates, constitute an
additional Permitted Holder.

 

“Permitted Investments” means:

 

(a) any Investment in the Borrower or any Restricted Subsidiary;

 

(b) any Investment in cash and Cash Equivalents or Investment Grade Securities;

 

25

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

 

(c) (i) any Investment by the Borrower or any Restricted Subsidiary of the
Borrower in a Person that is engaged in a Similar Business if as a result of
such Investment (A) such Person becomes a Restricted Subsidiary of the Borrower
or (B) such Person, in one transaction or a series of related transactions, is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Borrower or a
Restricted Subsidiary of the Borrower, and (ii) any Investment held by such
Person;

 

(d) any Investment in securities or other assets not constituting cash, Cash
Equivalents or Investment Grade Securities and received in connection with an
Asset Sale made pursuant to Section 6.06 or any other disposition of assets not
constituting an Asset Sale;

 

(e) any Investment existing on the Closing Date or made pursuant to legally
binding written commitments in existence on the Closing Date;

 

(f) loans and advances to, and guarantees of Indebtedness of, employees not in
excess of $10,000,000 outstanding at any one time, in the aggregate;

 

(g) any Investment acquired by the Borrower or any Restricted Subsidiary (i) in
exchange for any other Investment or accounts receivable held by the Borrower or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the Person in which
such other Investment is made or which is the obligor with respect to such
accounts receivable or (ii) as a result of a foreclosure by the Borrower or any
Restricted Subsidiary with respect to any secured Investment or other transfer
of title with respect to any secured Investment in default;

 

(h) Hedging Obligations permitted under Section 6.01(b)(xii);

 

(i) loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business or consistent with past practice or
to fund such Person’s purchase of Equity Interests of the Borrower or any direct
or indirect parent company thereof under compensation plans approved by the
Board of Directors of the Borrower in good faith;

 

(j) Investments the payment for which consists of Equity Interests of the
Borrower, or any of its direct or indirect parent companies (exclusive of
Disqualified Stock); provided that such Equity Interests will not increase the
amount available for Restricted Payments under Section 6.04(a)(iii);

 

(k) guarantees of Indebtedness permitted under Section 6.01 and performance
guarantees in the ordinary course of business;

 

(l) any transaction to the extent it constitutes an investment that is permitted
and made in accordance with the provisions of Section 6.05(b) (other than any
transaction set forth in clauses (ii), (vi) and (xi) of Section 6.05(b));

 

(m) Investments consisting of purchases and acquisitions of inventory, supplies,
material or equipment or the licensing or contribution of intellectual property
pursuant to joint marketing arrangements with other Persons;

 

(n) Investments in a Similar Business having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (n) that
are at that time

 

26

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

 

outstanding (without giving effect to the sale of an Unrestricted Subsidiary to
the extent the proceeds of such sale do not consist of cash or marketable
securities), not to exceed the greater of (x) $100,000,000 and (y) 1.50% of
Total Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);

 

(o) Investments relating to a Receivables Facility; provided that in the case of
Receivables Facilities established after the Closing Date, such Investments are
necessary or advisable (in the good faith determination of the Borrower) to
effect such Receivables Facility; and

 

(p) additional Investments having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (p) that are at that
time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash or
marketable securities), not to exceed $150,000,000 (with the fair market value
of each Investment being measured at the time made and without giving effect to
subsequent changes in value)

 

“Permitted Liens” means, with respect to any Person:

 

(a) Liens to secure Indebtedness incurred under Sections 6.01(b)(i) or (b)(ii),
the 2008 Notes and the 2028 Debentures (and, in each case, any related
obligations);

 

(b) pledges or deposits by such Person under workmen’s compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits to
secure bids, tenders, contracts (other than for the payment of Indebtedness) or
leases to which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or U.S. government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent, in each case incurred in the ordinary course of business;

 

(c) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens
and other similar Liens, in each case, for sums not yet overdue for a period of
more than thirty (30) days or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person shall then be proceeding with an appeal
or other proceedings for review, if adequate reserves with respect thereto are
maintained on the books of such Person in accordance with GAAP;

 

(d) Liens for taxes, assessments or other governmental charges or claims not yet
overdue for a period of more than thirty (30) days or payable or subject to
penalties for nonpayment or which are being contested in good faith by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of such Person in accordance with GAAP;

 

(e) Liens in favor of issuers of performance and surety bonds or bid bonds or
with respect to other regulatory requirements or letters of credit issued
pursuant to the request of and for the account of such Person in the ordinary
course of its business;

 

(f) minor survey exceptions, minor encumbrances, easements or reservations of,
or rights of others for, licenses, rights-of-way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or Liens

 

27

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

 

incidental to the conduct of the business of such Person or to the ownership of
its properties, in each case, which were not incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person;

 

(g) Liens existing on the Closing Date;

 

(h) Liens on property or shares of stock of a Person at the time such Person
becomes a subsidiary; provided that such Liens are not created or incurred in
connection with, or in contemplation of, such other Person becoming such a
subsidiary; provided, further, that such Liens may not extend to any other
property owned by the Borrower or any Restricted Subsidiary;

 

(i) Liens on property at the time the Borrower or a Restricted Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into the Borrower or any Restricted Subsidiary; provided
that such Liens are not created or incurred in connection with, or in
contemplation of, such acquisition; provided, further, that the Liens may not
extend to any other property owned by the Borrower or any Restricted Subsidiary;

 

(j) Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Borrower or another Restricted Subsidiary permitted to be incurred
in accordance with Section 6.01;

 

(k) Liens on specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

 

(l) leases and subleases granted to others in the ordinary course of business
which do not materially interfere with the ordinary conduct of the business of
the Borrower or any of the Restricted Subsidiaries and do not secure any
Indebtedness;

 

(m) Liens arising from financing statement filings under the UCC or similar
state laws regarding operating leases entered into by the Borrower and its
Restricted Subsidiaries in the ordinary course of business;

 

(n) Liens in favor of the Borrower or any Subsidiary Guarantor;

 

(o) Liens on inventory or equipment of the Borrower or any Restricted Subsidiary
granted in the ordinary course of business to the Borrower’s client at which
such inventory or equipment is located;

 

(p) Liens on accounts receivable and related assets incurred in connection with
a Receivables Facility;

 

(q) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancing, refunding, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in clauses (a), (g), (h), (i), (r) and (aa) of this definition;
provided that (x) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property),
and (y) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of (A) the outstanding principal amount or, if
greater, committed amount of the Indebtedness described

 

28

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

 

under clauses (a), (g), (h), (i), (r) and (aa) of this definition at the time
the original Lien became a Permitted Lien pursuant this Agreement, and (B) an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement;

 

(r) Liens securing Indebtedness permitted to be incurred pursuant to
Section 6.01(b)(vi), (b)(xix), (b)(xx), (b)(xxii)(A) and (b)(xxiii); provided
that (A) Liens securing Indebtedness permitted to be incurred pursuant to
Section 6.01(b)(vi) do not at any time encumber any property other than the
property financed by such Indebtedness and the proceeds and the products
thereof, (B) Liens securing Indebtedness permitted to be incurred pursuant to
Section 6.01(b)(xix) are solely on acquired property or the assets of the
acquired entity, as the case may be and (C) Liens securing Indebtedness
permitted to be incurred pursuant to Section 6.01(b)(xx) extend only to the
assets of Foreign Subsidiaries;

 

(s) deposits in the ordinary course of business to secure liability to insurance
carriers;

 

(t) Liens securing judgments for the payment of money not constituting an Event
of Default under paragraph (h) of Article VII, so long as such Liens are
adequately bonded and any appropriate legal proceedings that may have been duly
initiated for the review of such judgment have not been finally terminated or
the period within which such proceedings may be initiated has not expired;

 

(u) 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
in the ordinary course of business;

 

(v) Liens (i) of a collection bank arising under Section 4-210 of the UCC on
items in the course of collection, (ii) attaching to commodity trading accounts
or other commodity brokerage accounts incurred in the ordinary course of
business and (iii) in favor of banking institutions arising as a matter of law
encumbering deposits (including the right of set-off) and which are within the
general parameters customary in the banking industry;

 

(w) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
of the Borrower or any of its Restricted Subsidiaries to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Borrower and its Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the Borrower or any
of its Restricted Subsidiaries in the ordinary course of business;

 

(x) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;

 

(y) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 6.01; provided that such Liens do not extend
to any assets other than those assets that are the subject of such repurchase
agreement;

 

(z) other Liens securing obligations incurred in the ordinary course of business
which obligations do not exceed $50,000,000 at any one time outstanding;

 

29

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

 

(aa) Liens securing Hedging Obligations, so long as the related Indebtedness is,
and is permitted to be pursuant to Section 6.02, secured by a Lien on the same
property securing such Hedging Obligations; and

 

(bb) Liens incurred to secure obligations in respect of any Indebtedness
permitted to be incurred pursuant to Section 6.01; provided that, at the time of
incurrence and after giving pro forma effect thereto, the Consolidated Secured
Debt Ratio would be no greater than 4.00 to 1.00.

 

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

 

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Preferred Stock” means any Equity Interest with preferential rights of payment
of dividends or upon liquidation, dissolution, or winding up.

 

“Prime Rate” means the rate of interest per annum determined from time to time
by Credit Suisse as its prime rate in effect at its principal office in New York
City and notified to the Borrower.

 

“Projections” means the projections of the Borrower and the Subsidiaries
included in the Information Memorandum and any other projections and any
forward-looking statements of such entities furnished to the Lenders or the
Agent by or on behalf of Holdings, the Borrower or any of the Subsidiaries prior
to the Closing Date.

 

“Qualified Proceeds” means assets that are used or useful in, or Capital Stock
of any Person engaged in, a Similar Business; provided that the fair market
value of any such assets or Capital Stock shall be determined by the Borrower in
good faith.

 

“Receivables Facility” means one or more receivables financing facilities, as
amended, supplemented, modified, extended, renewed, restated, refunded, replaced
or refinanced from time to time, the Indebtedness of which is non-recourse
(except for standard representations, warranties, covenants and indemnities made
in connection with such facilities) to the Borrower and its Restricted
Subsidiaries pursuant to which the Borrower or any of its Restricted
Subsidiaries sells its accounts receivable to either (a) a Person that is not a
Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its
accounts receivable to a Person that is not a Restricted Subsidiary.

 

“Receivables Fees” means distributions or payments made directly or by means of
discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.

 

“Receivables Subsidiary” means any subsidiary formed solely for the purpose of
engaging, and that engages only, in one or more Receivables Facilities.

 

“Refinancing Indebtedness” has the meaning assigned to such term in
Section 6.01(b)(xv).

 

“Refunding Capital Stock” has the meaning assigned to such term in
Section 6.04(b)(ii).

 

30

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

 

“Register” has the meaning assigned to such term in Section 9.04.

 

“Registration Rights Agreement” means the Registration Rights Agreement relating
to the Senior Notes and the Senior Subordinated Notes, dated as of the Closing
Date, among the Borrower, each Subsidiary Guarantor, Credit Suisse First Boston
LLC, Deutsche Bank Securities Inc., Banc of America Securities LLC and Goldman
Sachs & Co.

 

“Regulation T” means Regulation T of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

 

“Regulation U” means Regulation U of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

 

“Regulation X” means Regulation X of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

 

“Related Business Assets” means assets (other than cash or Cash Equivalents)
used or useful in a Similar Business; provided that any assets received by the
Borrower or a Restricted Subsidiary in exchange for assets transferred by the
Borrower or a Restricted Subsidiary shall not be deemed to be Related Business
Assets if they consist of securities of a Person, unless upon receipt of the
securities of such Person, such Person would become a Restricted Subsidiary.

 

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

 

“Required Lenders” means at any time (i) prior to the making of the Loans on the
Closing Date, Lenders holding more than 50% of the total Commitments and
(ii) thereafter, the Lenders holding more than 50% of the aggregate principal
amount of Loans outstanding at such time.

 

“Requirement of Law” means, as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any 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.

 

“Responsible Officer” of any Person means the chief executive officer, the
president, any vice president, the chief operating officer or any Financial
Officer of such Person and any other officer or similar official thereof
responsible for the administration of the obligations of such Person in respect
of this Agreement, and, as to any document delivered on the Closing Date (but
subject to the express requirements set forth in Article IV), shall include any
secretary or assistant secretary of a Loan Party.  Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

“Restricted Payments” has the meaning assigned to such term in Section 6.04(a).

 

“Restricted Subsidiary” means, at any time, any direct or indirect subsidiary of
the Borrower (including any Foreign Subsidiary) that is not then an Unrestricted
Subsidiary; provided that

 

31

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

 

upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such subsidiary shall be included in the definition of “Restricted
Subsidiary”.

 

“Retired Capital Stock” has the meaning assigned to such term in
Section 6.04(b)(ii).

 

“Revolving Facility First Lien Collateral” has the meaning set forth in the
Intercreditor Agreement.

 

“Sale and Lease-Back Transaction” means any arrangement with any Person
providing for the leasing by the Borrower or any Restricted Subsidiary of any
real or tangible personal property, which property has been or is to be sold or
transferred by the Borrower or such Restricted Subsidiary to such Person in
contemplation of such leasing.

 

“S&P” means Standard & Poor’s Ratings Service, a division of the McGraw-Hill
Companies, Inc., and any successor to its rating agency business.

 

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

 

“Secured Hedging Obligations” means all Hedging Obligations owing to the Agent,
a Joint Lead Arranger or a co-arranger, a Lender or any Affiliate of any of the
foregoing and with respect to which, at or prior to the time that the Hedge
Agreement relating to such Hedging Obligation is entered into, the Borrower (or
another Loan Party) and the Lender or other Person referred to above in this
definition (or Affiliate) party thereto (except in the case of the Agent) shall
have delivered written notice to the Agent that such a transaction has been
entered into and that it constitutes a Secured Hedging Obligation entitled to
the benefits of the Collateral Documents and the Intercreditor Agreement.

 

“Secured Indebtedness” means any Indebtedness secured by a Lien.

 

“Secured Obligations” means all Obligations, together with all Secured Hedging
Obligations.

 

“Secured Parties” has the meaning assigned to such term in the Security
Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Security Agreement” means that certain Pledge and Security and Intercreditor
Agreement, dated as of the date hereof, between the Loan Parties and the Agent,
for the benefit of the Agent and the other Secured Parties.

 

“Senior Indebtedness” means with respect to any Person (a) all Indebtedness of
such Person, whether outstanding on the Closing Date or thereafter incurred and
(b) all other obligations of such Person (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
such Person whether or not post-filing interest is allowed in such proceeding)
in respect of Indebtedness described in clause (a) above unless, in the case of
clauses (a) and (b), the instrument creating or evidencing the same or pursuant
to which the same is outstanding expressly provides that such Indebtedness or
other obligations are subordinate in right of payment to the Obligations or the
Loan Guarantee of such Person, as the case may be; provided that Senior
Indebtedness shall not include (i) any obligation of such Person to the Borrower
or any subsidiary or to any joint venture in which the Borrower or any
Restricted Subsidiary has an interest,  (ii) any liability for Federal, state,
local or other Taxes owed or owing by such Person, (iii) any accounts payable or
other liability to

 

32

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

 

trade creditors in the ordinary course of business (including guarantees thereof
as instruments evidencing such liabilities), (iv) any Indebtedness or other
obligation of such Person that is subordinate or junior in any respect to any
other Indebtedness or other obligation of such Person or (v) that portion of any
Indebtedness that at the time of incurrence is incurred in violation of this
Agreement.

 

“Senior Note Documents” means the Senior Notes Indenture and all other
instruments, agreements and other documents evidencing the Senior Notes or
providing for any guarantee or other right in respect thereof.

 

“Senior Notes” means the Borrower’s 9%/9¾% Senior Notes due 2015, in an initial
aggregate principal amount of $700,000,000.

 

“Senior Notes Indenture” means the Indenture dated as of the date hereof, among
the Borrower, as issuer, certain of its subsidiaries, as guarantors, and Wells
Fargo Bank, National Association, as trustee, pursuant to which the Senior Notes
are issued.

 

“Senior Secured Asset-Based Revolving Credit Agreement” means the Credit
Agreement dated as of the date hereof, among Holdings, Merger Sub, the
subsidiaries of the Borrower from time to time party thereto, Deutsche Bank
Trust Company Americas, as administrative agent and collateral agent, and the
lenders from time to time party thereto.

 

“Senior Secured Asset-Based Revolving Credit Facility” means the credit facility
provided under the Senior Secured Asset-Based Revolving Credit Agreement,
including any guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments, supplements,
modifications, extensions, replacements, renewals, restatements, refundings or
refinancings thereof and any indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend,
replace, refund, refinance, renew or defease any part of the loans, notes, other
credit facilities or commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases the amount
borrowable thereunder or alters the maturity thereof (provided that such
increase in borrowings is permitted under Section 6.01).

 

“Senior Secured Term Loan Facility” means the credit facility provided under
this Agreement, including any guarantees, collateral documents, instruments and
agreements executed in connection therewith, and any amendments, supplements,
modifications, extensions, replacements, renewals, restatements, refundings or
refinancings thereof and any indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend,
replace, refund, refinance, renew or defease any part of the loans, notes, other
credit facilities or commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases the amount
borrowable thereunder or alters the maturity thereof (provided that such
increase in borrowings is permitted under Section 6.01).

 

“Senior Subordinated Notes Indenture” means the Indenture dated as of the date
hereof, among the Borrower, as issuer, certain of its subsidiaries, as
guarantors, and Wells Fargo Bank, National Association, as trustee, pursuant to
which the Senior Subordinated Notes are issued.

 

“Senior Subordinated Notes” means the Borrower’s 103/2% Senior Subordinated
Notes due 2015, in an initial aggregate principal amount of $500,000,000.

 

“Senior Subordinated Note Documents” means the Senior Subordinated Notes
Indenture and all other instruments, agreements and other documents evidencing
the Senior Subordinated Notes or providing for any guarantee or other right in
respect thereof.

 

33

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

 

“Significant Subsidiary” means any Restricted Subsidiary of the Borrower that
would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such regulation
is in effect on the date hereof.

 

“Similar Business” means any business conducted by the Borrower and its
Restricted Subsidiaries on the Closing Date or any business that is similar,
reasonably related, incidental or ancillary thereto.

 

“Sponsors” means Texas Pacific Group and Warburg Pincus LLC and their respective
Affiliates.

 

“Subordinated Indebtedness” means (a) with respect to the Borrower, any
Indebtedness of the Borrower that is by its terms subordinated in right of
payment to the Obligations, and (b) with respect to any Loan Guarantor, any
Indebtedness of such Loan Guarantor that is by its terms subordinated in right
of payment to the Loan Guaranty of such Loan Guarantor.

 

“subsidiary” means, with respect to any Person, (a) any corporation,
association, or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time of determination owned or controlled, directly
or indirectly, by such Person or one or more of the other subsidiaries of that
Person or a combination thereof and (b) any partnership, joint venture, limited
liability company or similar entity of which (i) more than 50% of the capital
accounts, distribution rights, total equity and voting interests or general or
limited partnership interests, as applicable, are owned or controlled, directly
or indirectly, by such Person or one or more of the other subsidiaries of that
Person or a combination thereof whether in the form of membership, general,
special or limited partnership or otherwise, and (ii) such Person or any
Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.

 

“Subsidiary” means, unless the context otherwise requires, a Restricted
Subsidiary of the Borrower.  For purposes of Sections 3.06, 3.09, 3.10, 3.15,
5.04 and 5.08 only, references to Subsidiaries shall be deemed also to be
references to Unrestricted Subsidiaries.

 

“Subsidiary Guarantor” means each Restricted Subsidiary of the Borrower that is
a Loan Party and that executes this Agreement as a Loan Guarantor on the Closing
Date and each other Restricted Subsidiary of the Borrower that thereafter
guarantees the Secured Obligations pursuant to the terms of this Agreement.

 

“Successor Borrower” has the meaning assigned to such term in
Section 6.03(a)(i).

 

“Successor Person” has the meaning assigned to such term in Section 6.03(c)(i).

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Term Loan First Lien Collateral” has the meaning set forth in the Intercreditor
Agreement.

 

“Title Insurance Company” means the title insurance company providing the Title
Insurance Policies.

 

34

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

 

“Title Insurance Policies” means the lender’s title insurance policies issued to
Agent with respect to the Mortgaged Properties.

 

“Total Assets” means the total amount of all assets of the Borrower and the
Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP as shown on the most recent balance sheet of the Borrower.

 

“Transaction Costs” means fees and expenses payable or otherwise borne by
Holdings, the Borrower and its subsidiaries in connection with the Transactions
and the transactions contemplated thereby (including redemption or other
premiums payable in connection with the redemption after the Closing Date of the
2008 Notes in accordance with Section 5.13).

 

“Transactions” means, collectively, (a) the execution, delivery and performance
by Holdings and Merger Sub of the Merger Agreement and the consummation of the
transactions contemplated thereby, (b) the execution, delivery and performance
by the Loan Parties of the Loan Documents to which they are a party and the
making of the Borrowings hereunder, (c) the execution, delivery and performance
by Holdings, the Borrower and the subsidiaries of the Borrower party thereto of
the New Note Documents and the issuance of the New Notes, (d) the execution,
delivery and performance of the Senior Secured Asset-Based Revolving Credit
Agreement and all other instruments, agreements and other documents evidencing
or governing the Senior Secured Asset-Based Revolving Credit Facility or
providing for any guarantee or other right in respect thereof and the making of
borrowings thereunder, (e) the execution, delivery and performance by all
parties thereto of the Intercreditor Agreement, (f) the Existing Bank Debt
Refinancing, (g) the 2008 Notes Call for Redemption, (h) the granting of Pari
Passu Liens, (i) the making of the Equity Contribution (j) the entering into of
the HSBC Arrangements and (k) the payment of the Transaction Costs.

 

“2008 Notes” means the 6.65% Senior Unsecured Notes due 2008 of Neiman Marcus
outstanding on the Closing Date.

 

“2008 Notes Call for Redemption” means the call for redemption of, and the
deposit into a segregated account of the estimated amount of the redemption
payment related to, all outstanding 2008 Notes in accordance with the indenture
governing the 2008 Notes and applicable law, and the securing of the 2008 Notes
by the Pari Passu Liens on the Closing Date.

 

“2028 Debentures” means the 7.125% Senior Debentures due 2028 of Neiman Marcus
outstanding on the Closing Date.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
state of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

 

“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations, but excluding

 

35

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

 

unripened or contingent obligations related to indemnification under
Section 9.03 for which no written demand has been made.

 

“Unrestricted Subsidiary” means (a) any subsidiary of the Borrower that at the
time of determination is an Unrestricted Subsidiary (as designated by the
Borrower, as provided below) and (b) any subsidiary of an Unrestricted
Subsidiary.

 

The Borrower may designate any subsidiary of the Borrower (including any
existing subsidiary and any newly acquired or newly formed subsidiary) to be an
Unrestricted Subsidiary unless such subsidiary or any of its subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, the Borrower or any subsidiary of the Borrower (other than any
subsidiary of the subsidiary to be so designated); provided that (i) any
Unrestricted Subsidiary must be an entity of which shares of the capital stock
or other equity interests (including partnership interests) entitled to cast at
least a majority of the votes that may be cast by all shares or equity interests
having ordinary voting power for the election of directors or other governing
body are owned, directly or indirectly, by the Borrower, (ii) such designation
complies with Section 6.04 and (iii) each of (A) the subsidiary to be so
designated and (B) its subsidiaries has not at the time of designation, and does
not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Borrower or any Restricted
Subsidiary.

 

The Borrower may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that, immediately after giving effect to such designation
no Default shall have occurred and be continuing and either (x) the Borrower
could incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test described in the first paragraph of Section 6.01 or
(y) the Fixed Charge Coverage Ratio for the Borrower and its Restricted
Subsidiaries would be greater than such ratio for the Borrower and its
Restricted Subsidiaries immediately prior to such designation, in each case on a
pro forma basis taking into account such designation.

 

Any such designation by the Borrower shall be notified by the Borrower to the
Agent by promptly delivering to the Agent a copy of any applicable Board
Resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing provisions. 
Notwithstanding the foregoing, as of the Closing Date, all of the subsidiaries
of the Borrower will be Restricted Subsidiaries, other than Neiman Marcus
Funding Corporation, Kate Spade, Gurwitch Products LLC and their respective
subsidiaries, which shall be Unrestricted Subsidiaries.

 

“USA PATRIOT Act” means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
from time to time.

 

“Voting Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness,
Disqualified Stock or Preferred Stock, as the case may be, at any date, the
quotient obtained by dividing (1) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar payment with
respect to such Disqualified Stock or Preferred Stock multiplied by the amount
of such payment, by (2) the sum of all such payments.

 

36

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

 

“Wholly-Owned Subsidiary” of any Person means a subsidiary of such Person, 100%
of the outstanding Capital Stock or other ownership interests of which (other
than directors’ qualifying shares) shall at the time be owned by such Person or
by one or more Wholly-Owned Subsidiaries of such Person.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.02.  CLASSIFICATION OF LOANS AND BORROWINGS.  FOR PURPOSES OF THIS
AGREEMENT, LOANS MAY BE CLASSIFIED AND REFERRED TO BY TYPE (E.G., A “LIBOR RATE
LOAN” OR A “LIBOR RATE BORROWING”).

 

SECTION 1.03.  TERMS GENERALLY.  THE DEFINITIONS OF TERMS HEREIN SHALL APPLY
EQUALLY TO THE SINGULAR AND PLURAL FORMS OF THE TERMS DEFINED.  WHENEVER THE
CONTEXT MAY REQUIRE, ANY PRONOUN SHALL INCLUDE THE CORRESPONDING MASCULINE,
FEMININE AND NEUTER FORMS.  THE WORDS “INCLUDE”, “INCLUDES” AND “INCLUDING”
SHALL BE DEEMED TO BE FOLLOWED BY THE PHRASE “WITHOUT LIMITATION”.  UNLESS
OTHERWISE SPECIFICALLY INDICATED, THE TERM “CONSOLIDATED” WITH RESPECT TO ANY
PERSON REFERS TO SUCH PERSON CONSOLIDATED WITH ITS RESTRICTED SUBSIDIARIES, AND
EXCLUDES FROM SUCH CONSOLIDATION ANY UNRESTRICTED SUBSIDIARY AS IF SUCH
UNRESTRICTED SUBSIDIARY WERE NOT AN AFFILIATE OF SUCH PERSON.  THE WORD “WILL”
SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AS THE WORD “SHALL”. 
UNLESS THE CONTEXT REQUIRES OTHERWISE (A) ANY DEFINITION OF OR REFERENCE TO ANY
AGREEMENT, INSTRUMENT OR OTHER DOCUMENT HEREIN SHALL BE CONSTRUED AS REFERRING
TO SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT AS FROM TIME TO TIME AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED (SUBJECT TO ANY RESTRICTIONS ON SUCH
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS SET FORTH HEREIN), (B) ANY REFERENCE
HEREIN TO ANY PERSON SHALL BE CONSTRUED TO INCLUDE SUCH PERSON’S SUCCESSORS AND
ASSIGNS, (C) THE WORDS “HEREIN”, “HEREOF” AND “HEREUNDER”, AND WORDS OF SIMILAR
IMPORT, SHALL BE CONSTRUED TO REFER TO THIS AGREEMENT IN ITS ENTIRETY AND NOT TO
ANY PARTICULAR PROVISION HEREOF, (D) ALL REFERENCES HEREIN TO ARTICLES,
SECTIONS, EXHIBITS AND SCHEDULES SHALL BE CONSTRUED TO REFER TO ARTICLES AND
SECTIONS OF, AND EXHIBITS AND SCHEDULES TO, THIS AGREEMENT AND (E) THE WORDS
“ASSET” AND “PROPERTY” SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT
AND TO REFER TO ANY AND ALL TANGIBLE AND INTANGIBLE ASSETS AND PROPERTIES,
INCLUDING CASH, SECURITIES, ACCOUNTS AND CONTRACT RIGHTS.

 

SECTION 1.04.  EFFECTUATION OF TRANSACTIONS.  EACH OF THE REPRESENTATIONS AND
WARRANTIES OF THE LOAN PARTIES CONTAINED IN THIS AGREEMENT (AND ALL
CORRESPONDING DEFINITIONS) ARE MADE AFTER GIVING EFFECT TO THE TRANSACTIONS,
UNLESS THE CONTEXT OTHERWISE REQUIRES. REFERENCES TO THE TRANSACTIONS IN
SECTIONS 3.02 AND 3.03 SHALL BE DEEMED NOT TO INCLUDE THE TRANSACTIONS DESCRIBED
IN CLAUSE (J) OF THE DEFINITION OF THE TERM “TRANSACTIONS” SET FORTH IN
SECTION 1.01.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.  COMMITMENTS.  SUBJECT TO THE TERMS AND CONDITIONS SET FORTH
HEREIN, EACH LENDER AGREES, SEVERALLY AND NOT JOINTLY, TO MAKE A LOAN TO THE
BORROWER ON THE CLOSING DATE, IN A PRINCIPAL AMOUNT NOT TO EXCEED ITS
COMMITMENT.  AMOUNTS PREPAID OR REPAID IN RESPECT OF LOANS MAY NOT BE
REBORROWED.

 

SECTION 2.02.  LOANS AND BORROWINGS.  (A)  EACH LOAN SHALL BE MADE AS PART OF A
BORROWING CONSISTING OF LOANS OF THE SAME TYPE MADE BY THE LENDERS RATABLY IN
ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS.  THE FAILURE OF ANY LENDER TO MAKE
ANY LOAN REQUIRED TO BE MADE BY IT SHALL NOT

 

37

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

 

RELIEVE ANY OTHER LENDER OF ITS OBLIGATIONS HEREUNDER; PROVIDED THAT THE
COMMITMENTS OF THE LENDERS ARE SEVERAL AND NO LENDER SHALL BE RESPONSIBLE FOR
ANY OTHER LENDER’S FAILURE TO MAKE LOANS AS REQUIRED.

 

(B)  SUBJECT TO SECTION 2.12, EACH BORROWING SHALL BE COMPRISED ENTIRELY OF ABR
LOANS OR LIBOR RATE LOANS AS THE BORROWER MAY REQUEST IN ACCORDANCE HEREWITH. 
EACH LENDER AT ITS OPTION MAY MAKE ANY LIBOR RATE LOAN BY CAUSING ANY DOMESTIC
OR FOREIGN BRANCH OR AFFILIATE OF SUCH LENDER TO MAKE SUCH LOAN; PROVIDED THAT
(I) ANY EXERCISE OF SUCH OPTION SHALL NOT AFFECT THE OBLIGATION OF THE BORROWER
TO REPAY SUCH LOAN IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, (II)IN
EXERCISING SUCH OPTION, SUCH LENDER SHALL USE REASONABLE EFFORTS TO MINIMIZE ANY
INCREASE IN THE ADJUSTED LIBOR RATE OR INCREASED COSTS TO THE BORROWER RESULTING
THEREFROM (WHICH OBLIGATION OF SUCH LENDER SHALL NOT REQUIRE IT TO TAKE, OR
REFRAIN FROM TAKING, ACTIONS THAT IT DETERMINES WOULD RESULT IN INCREASED COSTS
FOR WHICH IT WILL NOT BE COMPENSATED HEREUNDER OR THAT IT OTHERWISE DETERMINES
WOULD BE DISADVANTAGEOUS TO IT AND IN THE EVENT OF SUCH REQUEST FOR COSTS FOR
WHICH COMPENSATION IS PROVIDED UNDER THIS AGREEMENT, THE PROVISIONS OF
SECTION 2.13 SHALL APPLY) AND (III) SUCH BRANCH OR AFFILIATE OF SUCH LENDER
WOULD NOT BE INCLUDED IN CLAUSE (Z) OF THE FIRST PROVISO TO THE DEFINITION OF
THE TERM “ELIGIBLE ASSIGNEE” SET FORTH IN SECTION 1.01.

 

(C)  AT THE COMMENCEMENT OF EACH INTEREST PERIOD FOR ANY LIBOR RATE BORROWING,
SUCH BORROWING SHALL COMPRISE AN AGGREGATE PRINCIPAL AMOUNT THAT IS AN INTEGRAL
MULTIPLE OF $1,000,000 AND NOT LESS THAN $5,000,000.  EACH ABR BORROWING WHEN
MADE SHALL BE IN A MINIMUM PRINCIPAL AMOUNT OF $1,000,000; PROVIDED THAT AN ABR
BORROWING MAY BE MAINTAINED IN A LESSER AMOUNT EQUAL TO THE DIFFERENCE BETWEEN
THE AGGREGATE PRINCIPAL AMOUNT OF ALL OTHER BORROWINGS AND THE TOTAL AMOUNT OF
LOANS AT SUCH TIME OUTSTANDING.  BORROWINGS OF MORE THAN ONE TYPE MAY BE
OUTSTANDING AT THE SAME TIME; PROVIDED THAT THERE SHALL NOT AT ANY TIME BE MORE
THAN A TOTAL OF TEN DIFFERENT INTEREST PERIODS IN EFFECT FOR LIBOR RATE
BORROWINGS AT ANY TIME OUTSTANDING.

 

(D)  NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE BORROWER SHALL
NOT BE ENTITLED TO REQUEST, OR TO ELECT TO CONVERT OR CONTINUE, ANY BORROWING IF
THE INTEREST PERIOD REQUESTED WITH RESPECT THERETO WOULD END AFTER THE MATURITY
DATE.

 

SECTION 2.03.  REQUEST FOR BORROWING ON THE CLOSING DATE.  (A)  TO REQUEST THE
MAKING OF THE LOANS HEREUNDER ON THE CLOSING DATE, THE BORROWER SHALL NOTIFY THE
AGENT OF SUCH REQUEST EITHER IN WRITING BY DELIVERY OF A BORROWING REQUEST (BY
HAND OR FACSIMILE) SIGNED BY THE BORROWER OR BY TELEPHONE NOT LATER THAN
11:00 A.M., NEW YORK CITY TIME, TWO (2) BUSINESS DAYS BEFORE THE PROPOSED
CLOSING DATE (OR SUCH LATER TIME AS SHALL BE ACCEPTABLE TO THE AGENT).  A
TELEPHONIC BORROWING REQUEST SHALL BE IRREVOCABLE AND SHALL BE CONFIRMED
PROMPTLY BY HAND DELIVERY OR FACSIMILE TO THE AGENT OF A WRITTEN BORROWING
REQUEST SIGNED BY THE BORROWER.  EACH SUCH TELEPHONIC AND WRITTEN BORROWING
REQUEST SHALL SPECIFY THE FOLLOWING INFORMATION IN COMPLIANCE WITH SECTION 2.01:

 

(I) THE AGGREGATE AMOUNT OF THE REQUESTED BORROWING;

 

(II) THE DATE OF THE BORROWING, WHICH SHALL BE A BUSINESS DAY;

 

(III) WHETHER THE BORROWING IS TO BE AN ABR BORROWING OR A LIBOR RATE BORROWING;

 

(IV) IN THE CASE OF A LIBOR RATE BORROWING, THE INITIAL INTEREST PERIOD TO BE
APPLICABLE THERETO, WHICH SHALL BE A PERIOD CONTEMPLATED BY THE DEFINITION OF
THE TERM “INTEREST PERIOD”; AND

 

(V) THE LOCATION AND NUMBER OF THE BORROWER’S ACCOUNT TO WHICH FUNDS ARE TO BE
DISBURSED.

 

38

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

 

(B)  IF NO ELECTION AS TO THE TYPE OF BORROWING IS SPECIFIED, THEN THE REQUESTED
BORROWING SHALL BE AN ABR BORROWING.  IF NO INTEREST PERIOD IS SPECIFIED WITH
RESPECT TO ANY LIBOR RATE BORROWING, THEN THE BORROWER SHALL BE DEEMED TO HAVE
SELECTED AN INTEREST PERIOD OF ONE MONTH’S DURATION.  PROMPTLY FOLLOWING RECEIPT
OF THE BORROWING REQUEST IN ACCORDANCE WITH THIS SECTION, THE AGENT SHALL ADVISE
EACH LENDER OF THE DETAILS THEREOF AND OF THE AMOUNT OF SUCH LENDER’S LOAN TO BE
MADE AS PART OF THE REQUESTED BORROWING.

 

SECTION 2.04.  FUNDING OF THE BORROWING ON THE CLOSING DATE.  (A)  EACH LENDER
SHALL MAKE THE LOAN TO BE MADE BY IT HEREUNDER ON THE CLOSING DATE BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS BY 12:00 (NOON), NEW YORK CITY TIME, TO
THE ACCOUNT OF THE AGENT MOST RECENTLY DESIGNATED BY IT FOR SUCH PURPOSE BY
NOTICE TO THE LENDERS, IN AN AMOUNT EQUAL TO SUCH LENDER’S APPLICABLE PERCENTAGE
OF THE AGGREGATE PRINCIPAL AMOUNT OF THE LOANS MADE ON THE CLOSING DATE.

 

(B)  UNLESS THE AGENT SHALL HAVE RECEIVED NOTICE FROM A LENDER PRIOR TO THE
CLOSING DATE THAT SUCH LENDER WILL NOT MAKE AVAILABLE TO THE AGENT SUCH LENDER’S
SHARE OF THE BORROWING ON THE CLOSING DATE, THE AGENT MAY ASSUME THAT SUCH
LENDER HAS MADE SUCH SHARE AVAILABLE ON THE CLOSING DATE IN ACCORDANCE WITH
PARAGRAPH (A) OF THIS SECTION AND MAY, IN RELIANCE UPON SUCH ASSUMPTION, MAKE
AVAILABLE TO THE BORROWER A CORRESPONDING AMOUNT.  IN SUCH EVENT, IF A LENDER
HAS NOT IN FACT MADE ITS SHARE OF THE BORROWING AVAILABLE TO THE AGENT, THEN THE
APPLICABLE LENDER AND THE BORROWER SEVERALLY AGREE TO PAY TO THE AGENT FORTHWITH
ON DEMAND (WITHOUT DUPLICATION) SUCH CORRESPONDING AMOUNT WITH INTEREST THEREON,
FOR EACH DAY FROM AND INCLUDING THE DATE SUCH AMOUNT IS MADE AVAILABLE TO THE
BORROWER TO BUT EXCLUDING THE DATE OF PAYMENT TO THE AGENT, AT (I) IN THE CASE
OF SUCH LENDER, THE GREATER OF THE FEDERAL FUNDS EFFECTIVE RATE AND A RATE
DETERMINED BY THE AGENT IN ACCORDANCE WITH BANKING INDUSTRY RULES ON INTERBANK
COMPENSATION OR (II) IN THE CASE OF THE BORROWER, THE INTEREST RATE APPLICABLE
TO ABR LOANS.  IF SUCH LENDER PAYS SUCH AMOUNT TO THE AGENT, THEN SUCH AMOUNT
SHALL CONSTITUTE SUCH LENDER’S LOAN INCLUDED IN THE BORROWING ON THE CLOSING
DATE.  NOTHING HEREIN SHALL BE DEEMED TO RELIEVE ANY LENDER FROM ITS OBLIGATION
TO FULFILL ITS COMMITMENT OR TO PREJUDICE ANY RIGHTS WHICH THE AGENT OR THE
BORROWER OR ANY LOAN PARTY MAY HAVE AGAINST ANY LENDER AS A RESULT OF ANY
DEFAULT BY SUCH LENDER HEREUNDER.

 

SECTION 2.05.  TYPE; INTEREST ELECTIONS.  (A)  THE LOANS INITIALLY SHALL BE OF
THE TYPE SPECIFIED IN THE BORROWING REQUEST AND, IN THE CASE OF A LIBOR RATE
BORROWING, SHALL HAVE AN INITIAL INTEREST PERIOD (NOT TO EXCEED TWO (2) MONTHS’
DURATION) AS SPECIFIED IN SUCH BORROWING REQUEST.  THEREAFTER, THE BORROWER MAY
ELECT TO CONVERT ALL OR ANY PORTION OF ANY BORROWING (SUBJECT TO THE MINIMUM
AMOUNTS FOR BORROWINGS OF THE APPLICABLE TYPE SPECIFIED IN SECTION 2.02(C)) TO A
DIFFERENT TYPE OR TO CONTINUE SUCH BORROWING AND, IN THE CASE OF A LIBOR RATE
BORROWING, MAY ELECT INTEREST PERIODS THEREFOR, ALL AS PROVIDED IN THIS
SECTION.  THE BORROWER MAY ELECT DIFFERENT OPTIONS WITH RESPECT TO DIFFERENT
PORTIONS OF THE AFFECTED BORROWING, IN WHICH CASE EACH SUCH PORTION SHALL BE
ALLOCATED RATABLY AMONG THE LENDERS HOLDING THE LOANS COMPRISING SUCH BORROWING,
AND THE LOANS COMPRISING EACH SUCH PORTION SHALL BE CONSIDERED A SEPARATE
BORROWING.

 

(B)  TO MAKE AN ELECTION PURSUANT TO THIS SECTION, THE BORROWER SHALL NOTIFY THE
AGENT OF SUCH ELECTION BY TELEPHONE (I) IN THE CASE OF AN ELECTION TO CONVERT TO
OR CONTINUE AS A LIBOR RATE BORROWING, NOT LATER THAN 11:00 A.M., NEW YORK CITY
TIME, THREE (3) BUSINESS DAYS BEFORE THE DATE OF THE PROPOSED CONVERSION OR
CONTINUATION OR (II) IN THE CASE OF AN ELECTION TO CONVERT TO OR CONTINUE AS AN
ABR BORROWING, NOT LATER THAN 10:00 A.M., NEW YORK CITY TIME, ON THE DATE OF THE
PROPOSED CONVERSION OR CONTINUATION.  EACH SUCH TELEPHONIC INTEREST ELECTION
REQUEST SHALL BE IRREVOCABLE AND SHALL BE CONFIRMED PROMPTLY BY HAND DELIVERY OR
FACSIMILE TO THE AGENT OF A WRITTEN INTEREST ELECTION REQUEST IN A FORM APPROVED
BY THE AGENT AND SIGNED BY THE BORROWER.

 

39

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

 

(C)  EACH TELEPHONIC AND WRITTEN INTEREST ELECTION REQUEST SHALL SPECIFY THE
FOLLOWING INFORMATION IN COMPLIANCE WITH SECTION 2.02:

 

(I) THE BORROWING TO WHICH SUCH INTEREST ELECTION REQUEST APPLIES AND, IF
DIFFERENT OPTIONS ARE BEING ELECTED WITH RESPECT TO DIFFERENT PORTIONS THEREOF,
THE PORTIONS THEREOF TO BE ALLOCATED TO EACH RESULTING BORROWING (IN WHICH CASE
THE INFORMATION TO BE SPECIFIED PURSUANT TO CLAUSES (III) AND (IV) BELOW SHALL
BE SPECIFIED FOR EACH RESULTING BORROWING);

 

(II) THE EFFECTIVE DATE OF THE ELECTION MADE PURSUANT TO SUCH INTEREST ELECTION
REQUEST, WHICH SHALL BE A BUSINESS DAY;

 

(III) WHETHER THE RESULTING BORROWING IS TO BE AN ABR BORROWING OR A LIBOR RATE
BORROWING; AND

 

(IV) IF THE RESULTING BORROWING IS A LIBOR RATE BORROWING, THE INTEREST PERIOD
TO BE APPLICABLE THERETO AFTER GIVING EFFECT TO SUCH ELECTION, WHICH SHALL BE A
PERIOD CONTEMPLATED BY THE DEFINITION OF THE TERM “INTEREST PERIOD”.

 

If any such Interest Election Request requests a LIBOR Rate Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

(D)  PROMPTLY FOLLOWING RECEIPT OF AN INTEREST ELECTION REQUEST, THE AGENT SHALL
ADVISE EACH LENDER OF THE DETAILS THEREOF AND OF SUCH LENDER’S PORTION OF EACH
RESULTING BORROWING.

 

(E)  IF THE BORROWER FAILS TO DELIVER A TIMELY INTEREST ELECTION REQUEST WITH
RESPECT TO A LIBOR RATE BORROWING PRIOR TO THE END OF THE INTEREST PERIOD
APPLICABLE THERETO, THEN, UNLESS SUCH BORROWING IS REPAID AS PROVIDED HEREIN, AT
THE END OF SUCH INTEREST PERIOD SUCH BORROWING SHALL BE CONVERTED TO AN ABR
BORROWING.  NOTWITHSTANDING ANY CONTRARY PROVISION HEREOF, IF AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING AND THE AGENT, AT THE REQUEST OF THE
REQUIRED LENDERS, SO NOTIFIES THE BORROWER, THEN, SO LONG AS AN EVENT OF DEFAULT
IS CONTINUING (I) NO OUTSTANDING BORROWING MAY BE CONVERTED TO OR CONTINUED AS A
LIBOR RATE BORROWING AND (II) UNLESS REPAID, EACH LIBOR RATE BORROWING SHALL BE
CONVERTED TO AN ABR BORROWING AT THE END OF THE THEN CURRENT INTEREST PERIOD
APPLICABLE THERETO.

 

SECTION 2.06.  TERMINATION OF COMMITMENTS.  THE COMMITMENTS SHALL AUTOMATICALLY
TERMINATE UPON EARLIER TO OCCUR OF (I) THE MAKING OF THE LOANS ON THE CLOSING
DATE AND (II) 5:00 P.M., NEW YORK CITY TIME, ON THE TERMINATION DATE (AS DEFINED
IN THE MERGER AGREEMENT).

 

SECTION 2.07.  REPAYMENT OF LOANS; EVIDENCE OF DEBT.  (A)  THE BORROWER HEREBY
UNCONDITIONALLY PROMISES TO PAY TO THE AGENT FOR THE ACCOUNT OF EACH LENDER THE
THEN UNPAID PRINCIPAL AMOUNT OF EACH LOAN ON THE MATURITY DATE.

 

(B)  EACH LENDER SHALL MAINTAIN IN ACCORDANCE WITH ITS USUAL PRACTICE AN ACCOUNT
OR ACCOUNTS EVIDENCING THE INDEBTEDNESS OF THE BORROWER TO SUCH LENDER RESULTING
FROM EACH LOAN MADE BY SUCH LENDER, INCLUDING THE AMOUNTS OF PRINCIPAL AND
INTEREST PAYABLE AND PAID TO SUCH LENDER FROM TIME TO TIME HEREUNDER.

 

(C)  THE AGENT SHALL MAINTAIN ACCOUNTS IN WHICH IT SHALL RECORD (I) THE AMOUNT
OF EACH LOAN MADE HEREUNDER, THE TYPE THEREOF AND THE INTEREST PERIOD (IF ANY)
APPLICABLE THERETO, (II) THE AMOUNT OF ANY PRINCIPAL OR INTEREST DUE AND PAYABLE
OR TO BECOME DUE AND PAYABLE FROM THE BORROWER TO EACH

 

40

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

 

LENDER HEREUNDER AND (III) THE AMOUNT OF ANY SUM RECEIVED BY THE AGENT HEREUNDER
FOR THE ACCOUNT OF THE LENDERS AND EACH LENDER’S SHARE THEREOF.

 

(D)  THE ENTRIES MADE IN THE ACCOUNTS MAINTAINED PURSUANT TO PARAGRAPH (B) OR
(C) OF THIS SECTION SHALL BE PRIMA FACIE EVIDENCE OF THE EXISTENCE AND AMOUNTS
OF THE OBLIGATIONS RECORDED THEREIN; PROVIDED THAT THE FAILURE OF ANY LENDER OR
THE AGENT TO MAINTAIN SUCH ACCOUNTS OR ANY ERROR THEREIN SHALL NOT IN ANY MANNER
AFFECT THE OBLIGATION OF THE BORROWER TO REPAY THE LOANS IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT.

 

(E)  ANY LENDER MAY REQUEST THAT LOANS MADE BY IT BE EVIDENCED BY A PROMISSORY
NOTE.  IN SUCH EVENT, THE BORROWER SHALL PREPARE, EXECUTE AND DELIVER TO SUCH
LENDER A PROMISSORY NOTE PAYABLE TO SUCH LENDER AND ITS REGISTERED ASSIGNS AND
IN SUBSTANTIALLY THE FORM OF EXHIBIT F HERETO.  THEREAFTER, THE LOANS EVIDENCED
BY SUCH PROMISSORY NOTE AND INTEREST THEREON SHALL AT ALL TIMES (INCLUDING AFTER
ASSIGNMENT PURSUANT TO SECTION 9.04) BE REPRESENTED BY ONE OR MORE PROMISSORY
NOTES IN SUCH FORM PAYABLE TO THE PAYEE NAMED THEREIN AND ITS REGISTERED
ASSIGNS.

 

SECTION 2.08.  OPTIONAL PREPAYMENT OF LOANS.  (A)  UPON PRIOR NOTICE IN
ACCORDANCE WITH PARAGRAPH (B) OF THIS SECTION, THE BORROWER SHALL HAVE THE RIGHT
AT ANY TIME AND FROM TIME TO TIME TO PREPAY ANY BORROWING IN WHOLE OR IN PART
WITHOUT PREMIUM OR PENALTY (BUT SUBJECT TO SECTION 2.14); PROVIDED THAT ANY
OPTIONAL PREPAYMENT OF LOANS PURSUANT TO THIS PARAGRAPH (A) (OTHER THAN ANY SUCH
PREPAYMENT THAT IS MADE WITH DESIGNATED ASSET SALE PROCEEDS) MADE PRIOR TO THE
FIRST ANNIVERSARY OF THE CLOSING DATE SHALL BE ACCOMPANIED BY A PREPAYMENT FEE
IN AN AMOUNT (EXPRESSED AS A PERCENTAGE OF THE PRINCIPAL AMOUNT OF LOANS TO BE
PREPAID) EQUAL TO 1.00% OF THE PRINCIPAL AMOUNT OF THE LOANS TO BE PREPAID.

 

(B)  THE BORROWER SHALL NOTIFY THE AGENT BY TELEPHONE (CONFIRMED BY FACSIMILE)
OF ANY PREPAYMENT HEREUNDER (I) IN THE CASE OF PREPAYMENT OF A LIBOR RATE
BORROWING, NOT LATER THAN 11:00 A.M., NEW YORK CITY TIME, THREE (3) BUSINESS
DAYS BEFORE THE DATE OF PREPAYMENT OR (II) IN THE CASE OF PREPAYMENT OF AN ABR
BORROWING, NOT LATER THAN 10:00 A.M., NEW YORK CITY TIME, ON THE DAY OF
PREPAYMENT. EACH SUCH NOTICE SHALL BE IRREVOCABLE AND SHALL SPECIFY THE
PREPAYMENT DATE AND THE PRINCIPAL AMOUNT OF EACH BORROWING OR PORTION THEREOF TO
BE PREPAID. PROMPTLY FOLLOWING RECEIPT OF ANY SUCH NOTICE RELATING TO A
BORROWING, THE AGENT SHALL ADVISE THE LENDERS OF THE CONTENTS THEREOF. EACH
PARTIAL PREPAYMENT OF ANY BORROWING SHALL BE IN AN AMOUNT THAT WOULD BE
PERMITTED IN THE CASE OF A BORROWING OF THE SAME TYPE AS PROVIDED IN
SECTION 2.02. EACH PREPAYMENT OF A BORROWING SHALL BE APPLIED RATABLY TO THE
LOANS INCLUDED IN THE PREPAID BORROWING. PREPAYMENTS SHALL BE ACCOMPANIED BY
ACCRUED INTEREST AS REQUIRED BY SECTION 2.11.

 

SECTION 2.09.  MANDATORY PREPAYMENT OF LOANS.  (A)  NO LATER THAN THE EARLIER OF
(I) NINETY (90) DAYS AFTER THE END OF EACH FISCAL YEAR OF THE BORROWER,
COMMENCING WITH THE FISCAL YEAR ENDING ON JULY 30, 2006, AND (II) THE DATE ON
WHICH THE FINANCIAL STATEMENTS WITH RESPECT TO SUCH PERIOD ARE DELIVERED
PURSUANT TO SECTION 5.01(A), THE BORROWER SHALL PREPAY OUTSTANDING LOANS IN AN
AGGREGATE PRINCIPAL AMOUNT EQUAL TO 50% OF EXCESS CASH FLOW FOR THE FISCAL YEAR
THEN ENDED; PROVIDED THAT THE AMOUNT OF SUCH PREPAYMENT SHALL BE REDUCED TO 25%
OF SUCH EXCESS CASH FLOW IF THE CONSOLIDATED LEVERAGE RATIO AT THE END OF SUCH
FISCAL YEAR SHALL BE EQUAL TO OR LESS THAN 5.00 TO 1.00, BUT GREATER THAN 4.50
TO 1.00, AND (II) SUCH PREPAYMENT SHALL NOT BE REQUIRED IF THE CONSOLIDATED
LEVERAGE RATIO AT THE END OF SUCH FISCAL YEAR SHALL BE EQUAL TO OR LESS THAN
4.50 TO 1.00.

 

(B)  THE BORROWER SHALL DELIVER TO THE AGENT, AT THE TIME OF EACH PREPAYMENT
REQUIRED UNDER THIS SECTION 2.09, (I) A CERTIFICATE SIGNED BY A FINANCIAL
OFFICER OF THE BORROWER SETTING FORTH IN REASONABLE DETAIL THE CALCULATION OF
THE AMOUNT OF SUCH PREPAYMENT AND (II) TO THE EXTENT PRACTICABLE, AT LEAST THREE
(3) DAYS PRIOR WRITTEN NOTICE OF SUCH PREPAYMENT. EACH NOTICE OF PREPAYMENT
SHALL SPECIFY THE

 

41

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

 

PREPAYMENT DATE, THE TYPE OF EACH LOAN BEING PREPAID AND THE PRINCIPAL AMOUNT OF
EACH LOAN (OR PORTION THEREOF) TO BE PREPAID. EACH PREPAYMENT OF A BORROWING
SHALL BE APPLIED RATABLY TO THE LOANS INCLUDED IN THE PREPAID BORROWING.
PREPAYMENTS SHALL BE ACCOMPANIED BY ACCRUED INTEREST AS REQUIRED BY
SECTION 2.11. ALL PREPAYMENTS OF BORROWINGS UNDER THIS SECTION 2.09 SHALL BE
SUBJECT TO SECTION 2.14, BUT SHALL OTHERWISE BE WITHOUT PREMIUM OR PENALTY.

 

SECTION 2.10.  FEES.  THE BORROWER AGREES TO PAY TO THE AGENT, FOR ITS OWN
ACCOUNT, THE AGENCY FEES SET FORTH IN THE FEE LETTER, AS AMENDED, RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, OR SUCH AGENCY FEES AS MAY
OTHERWISE BE SEPARATELY AGREED UPON BY THE BORROWER AND THE AGENT PAYABLE IN THE
AMOUNTS AND AT THE TIMES SPECIFIED THEREIN OR AS SO OTHERWISE AGREED UPON.

 

SECTION 2.11.  INTEREST.  (A)  THE LOANS COMPRISING EACH ABR BORROWING SHALL
BEAR INTEREST AT THE ALTERNATE BASE RATE PLUS THE APPLICABLE RATE.

 

(B)  THE LOANS COMPRISING EACH LIBOR RATE BORROWING SHALL BEAR INTEREST AT THE
ADJUSTED LIBOR RATE FOR THE INTEREST PERIOD IN EFFECT FOR SUCH BORROWING PLUS
THE APPLICABLE RATE.

 

(C)  NOTWITHSTANDING THE FOREGOING, IF ANY PRINCIPAL OF OR INTEREST ON ANY LOAN
OR ANY FEE OR OTHER AMOUNT PAYABLE BY THE BORROWER HEREUNDER IS NOT PAID WHEN
DUE, WHETHER AT STATED MATURITY, UPON ACCELERATION OR OTHERWISE, SUCH OVERDUE
AMOUNT SHALL BEAR INTEREST, AFTER AS WELL AS BEFORE JUDGMENT, AT A RATE PER
ANNUM EQUAL TO (I) IN THE CASE OF OVERDUE PRINCIPAL OF ANY LOAN, 2% PLUS THE
RATE OTHERWISE APPLICABLE TO SUCH LOAN AS PROVIDED IN THE PRECEDING PARAGRAPHS
OF THIS SECTION OR (II) IN THE CASE OF ANY OTHER AMOUNT, 2% PLUS THE RATE
APPLICABLE TO ABR LOANS AS PROVIDED IN PARAGRAPH (A) OF THIS SECTION.

 

(D)  ACCRUED INTEREST ON EACH LOAN SHALL BE PAYABLE IN ARREARS ON EACH INTEREST
PAYMENT DATE FOR SUCH LOAN; PROVIDED THAT (I) INTEREST ACCRUED PURSUANT TO
PARAGRAPH (C) OF THIS SECTION SHALL BE PAYABLE ON DEMAND, (II) IN THE EVENT OF
ANY REPAYMENT OR PREPAYMENT OF ANY LOAN, ACCRUED INTEREST ON THE PRINCIPAL
AMOUNT REPAID OR PREPAID SHALL BE PAYABLE ON THE DATE OF SUCH REPAYMENT OR
PREPAYMENT AND (III) IN THE EVENT OF ANY CONVERSION OF ANY LIBOR RATE LOAN PRIOR
TO THE END OF THE CURRENT INTEREST PERIOD THEREFOR, ACCRUED INTEREST ON SUCH
LOAN SHALL BE PAYABLE ON THE EFFECTIVE DATE OF SUCH CONVERSION.

 

(E)  ALL INTEREST HEREUNDER SHALL BE COMPUTED ON THE BASIS OF A YEAR OF 360
DAYS, EXCEPT THAT INTEREST COMPUTED BY REFERENCE TO THE ALTERNATE BASE RATE AT
TIMES WHEN THE ALTERNATE BASE RATE IS BASED ON THE PRIME RATE SHALL BE COMPUTED
ON THE BASIS OF A YEAR OF 365 DAYS (OR 366 DAYS IN A LEAP YEAR), AND IN EACH
CASE SHALL BE PAYABLE FOR THE ACTUAL NUMBER OF DAYS ELAPSED (INCLUDING THE FIRST
DAY BUT EXCLUDING THE LAST DAY).  THE APPLICABLE ALTERNATE BASE RATE, ADJUSTED
LIBOR RATE OR LIBOR RATE SHALL BE DETERMINED BY THE AGENT, AND SUCH
DETERMINATION SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.

 

SECTION 2.12.  ALTERNATE RATE OF INTEREST.  IF PRIOR TO THE COMMENCEMENT OF ANY
INTEREST PERIOD FOR A LIBOR RATE BORROWING:

 

(A) THE AGENT DETERMINES (WHICH DETERMINATION SHALL BE CONCLUSIVE ABSENT
MANIFEST ERROR) THAT ADEQUATE AND REASONABLE MEANS DO NOT EXIST FOR ASCERTAINING
THE ADJUSTED LIBOR RATE OR THE LIBOR RATE, AS APPLICABLE, FOR SUCH INTEREST
PERIOD; OR

 

(B) THE AGENT IS ADVISED BY THE REQUIRED LENDERS THAT THE ADJUSTED LIBOR RATE OR
THE LIBOR RATE, AS APPLICABLE, FOR SUCH INTEREST PERIOD WILL NOT ADEQUATELY AND
FAIRLY REFLECT THE COST TO SUCH LENDERS OF MAKING OR MAINTAINING THEIR LOANS
INCLUDED IN SUCH BORROWING FOR SUCH INTEREST PERIOD;

 

42

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

 

then the Agent shall promptly give notice thereof to the Borrower and the
Lenders by telephone or facsimile as promptly as practicable thereafter and,
until the Agent notifies the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a LIBOR Rate Borrowing shall be ineffective and such Borrowing shall be
converted to an ABR Borrowing on the last day of the Interest Period applicable
thereof.

 

SECTION 2.13.  INCREASED COSTS.  (A)  IF ANY CHANGE IN LAW SHALL:

 

(I) IMPOSE, MODIFY OR DEEM APPLICABLE ANY RESERVE, SPECIAL DEPOSIT OR SIMILAR
REQUIREMENT AGAINST ASSETS OF, DEPOSITS WITH OR FOR THE ACCOUNT OF, OR CREDIT
EXTENDED BY, ANY LENDER (EXCEPT ANY SUCH RESERVE REQUIREMENT REFLECTED IN THE
ADJUSTED LIBOR RATE); OR

 

(II) IMPOSE ON ANY LENDER OR THE LONDON INTERBANK MARKET ANY OTHER CONDITION
AFFECTING THIS AGREEMENT OR LIBOR RATE LOANS MADE BY SUCH LENDER;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Rate Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then, following delivery of the certificate contemplated
by paragraph (c) of this Section, the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered (except for any Taxes, which shall be dealt
with exclusively pursuant to Section 2.15).

 

(B)  IF ANY LENDER DETERMINES THAT ANY CHANGE IN LAW REGARDING CAPITAL
REQUIREMENTS HAS OR WOULD HAVE THE EFFECT OF REDUCING THE RATE OF RETURN ON SUCH
LENDER’S CAPITAL OR ON THE CAPITAL OF SUCH LENDER’S HOLDING COMPANY, IF ANY, AS
A CONSEQUENCE OF THIS AGREEMENT OR THE LOANS MADE BY SUCH LENDER TO A LEVEL
BELOW THAT WHICH SUCH LENDER OR SUCH LENDER’S HOLDING COMPANY COULD HAVE
ACHIEVED BUT FOR SUCH CHANGE IN LAW OTHER THAN DUE TO TAXES, WHICH SHALL BE
DEALT WITH EXCLUSIVELY PURSUANT TO SECTION 2.15 (TAKING INTO CONSIDERATION SUCH
LENDER’S POLICIES AND THE POLICIES OF SUCH LENDER’S HOLDING COMPANY WITH RESPECT
TO CAPITAL ADEQUACY), THEN FROM TIME TO TIME FOLLOWING DELIVERY OF THE
CERTIFICATE CONTEMPLATED BY PARAGRAPH (C) OF THIS SECTION THE BORROWER WILL PAY
TO SUCH LENDER SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL COMPENSATE SUCH LENDER
OR SUCH LENDER’S HOLDING COMPANY FOR ANY SUCH REDUCTION SUFFERED.

 

(C)  A CERTIFICATE OF A LENDER SETTING FORTH THE AMOUNT OR AMOUNTS NECESSARY TO
COMPENSATE SUCH LENDER OR ITS HOLDING COMPANY AS SPECIFIED IN PARAGRAPH (A) OR
(B) OF THIS SECTION AND SETTING FORTH IN REASONABLE DETAIL THE MANNER IN WHICH
SUCH AMOUNT OR AMOUNTS WAS DETERMINED SHALL BE DELIVERED TO THE BORROWER AND
SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.  THE BORROWER SHALL PAY SUCH LENDER
THE AMOUNT SHOWN AS DUE ON ANY SUCH CERTIFICATE WITHIN TEN (10) DAYS AFTER
RECEIPT THEREOF.

 

(D)  FAILURE OR DELAY ON THE PART OF ANY LENDER TO DEMAND COMPENSATION PURSUANT
TO THIS SECTION SHALL NOT CONSTITUTE A WAIVER OF SUCH LENDER’S RIGHT TO DEMAND
SUCH COMPENSATION; PROVIDED THAT THE BORROWER SHALL NOT BE REQUIRED TO
COMPENSATE A LENDER PURSUANT TO THIS SECTION FOR ANY INCREASED COSTS OR
REDUCTIONS INCURRED MORE THAN 180 DAYS PRIOR TO THE DATE THAT SUCH LENDER
NOTIFIES THE BORROWER OF THE CHANGE IN LAW GIVING RISE TO SUCH INCREASED COSTS
OR REDUCTIONS AND OF SUCH LENDER’S INTENTION TO CLAIM COMPENSATION THEREFOR;
PROVIDED FURTHER THAT, IF THE CHANGE IN LAW GIVING RISE TO SUCH INCREASED COSTS
OR REDUCTIONS IS RETROACTIVE, THEN THE 180-DAY PERIOD REFERRED TO ABOVE SHALL BE
EXTENDED TO INCLUDE THE PERIOD OF RETROACTIVE EFFECT THEREOF.

 

SECTION 2.14.  BREAK FUNDING PAYMENTS.  IN THE EVENT OF (A) THE PAYMENT OF ANY
PRINCIPAL OF ANY LIBOR RATE LOAN OTHER THAN ON THE LAST DAY OF AN INTEREST
PERIOD APPLICABLE THERETO

 

43

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

 

(INCLUDING AS A RESULT OF AN EVENT OF DEFAULT), (B) THE CONVERSION OF ANY LIBOR
RATE LOAN OTHER THAN ON THE LAST DAY OF THE INTEREST PERIOD APPLICABLE THERETO,
(C) THE FAILURE TO BORROW, CONVERT, CONTINUE OR PREPAY ANY LIBOR RATE LOAN ON
THE DATE SPECIFIED IN ANY NOTICE DELIVERED PURSUANT HERETO, OR (D) THE
ASSIGNMENT OF ANY LIBOR RATE LOAN OTHER THAN ON THE LAST DAY OF THE INTEREST
PERIOD APPLICABLE THERETO AS A RESULT OF A REQUEST BY THE BORROWER PURSUANT TO
SECTION 2.17, THEN, IN ANY SUCH EVENT, THE BORROWER SHALL COMPENSATE EACH LENDER
FOR THE LOSS, COST AND EXPENSE ATTRIBUTABLE TO SUCH EVENT.  IN THE CASE OF A
LIBOR RATE LOAN, SUCH LOSS, COST OR EXPENSE TO ANY LENDER SHALL BE DEEMED TO BE
THE AMOUNT DETERMINED BY SUCH LENDER TO BE THE EXCESS, IF ANY, OF (I) THE AMOUNT
OF INTEREST WHICH WOULD HAVE ACCRUED ON THE PRINCIPAL AMOUNT OF SUCH LOAN HAD
SUCH EVENT NOT OCCURRED, AT THE ADJUSTED LIBOR RATE THAT WOULD HAVE BEEN
APPLICABLE TO SUCH LOAN, FOR THE PERIOD FROM THE DATE OF SUCH EVENT TO THE LAST
DAY OF THE THEN CURRENT INTEREST PERIOD THEREFOR (OR, IN THE CASE OF A FAILURE
TO BORROW, CONVERT OR CONTINUE, FOR THE PERIOD THAT WOULD HAVE BEEN THE INTEREST
PERIOD FOR SUCH LOAN), OVER (II) THE AMOUNT OF INTEREST WHICH WOULD ACCRUE ON
SUCH PRINCIPAL AMOUNT FOR SUCH PERIOD AT THE INTEREST RATE WHICH SUCH LENDER
WOULD BID WERE IT TO BID, AT THE COMMENCEMENT OF SUCH PERIOD, FOR DOLLAR
DEPOSITS OF A COMPARABLE AMOUNT AND PERIOD FROM OTHER BANKS IN THE EURODOLLAR
MARKET.  A CERTIFICATE OF ANY LENDER SETTING FORTH ANY AMOUNT OR AMOUNTS THAT
SUCH LENDER IS ENTITLED TO RECEIVE PURSUANT TO THIS SECTION AND THE BASIS
THEREFOR AND SETTING FORTH IN REASONABLE DETAIL THE MANNER IN WHICH SUCH AMOUNT
OR AMOUNTS WAS DETERMINED SHALL BE DELIVERED TO THE BORROWER AND SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.  THE BORROWER SHALL PAY SUCH LENDER THE AMOUNT
SHOWN AS DUE ON ANY SUCH CERTIFICATE WITHIN TEN (10) DAYS AFTER RECEIPT THEREOF.

 

SECTION 2.15.  TAXES.  (A)  ANY AND ALL PAYMENTS BY OR ON ACCOUNT OF ANY
OBLIGATION OF ANY LOAN PARTY HEREUNDER SHALL BE MADE FREE AND CLEAR OF AND
WITHOUT DEDUCTION FOR ANY INDEMNIFIED TAXES OR OTHER TAXES; PROVIDED THAT IF A
LOAN PARTY SHALL BE REQUIRED TO DEDUCT ANY INDEMNIFIED TAXES OR OTHER TAXES FROM
SUCH PAYMENTS, THEN (I) THE SUM PAYABLE SHALL BE INCREASED AS NECESSARY SO THAT
AFTER MAKING ALL REQUIRED DEDUCTIONS (INCLUDING DEDUCTIONS APPLICABLE TO
ADDITIONAL SUMS PAYABLE UNDER THIS SECTION) THE AGENT OR LENDER (AS APPLICABLE)
RECEIVES AN AMOUNT EQUAL TO THE SUM IT WOULD HAVE RECEIVED HAD NO SUCH
DEDUCTIONS BEEN MADE, (II) SUCH LOAN PARTY SHALL MAKE SUCH DEDUCTIONS AND
(III) SUCH LOAN PARTY SHALL TIMELY PAY THE FULL AMOUNT DEDUCTED TO THE RELEVANT
GOVERNMENTAL AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW.  IF AT ANY TIME A LOAN
PARTY IS REQUIRED BY APPLICABLE LAW TO MAKE ANY DEDUCTION OR WITHHOLDING FROM
ANY SUM PAYABLE HEREUNDER, SUCH LOAN PARTY SHALL PROMPTLY NOTIFY THE RELEVANT
LENDER OR AGENT UPON BECOMING AWARE OF THE SAME. IN ADDITION, EACH LENDER OR
AGENT SHALL PROMPTLY NOTIFY A LOAN PARTY UPON BECOMING AWARE OF ANY
CIRCUMSTANCES AS A RESULT OF WHICH A LOAN PARTY IS OR WOULD BE REQUIRED TO MAKE
ANY DEDUCTION OR WITHHOLDING FROM ANY SUM PAYABLE HEREUNDER.

 

(B)  IN ADDITION, THE LOAN PARTIES SHALL PAY ANY OTHER TAXES TO THE RELEVANT
GOVERNMENTAL AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW.

 

(C)  EACH LOAN PARTY SHALL INDEMNIFY THE AGENT AND EACH LENDER, WITHIN TEN
(10) DAYS AFTER WRITTEN DEMAND THEREFOR, FOR THE FULL AMOUNT OF ANY INDEMNIFIED
TAXES OR OTHER TAXES PAID BY THE AGENT OR SUCH LENDER, AS APPLICABLE, ON OR WITH
RESPECT TO ANY PAYMENT BY OR ON ACCOUNT OF ANY OBLIGATION OF SUCH LOAN PARTY
HEREUNDER (INCLUDING INDEMNIFIED TAXES OR OTHER TAXES IMPOSED OR ASSERTED ON OR
ATTRIBUTABLE TO AMOUNTS PAYABLE UNDER THIS SECTION) AND ANY PENALTIES, INTEREST
AND REASONABLE EXPENSES ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR
NOT SUCH INDEMNIFIED TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY IMPOSED OR
ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY.  A CERTIFICATE AS TO THE AMOUNT
OF SUCH PAYMENT OR LIABILITY DELIVERED TO THE BORROWER BY A LENDER, OR BY THE
AGENT ON ITS OWN BEHALF OR ON BEHALF OF A LENDER, SHALL BE CONCLUSIVE ABSENT
MANIFEST ERROR.

 

(D)  AS SOON AS PRACTICABLE AFTER ANY PAYMENT OF INDEMNIFIED TAXES OR OTHER
TAXES BY A LOAN PARTY TO A GOVERNMENTAL AUTHORITY, SUCH LOAN PARTY SHALL DELIVER
TO THE AGENT THE ORIGINAL OR A CERTIFIED COPY OF A RECEIPT ISSUED BY SUCH
GOVERNMENTAL AUTHORITY EVIDENCING SUCH PAYMENT, A COPY OF THE RETURN REPORTING
SUCH PAYMENT OR OTHER EVIDENCE OF SUCH PAYMENT REASONABLY SATISFACTORY TO THE
AGENT.

 

44

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

 

(E)  ANY FOREIGN LENDER THAT IS ENTITLED TO AN EXEMPTION FROM OR REDUCTION OF
WITHHOLDING TAX UNDER THE LAW OF THE JURISDICTION IN WHICH THE BORROWER IS
LOCATED, OR ANY TREATY TO WHICH SUCH JURISDICTION IS A PARTY, WITH RESPECT TO
PAYMENTS UNDER THIS AGREEMENT SHALL DELIVER TO THE BORROWER (WITH A COPY TO THE
AGENT), AT THE TIME OR TIMES PRESCRIBED BY APPLICABLE LAW, SUCH PROPERLY
COMPLETED AND EXECUTED DOCUMENTATION PRESCRIBED BY APPLICABLE LAW OR REASONABLY
REQUESTED BY THE BORROWER AS WILL PERMIT SUCH PAYMENTS TO BE MADE WITHOUT
WITHHOLDING OR AT A REDUCED RATE.  IN PARTICULAR, ON OR PRIOR TO THE DATE WHICH
IS TEN (10) BUSINESS DAYS AFTER THE CLOSING DATE, EACH FOREIGN LENDER SHALL
DELIVER TO THE BORROWER (WITH A COPY TO THE AGENT) TWO DULY SIGNED, PROPERLY
COMPLETED COPIES OF EITHER IRS FORM W- 8BEN OR ANY SUCCESSOR THERETO (RELATING
TO SUCH FOREIGN LENDER AND ENTITLING IT TO AN EXEMPTION FROM, OR REDUCTION OF,
UNITED STATES WITHHOLDING TAX ON ALL PAYMENTS TO BE MADE TO SUCH FOREIGN LENDER
BY THE BORROWER OR ANY OTHER LOAN PARTY PURSUANT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT) OR IRS FORM W-8ECI OR ANY SUCCESSOR THERETO (RELATING TO ALL
PAYMENTS TO BE MADE TO SUCH FOREIGN LENDER BY THE BORROWER OR ANY OTHER LOAN
PARTY PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) OR SUCH OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE BORROWER AND THE AGENT THAT SUCH FOREIGN
LENDER IS ENTITLED TO AN EXEMPTION FROM, OR REDUCTION OF, UNITED STATES
WITHHOLDING TAX, INCLUDING ANY EXEMPTION PURSUANT TO SECTION 871(H) OR 881(C) OF
THE CODE, AND IN THE CASE OF A FOREIGN LENDER CLAIMING SUCH AN EXEMPTION UNDER
SECTION 881(C) OF THE CODE, A CERTIFICATE THAT ESTABLISHES IN WRITING TO THE
BORROWER AND THE AGENT THAT SUCH FOREIGN LENDER IS NOT (I) A “BANK” AS DEFINED
IN SECTION 881(C)(3)(A) OF THE CODE, (II) A 10-PERCENT STOCKHOLDER WITHIN THE
MEANING OF SECTION 871(H)(3)(B) OF THE CODE, OR (III) A CONTROLLED FOREIGN
CORPORATION RELATED TO THE BORROWER WITH THE MEANING OF SECTION 864(D) OF THE
CODE.  THEREAFTER AND FROM TIME TO TIME, EACH SUCH FOREIGN LENDER SHALL
(A) PROMPTLY SUBMIT TO THE BORROWER (WITH A COPY TO THE AGENT) SUCH ADDITIONAL
DULY COMPLETED AND SIGNED COPIES OF ONE OR MORE OF SUCH FORMS OR CERTIFICATES
(OR SUCH SUCCESSOR FORMS OR CERTIFICATES AS SHALL BE ADOPTED FROM TIME TO TIME
BY THE RELEVANT UNITED STATES TAXING AUTHORITIES) AS MAY THEN BE AVAILABLE UNDER
THEN CURRENT UNITED STATES LAWS AND REGULATIONS TO AVOID, OR SUCH EVIDENCE AS IS
REASONABLY SATISFACTORY TO THE BORROWER AND THE AGENT OF ANY AVAILABLE EXEMPTION
FROM, OR REDUCTION OF, UNITED STATES WITHHOLDING TAXES IN RESPECT OF ALL
PAYMENTS TO BE MADE TO SUCH FOREIGN LENDER BY THE BORROWER OR OTHER LOAN PARTY
PURSUANT TO THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, IN EACH CASE, (1) ON OR
BEFORE THE DATE THAT ANY SUCH FORM, CERTIFICATE OR OTHER EVIDENCE EXPIRES OR
BECOMES OBSOLETE, (2) AFTER THE OCCURRENCE OF ANY EVENT REQUIRING A CHANGE IN
THE MOST RECENT FORM, CERTIFICATE OR EVIDENCE PREVIOUSLY DELIVERED BY IT TO THE
BORROWER AND (3) FROM TIME TO TIME THEREAFTER IF REASONABLY REQUESTED BY THE
BORROWER OR THE AGENT, AND (B) PROMPTLY NOTIFY THE BORROWER AND THE
ADMINISTRATIVE AGENT OF ANY CHANGE IN CIRCUMSTANCES WHICH WOULD MODIFY OR RENDER
INVALID ANY CLAIMED EXEMPTION OR REDUCTION.

 

(F)  EACH LENDER OR AGENT THAT IS A UNITED STATES PERSON, AGREES TO COMPLETE AND
DELIVER TO THE BORROWER A STATEMENT SIGNED BY AN AUTHORIZED SIGNATORY OF THE
LENDER TO THE EFFECT THAT IT IS A UNITED STATES PERSON TOGETHER WITH A DULY
COMPLETED AND EXECUTED COPY OF INTERNAL REVENUE SERVICE FORM W-9 OR SUCCESSOR
FORM.

 

(G)  IF THE AGENT OR A LENDER DETERMINES, IN GOOD FAITH IN ITS SOLE DISCRETION,
THAT IT HAS RECEIVED A REFUND OF ANY INDEMNIFIED TAXES OR OTHER TAXES AS TO
WHICH IT HAS BEEN INDEMNIFIED BY A LOAN PARTY OR WITH RESPECT TO WHICH SUCH LOAN
PARTY HAS PAID ADDITIONAL AMOUNTS PURSUANT TO THIS SECTION 2.15, IT SHALL PAY
OVER SUCH REFUND TO SUCH LOAN PARTY (BUT ONLY TO THE EXTENT OF INDEMNITY
PAYMENTS MADE, OR ADDITIONAL AMOUNTS PAID, BY SUCH LOAN PARTY UNDER THIS
SECTION 2.15 WITH RESPECT TO THE TAXES OR OTHER TAXES GIVING RISE TO SUCH
REFUND), NET OF ALL OUT-OF-POCKET EXPENSES OF THE AGENT OR SUCH LENDER
(INCLUDING ANY TAXES IMPOSED WITH RESPECT TO SUCH REFUND) AS IS DETERMINED BY
THE AGENT OR SUCH LENDER IN GOOD FAITH IN ITS SOLE DISCRETION, AND WITHOUT
INTEREST (OTHER THAN ANY INTEREST PAID BY THE RELEVANT GOVERNMENTAL AUTHORITY
WITH RESPECT TO SUCH REFUND); PROVIDED, THAT SUCH LOAN PARTY, UPON THE REQUEST
OF THE AGENT OR SUCH LENDER, AGREES TO REPAY AS SOON AS REASONABLY PRACTICABLE
THE AMOUNT PAID OVER TO SUCH LOAN PARTY (PLUS ANY PENALTIES, INTEREST OR OTHER
CHARGES IMPOSED BY THE RELEVANT GOVERNMENTAL

 

45

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

 

AUTHORITY) TO THE AGENT OR SUCH LENDER IN THE EVENT THE AGENT OR SUCH LENDER IS
REQUIRED TO REPAY SUCH REFUND TO SUCH GOVERNMENTAL AUTHORITY. THIS SECTION SHALL
NOT BE CONSTRUED TO REQUIRE THE AGENT OR ANY LENDER TO MAKE AVAILABLE ITS TAX
RETURNS (OR ANY OTHER INFORMATION RELATING TO ITS TAXES WHICH IT DEEMS
CONFIDENTIAL) TO SUCH LOAN PARTY OR ANY OTHER PERSON.

 

(H)  IF THE BORROWER DETERMINES IN GOOD FAITH THAT A REASONABLE BASIS EXISTS FOR
CONTESTING ANY INDEMNIFIED TAXES OR OTHER TAXES FOR WHICH ADDITIONAL AMOUNTS
HAVE BEEN PAID UNDER THIS SECTION 2.15, THE RELEVANT LENDER OR AGENT SHALL
COOPERATE WITH THE BORROWER IN CHALLENGING SUCH INDEMNIFIED TAXES OR OTHER
TAXES, AT THE BORROWER’S EXPENSE, IF SO REQUESTED BY THE BORROWER IN WRITING.

 

SECTION 2.16.  PAYMENTS GENERALLY; ALLOCATION OF PROCEEDS; SHARING OF SET-OFFS. 
(A)  UNLESS OTHERWISE SPECIFIED, THE BORROWER SHALL MAKE EACH PAYMENT REQUIRED
TO BE MADE BY IT HEREUNDER (WHETHER OF PRINCIPAL, INTEREST OR FEES, OR OF
AMOUNTS PAYABLE UNDER SECTION 2.13, 2.14 OR 2.15, OR OTHERWISE) PRIOR TO 12:00
(NOON), NEW YORK CITY TIME, ON THE DATE WHEN DUE, IN IMMEDIATELY AVAILABLE
FUNDS, WITHOUT SET-OFF OR COUNTERCLAIM.  ANY AMOUNTS RECEIVED AFTER SUCH TIME ON
ANY DATE MAY, IN THE DISCRETION OF THE AGENT, BE DEEMED TO HAVE BEEN RECEIVED ON
THE NEXT SUCCEEDING BUSINESS DAY FOR PURPOSES OF CALCULATING INTEREST THEREON. 
ALL SUCH PAYMENTS SHALL BE MADE TO THE AGENT TO THE APPLICABLE ACCOUNT
DESIGNATED TO THE BORROWER BY THE AGENT, EXCEPT THAT PAYMENTS PURSUANT TO
SECTIONS 2.13, 2.14, 2.15 AND 9.03 SHALL BE MADE DIRECTLY TO THE PERSONS
ENTITLED THERETO.  THE AGENT SHALL DISTRIBUTE ANY SUCH PAYMENTS RECEIVED BY IT,
EXCEPT AS OTHERWISE PROVIDED, FOR THE ACCOUNT OF ANY OTHER PERSON TO THE
APPROPRIATE RECIPIENT PROMPTLY FOLLOWING RECEIPT THEREOF.  IF ANY PAYMENT
HEREUNDER SHALL BE DUE ON A DAY THAT IS NOT A BUSINESS DAY, THE DATE FOR PAYMENT
SHALL BE EXTENDED TO THE NEXT SUCCEEDING BUSINESS DAY, AND, IN THE CASE OF ANY
PAYMENT ACCRUING INTEREST, INTEREST THEREON SHALL BE PAYABLE FOR THE PERIOD OF
SUCH EXTENSION.  ALL PAYMENTS HEREUNDER SHALL BE MADE IN DOLLARS.  ANY PAYMENT
REQUIRED TO BE MADE BY THE AGENT HEREUNDER SHALL BE DEEMED TO HAVE BEEN MADE BY
THE TIME REQUIRED IF THE AGENT SHALL, AT OR BEFORE SUCH TIME, HAVE TAKEN THE
NECESSARY STEPS TO MAKE SUCH PAYMENT IN ACCORDANCE WITH THE REGULATIONS OR
OPERATING PROCEDURES OF THE CLEARING OR SETTLEMENT SYSTEM USED BY THE AGENT TO
MAKE SUCH PAYMENT.

 

(B)  SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT,
ALL PROCEEDS OF COLLATERAL RECEIVED BY THE AGENT AFTER AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING AND ALL OR ANY PORTION OF THE LOANS SHALL HAVE BEEN
ACCELERATED HEREUNDER PURSUANT TO ARTICLE VII, SHALL UPON ELECTION BY THE AGENT
OR AT THE DIRECTION OF THE REQUIRED LENDERS BE APPLIED, FIRST, TO, RATABLY, PAY
ANY FEES, INDEMNITIES, OR EXPENSE REIMBURSEMENTS THEN DUE TO THE AGENT FROM THE
BORROWER (OTHER THAN IN CONNECTION WITH HEDGING OBLIGATIONS), SECOND, RATABLY,
TO PAY ANY FEES OR EXPENSE REIMBURSEMENTS THEN DUE TO THE LENDERS FROM THE
BORROWER (OTHER THAN IN CONNECTION WITH HEDGING OBLIGATIONS), THIRD, TO PAY
INTEREST DUE AND PAYABLE IN RESPECT OF THE LOANS, RATABLY, FOURTH, TO PREPAY
PRINCIPAL ON THE LOANS AND ANY AMOUNTS OWING WITH RESPECT TO HEDGING
OBLIGATIONS, RATABLY, FIFTH, TO THE PAYMENT OF ANY OTHER SECURED OBLIGATION DUE
TO THE AGENT OR ANY LENDER BY THE BORROWER, SIXTH, AS PROVIDED FOR UNDER THE
INTERCREDITOR AGREEMENT, AND SEVENTH, TO THE BORROWER OR AS THE BORROWER SHALL
DIRECT.

 

(C)  IF ANY LENDER SHALL, BY EXERCISING ANY RIGHT OF SET-OFF OR COUNTERCLAIM OR
OTHERWISE, OBTAIN PAYMENT IN RESPECT OF ANY PRINCIPAL OF OR INTEREST ON ANY OF
ITS LOANS RESULTING IN SUCH LENDER RECEIVING PAYMENT OF A GREATER PROPORTION OF
THE AGGREGATE AMOUNT OF ITS LOANS AND ACCRUED INTEREST THEREON THAN THE
PROPORTION RECEIVED BY ANY OTHER LENDER, THEN THE LENDER RECEIVING SUCH GREATER
PROPORTION SHALL PURCHASE (FOR CASH AT FACE VALUE) PARTICIPATIONS IN THE LOANS
OF OTHER LENDERS AT SUCH TIME OUTSTANDING TO THE EXTENT NECESSARY SO THAT THE
BENEFIT OF ALL SUCH PAYMENTS SHALL BE SHARED BY THE LENDERS RATABLY IN
ACCORDANCE WITH THE AGGREGATE AMOUNT OF PRINCIPAL OF AND ACCRUED INTEREST ON
THEIR RESPECTIVE LOANS; PROVIDED THAT (I) IF ANY SUCH PARTICIPATIONS ARE
PURCHASED AND ALL OR ANY PORTION OF THE PAYMENT GIVING RISE THERETO IS
RECOVERED,  SUCH PARTICIPATIONS SHALL BE RESCINDED AND THE PURCHASE PRICE
RESTORED TO THE EXTENT OF SUCH RECOVERY, WITHOUT INTEREST, AND (II) THE
PROVISIONS OF THIS PARAGRAPH SHALL NOT BE CONSTRUED TO APPLY TO ANY PAYMENT MADE
BY THE BORROWER PURSUANT TO AND IN ACCORDANCE WITH THE EXPRESS

 

46

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

 

TERMS OF THIS AGREEMENT OR ANY PAYMENT OBTAINED BY A LENDER AS CONSIDERATION FOR
THE ASSIGNMENT OF OR SALE OF A PARTICIPATION IN ANY OF ITS LOANS TO ANY ASSIGNEE
OR PARTICIPANT, OTHER THAN TO THE BORROWER OR ANY SUBSIDIARY OR AFFILIATE
THEREOF (AS TO WHICH THE PROVISIONS OF THIS PARAGRAPH SHALL APPLY).  THE
BORROWER CONSENTS TO THE FOREGOING AND AGREES, TO THE EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, THAT ANY LENDER ACQUIRING A PARTICIPATION PURSUANT
TO THE FOREGOING ARRANGEMENTS MAY EXERCISE AGAINST THE BORROWER RIGHTS OF
SET-OFF AND COUNTERCLAIM WITH RESPECT TO SUCH PARTICIPATION AS FULLY AS IF SUCH
LENDER WERE A DIRECT CREDITOR OF THE BORROWER IN THE AMOUNT OF SUCH
PARTICIPATION.

 

(D)  UNLESS THE AGENT SHALL HAVE RECEIVED NOTICE FROM THE BORROWER PRIOR TO THE
DATE ON WHICH ANY PAYMENT IS DUE TO THE AGENT FOR THE ACCOUNT OF THE LENDERS
THAT THE BORROWER WILL NOT MAKE SUCH PAYMENT, THE AGENT MAY ASSUME THAT THE
BORROWER HAS MADE SUCH PAYMENT ON SUCH DATE IN ACCORDANCE HEREWITH AND MAY, IN
RELIANCE UPON SUCH ASSUMPTION, DISTRIBUTE TO THE LENDERS THE AMOUNT DUE.  IN
SUCH EVENT, IF THE BORROWER HAS NOT IN FACT MADE SUCH PAYMENT, THEN EACH OF THE
LENDERS SEVERALLY AGREES TO REPAY TO THE AGENT FORTHWITH ON DEMAND THE AMOUNT SO
DISTRIBUTED TO SUCH LENDER WITH INTEREST THEREON, FOR EACH DAY FROM AND
INCLUDING THE DATE SUCH AMOUNT IS DISTRIBUTED TO IT TO BUT EXCLUDING THE DATE OF
PAYMENT TO THE AGENT, AT THE GREATER OF THE FEDERAL FUNDS EFFECTIVE RATE AND A
RATE DETERMINED BY THE AGENT IN ACCORDANCE WITH BANKING INDUSTRY RULES ON
INTERBANK COMPENSATION.

 

(E)  IF ANY LENDER SHALL FAIL TO MAKE ANY PAYMENT REQUIRED TO BE MADE BY IT
PURSUANT TO SECTIONS 2.03(A), 2.16(C) OR 9.03(C), THEN THE AGENT MAY, IN ITS
DISCRETION (NOTWITHSTANDING ANY CONTRARY PROVISION HEREOF), APPLY ANY AMOUNTS
THEREAFTER RECEIVED BY THE AGENT FOR THE ACCOUNT OF SUCH LENDER TO SATISFY SUCH
LENDER’S OBLIGATIONS UNDER SUCH SECTIONS UNTIL ALL SUCH UNSATISFIED OBLIGATIONS
ARE FULLY PAID.

 

SECTION 2.17.  MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.  (A)  IF ANY
LENDER REQUESTS COMPENSATION UNDER SECTION 2.13, OR IF THE BORROWER IS REQUIRED
TO PAY ANY ADDITIONAL AMOUNT TO ANY LENDER OR ANY GOVERNMENTAL AUTHORITY FOR THE
ACCOUNT OF ANY LENDER PURSUANT TO SECTION 2.15, THEN SUCH LENDER SHALL USE
REASONABLE EFFORTS TO DESIGNATE A DIFFERENT LENDING OFFICE FOR FUNDING OR
BOOKING ITS LOANS HEREUNDER OR TO ASSIGN ITS RIGHTS AND OBLIGATIONS HEREUNDER TO
ANOTHER OF ITS OFFICES, BRANCHES OR AFFILIATES, IF, IN THE REASONABLE JUDGMENT
OF SUCH LENDER, SUCH DESIGNATION OR ASSIGNMENT (I) WOULD ELIMINATE OR REDUCE
AMOUNTS PAYABLE PURSUANT TO SECTION 2.13 OR 2.15, AS APPLICABLE, IN THE FUTURE
AND (II) WOULD NOT SUBJECT SUCH LENDER TO ANY MATERIAL UNREIMBURSED COST OR
EXPENSE AND WOULD NOT OTHERWISE BE DISADVANTAGEOUS TO SUCH LENDER IN ANY
MATERIAL RESPECT.  THE BORROWER HEREBY AGREES TO PAY ALL REASONABLE COSTS AND
EXPENSES INCURRED BY ANY LENDER IN CONNECTION WITH ANY SUCH DESIGNATION OR
ASSIGNMENT.

 

(B)  IF ANY LENDER REQUESTS COMPENSATION UNDER SECTION 2.13, OR IF THE BORROWER
IS REQUIRED TO PAY ANY ADDITIONAL AMOUNT TO ANY LENDER OR ANY GOVERNMENTAL
AUTHORITY FOR THE ACCOUNT OF ANY LENDER PURSUANT TO SECTION 2.15, THEN THE
BORROWER MAY, AT ITS SOLE EXPENSE AND EFFORT, UPON NOTICE TO SUCH LENDER AND THE
AGENT, REPLACE SUCH LENDER BY REQUIRING SUCH LENDER TO ASSIGN AND DELEGATE (AND
SUCH LENDER SHALL BE OBLIGATED TO ASSIGN AND DELEGATE), WITHOUT RECOURSE (IN
ACCORDANCE WITH AND SUBJECT TO THE RESTRICTIONS CONTAINED IN SECTION 9.04), ALL
ITS INTERESTS, RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT TO AN ASSIGNEE THAT
SHALL ASSUME SUCH OBLIGATIONS (WHICH ASSIGNEE MAY BE ANOTHER LENDER, IF A LENDER
ACCEPTS SUCH ASSIGNMENT); PROVIDED THAT (I) THE BORROWER SHALL HAVE RECEIVED THE
PRIOR WRITTEN CONSENT OF THE AGENT, WHICH CONSENT SHALL NOT UNREASONABLY BE
WITHHELD, (II) SUCH LENDER SHALL HAVE RECEIVED PAYMENT OF AN AMOUNT EQUAL TO THE
OUTSTANDING PRINCIPAL OF ITS LOANS, ACCRUED INTEREST THEREON, ACCRUED FEES AND
ALL OTHER AMOUNTS PAYABLE TO IT HEREUNDER, FROM THE ASSIGNEE (TO THE EXTENT OF
SUCH OUTSTANDING PRINCIPAL AND ACCRUED INTEREST AND FEES) OR THE BORROWER (IN
THE CASE OF ALL OTHER AMOUNTS) AND (III) IN THE CASE OF ANY SUCH ASSIGNMENT
RESULTING FROM A CLAIM FOR COMPENSATION UNDER SECTION 2.13 OR PAYMENTS REQUIRED
TO BE MADE PURSUANT TO SECTION 2.15, SUCH ASSIGNMENT WILL RESULT IN A REDUCTION
IN SUCH COMPENSATION OR PAYMENTS.  A LENDER SHALL NOT BE REQUIRED TO MAKE ANY
SUCH ASSIGNMENT AND DELEGATION

 

47

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

 

IF, PRIOR THERETO, AS A RESULT OF A WAIVER BY SUCH LENDER OR OTHERWISE, THE
CIRCUMSTANCES ENTITLING THE BORROWER TO REQUIRE SUCH ASSIGNMENT AND DELEGATION
CEASE TO APPLY.

 

SECTION 2.18.  ILLEGALITY.  IF ANY LENDER REASONABLY DETERMINES THAT ANY CHANGE
IN LAW HAS MADE IT UNLAWFUL, OR THAT ANY GOVERNMENTAL AUTHORITY HAS ASSERTED
AFTER THE CLOSING DATE THAT IT IS UNLAWFUL, FOR SUCH LENDER OR ITS APPLICABLE
LENDING OFFICE TO MAKE OR MAINTAIN ANY LIBOR RATE LOANS, THEN, ON NOTICE THEREOF
BY SUCH LENDER TO THE BORROWER THROUGH THE AGENT, ANY OBLIGATIONS OF SUCH LENDER
TO MAKE OR CONTINUE LIBOR RATE LOANS OR TO CONVERT ABR BORROWINGS TO LIBOR RATE
BORROWINGS SHALL BE SUSPENDED UNTIL SUCH LENDER NOTIFIES THE AGENT AND THE
BORROWER THAT THE CIRCUMSTANCES GIVING RISE TO SUCH DETERMINATION NO LONGER
EXIST.  UPON RECEIPT OF SUCH NOTICE, THE BORROWER SHALL UPON DEMAND FROM SUCH
LENDER (WITH A COPY TO THE AGENT), EITHER CONVERT ALL LIBOR RATE BORROWINGS OF
SUCH LENDER TO ABR BORROWINGS, EITHER ON THE LAST DAY OF THE INTEREST PERIOD
THEREFOR, IF SUCH LENDER MAY LAWFULLY CONTINUE TO MAINTAIN SUCH LIBOR RATE
BORROWINGS TO SUCH DAY, OR IMMEDIATELY, IF SUCH LENDER MAY NOT LAWFULLY CONTINUE
TO MAINTAIN SUCH LOANS.  UPON ANY SUCH PREPAYMENT OR CONVERSION, THE BORROWER
SHALL ALSO PAY ACCRUED INTEREST ON THE AMOUNT SO PREPAID OR CONVERTED.  EACH
LENDER AGREES TO DESIGNATE A DIFFERENT LENDING OFFICE IF SUCH DESIGNATION WILL
AVOID THE NEED FOR SUCH NOTICE AND WILL NOT, IN THE DETERMINATION OF SUCH
LENDER, OTHERWISE BE DISADVANTAGEOUS TO IT.

 

SECTION 2.19.  CHANGE OF CONTROL.  (A)  THE BORROWER SHALL (I) WITHIN THIRTY
(30) DAYS FOLLOWING THE OCCURRENCE OF A CHANGE OF CONTROL, MAKE AN OFFER TO ALL
LENDERS TO PREPAY ALL LOANS PURSUANT TO A CHANGE IN CONTROL OFFER (AS DEFINED IN
PARAGRAPH (B) OF THIS SECTION 2.19) AT A PURCHASE PRICE IN CASH EQUAL TO 101% OF
THE PRINCIPAL AMOUNT THEREOF, PLUS ACCRUED AND UNPAID INTEREST TO THE DATE OF
PREPAYMENT, IN ACCORDANCE WITH THE TERMS CONTEMPLATED IN THIS SECTION 2.19; AND
(II) PREPAY ALL THE LOANS OF ALL LENDERS PROPERLY ACCEPTING SUCH OFFER OF
PREPAYMENT IN ACCORDANCE WITH SUCH CHANGE OF CONTROL OFFER.

 

(B)  A “CHANGE OF CONTROL OFFER” MEANS A NOTICE DELIVERED TO THE AGENT (WHICH
WILL PROMPTLY FURNISH SUCH NOTICE TO THE LENDERS) STATING:

 

(I) THAT A CHANGE OF CONTROL HAS OCCURRED AND THAT SUCH LENDER HAS THE RIGHT TO
REQUIRE THE BORROWER TO PREPAY ALL OR A PORTION OF SUCH LENDER’S LOANS AT A
PURCHASE PRICE IN CASH EQUAL TO 101% OF THE PRINCIPAL AMOUNT THEREOF, PLUS
ACCRUED AND UNPAID INTEREST TO THE DATE OF PREPAYMENT;

 

(II) THE CHANGE OF CONTROL PREPAYMENT DATE (WHICH SHALL BE NO EARLIER THAN
THIRTY (30) DAYS NOR LATER THAN SIXTY (60) DAYS FROM THE DATE SUCH NOTICE IS
DELIVERED);

 

(III) THAT ANY LOANS AS TO WHICH SUCH OFFER IS NOT PROPERLY ACCEPTED WILL REMAIN
OUTSTANDING AND CONTINUE TO ACCRUE INTEREST;

 

(IV) UNLESS THE BORROWER DEFAULTS IN THE PAYMENT OF THE PURCHASE PRICE OF ANY
LOANS AS TO WHICH THE CHANGE OF CONTROL OFFER SHALL HAVE BEEN ACCEPTED, ALL
LOANS ACCEPTED FOR PAYMENT PURSUANT TO THE CHANGE OF CONTROL OFFER WILL CEASE TO
ACCRUE INTEREST ON THE CHANGE OF CONTROL PREPAYMENT DATE;

 

(V) LENDERS ELECTING TO HAVE ANY LOANS PURCHASED PURSUANT TO A CHANGE OF CONTROL
OFFER WILL BE REQUIRED TO NOTIFY THE AGENT PRIOR TO THE CLOSE OF BUSINESS ON THE
THIRD BUSINESS DAY PRECEDING THE CHANGE OF CONTROL PREPAYMENT DATE; AND

 

(VI) THAT LENDERS WILL BE ENTITLED TO WITHDRAW THEIR ELECTION TO REQUIRE THE
BORROWER TO PREPAY THEIR LOANS; PROVIDED THAT THE AGENT RECEIVES, NOT LATER THAN
THE CLOSE OF BUSINESS ON THE LAST DAY OF THE OFFER PERIOD, A NOTICE SETTING
FORTH THE NAME OF THE LENDER, THE PRINCIPAL AMOUNT OF LOANS

 

48

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

 

TENDERED FOR PREPAYMENT, AND A STATEMENT THAT SUCH LENDER IS WITHDRAWING ITS
ELECTION TO HAVE SUCH LOANS PREPAID.

 

(C)  ON THE PREPAYMENT DATE, THE BORROWER SHALL PREPAY THE LOANS OF ALL LENDERS
WHO ACCEPT THE CHANGE OF CONTROL OFFER AT A PURCHASE PRICE IN CASH EQUAL TO 101%
OF THE PRINCIPAL AMOUNT THEREOF, PLUS ACCRUED AND UNPAID INTEREST, IF ANY, TO
THE DATE OF PREPAYMENT.  IF AT THE TIME OF ANY PREPAYMENT PURSUANT TO THIS
SECTION 2.19 THERE SHALL BE OUTSTANDING BORROWINGS OF DIFFERENT TYPES OR LIBOR
RATE BORROWINGS WITH DIFFERENT INTEREST PERIODS, AND IF SOME BUT NOT ALL LENDERS
SHALL HAVE ACCEPTED SUCH CHANGE OF CONTROL OFFER, THEN THE AGGREGATE AMOUNT OF
SUCH PREPAYMENT SHALL BE ALLOCATED RATABLY TO EACH OUTSTANDING BORROWING THAT
COMPRISES THE LOANS OF THE ACCEPTING LENDERS.  ALL PREPAYMENTS OF LOANS UNDER
THIS SECTION 2.19 SHALL BE SUBJECT TO SECTION 2.14.

 

(D)  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION, THE BORROWER
SHALL BE DEEMED TO HAVE MADE A CHANGE OF CONTROL OFFER UPON A CHANGE OF CONTROL
IF A THIRD PARTY MAKES THE CHANGE OF CONTROL OFFER IN THE MANNER, AT THE TIMES
AND OTHERWISE IN COMPLIANCE WITH THE REQUIREMENTS SET FORTH IN
SECTION 2.19(B) APPLICABLE TO A CHANGE OF CONTROL OFFER MADE BY THE BORROWER AND
PREPAYS ALL LOANS AS TO WHICH OFFERS FOR PREPAYMENT HAVE BEEN VALIDLY ACCEPTED
AND NOT WITHDRAWN PURSUANT TO THE TERMS OF SUCH CHANGE OF CONTROL OFFER.

 

(E)  A CHANGE OF CONTROL OFFER MAY BE MADE IN ADVANCE OF A CHANGE OF CONTROL,
CONDITIONAL UPON SUCH CHANGE OF CONTROL, IF A DEFINITIVE AGREEMENT IS IN PLACE
FOR SUCH CHANGE OF CONTROL AT THE TIME OF MAKING OF THE CHANGE OF CONTROL OFFER.

 

SECTION 2.20.  ASSET SALE OFFER.  (A)  WITHIN 450 DAYS AFTER THE AGENT’S RECEIPT
OF THE NET PROCEEDS OF ANY ASSET SALE OF TERM LOAN FIRST LIEN COLLATERAL, THE
BORROWER OR THE APPLICABLE RESTRICTED SUBSIDIARY MAY, AT ITS OPTION, APPLY THE
NET PROCEEDS FROM SUCH ASSET SALE (I) (A) TO MAKE AN OFFER TO THE LENDERS TO
PREPAY LOANS OR (B) TO MAKE AN OFFER TO PURCHASE, PREPAY OR PERMANENTLY REDUCE
OTHER PARI PASSU LIEN OBLIGATIONS SECURED BY A PERMITTED COLLATERAL LIEN;
PROVIDED, HOWEVER, THAT IN CONNECTION WITH ANY PREPAYMENT, REPAYMENT OR PURCHASE
OF INDEBTEDNESS PURSUANT TO THIS CLAUSE (I), THE BORROWER OR SUCH RESTRICTED
SUBSIDIARY SHALL PERMANENTLY RETIRE SUCH INDEBTEDNESS AND, IN THE CASE OF
OBLIGATIONS UNDER REVOLVING CREDIT FACILITIES OR OTHER SIMILAR INDEBTEDNESS,
SHALL CORRESPONDINGLY PERMANENTLY REDUCE COMMITMENTS WITH RESPECT THERETO (OTHER
THAN OBLIGATIONS OWED TO THE BORROWER OR A RESTRICTED SUBSIDIARY); PROVIDED,
FURTHER, HOWEVER, THAT IF THE BORROWER OR ANY RESTRICTED SUBSIDIARY SHALL SO
REDUCE OBLIGATIONS UNDER ANY SUCH OTHER PARI PASSU LIEN OBLIGATIONS, THE
BORROWER OR SUCH RESTRICTED SUBSIDIARY WILL, EQUALLY AND RATABLY, REDUCE THE
AMOUNT OF INDEBTEDNESS OUTSTANDING UNDER THIS AGREEMENT BY, AT ITS OPTION,
(I) PREPAYING LOANS IN ACCORDANCE WITH SECTION 2.08 OR (II) MAKING AN OFFER (IN
ACCORDANCE WITH THE PROCEDURES SET FORTH BELOW FOR AN ASSET SALE OFFER) TO ALL
LENDERS TO PREPAY THEIR LOANS AT 100% OF THE PRINCIPAL AMOUNT THEREOF, PLUS THE
AMOUNT OF ACCRUED AND UNPAID INTEREST ON THE PRINCIPAL AMOUNT OF LOANS TO BE
PREPAID; OR (II) TO ACQUIRE ADDITIONAL ASSETS; PROVIDED, HOWEVER, THAT SUCH
ADDITIONAL ASSETS ARE CONCURRENTLY WITH THEIR ACQUISITION ADDED TO THE
COLLATERAL SECURING THE SECURED OBLIGATIONS IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.11 AND THE COLLATERAL DOCUMENTS, AND PROVIDED, FURTHER, THAT TO THE
EXTENT SUCH ADDITIONAL ASSETS CONSTITUTE THE CAPITAL STOCK OF ANY PERSON, THE
ASSETS OF SUCH PERSON THAT MAY BE USED OR USEFUL IN A SIMILAR BUSINESS ARE, IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.11 AND THE COLLATERAL DOCUMENTS,
CONCURRENTLY WITH THE ACQUISITION ADDED TO THE COLLATERAL SECURING THE SECURED
OBLIGATIONS.  NOTWITHSTANDING THE FOREGOING, IF DURING SUCH 450-DAY PERIOD THE
BORROWER OR A RESTRICTED SUBSIDIARY ENTERS INTO A DEFINITIVE BINDING AGREEMENT
COMMITTING IT TO APPLY SUCH NET PROCEEDS OF ANY ASSET SALE OF TERM LOAN FIRST
LIEN COLLATERAL TO ACQUIRE ADDITIONAL ASSETS PURSUANT TO CLAUSE (II) OF THIS
PARAGRAPH (A), SUCH 450-DAY PERIOD WILL BE EXTENDED WITH RESPECT TO THE AMOUNT
OF NET PROCEEDS SO COMMITTED UNTIL SUCH NET PROCEEDS ARE REQUIRED TO BE APPLIED
IN

 

49

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

 

ACCORDANCE WITH SUCH AGREEMENT (BUT SUCH EXTENSION WILL IN NO EVENT BE FOR A
PERIOD LONGER THAN 180 DAYS) (OR, IF EARLIER, THE DATE OF TERMINATION OF SUCH
AGREEMENT).

 

(B)  WITHIN 450 DAYS AFTER ANY OF THE BORROWER’S OR ANY RESTRICTED SUBSIDIARY’S
RECEIPT OF THE NET PROCEEDS OF ANY ASSET SALE (OTHER THAN AN ASSET SALE OF TERM
LOAN FIRST LIEN COLLATERAL), THE BORROWER OR SUCH RESTRICTED SUBSIDIARY MAY, AT
ITS OPTION, APPLY THE NET PROCEEDS FROM SUCH ASSET SALE (I) TO PERMANENTLY
REDUCE (A) OBLIGATIONS UNDER ANY SENIOR INDEBTEDNESS OF THE BORROWER OR ANY
SUBSIDIARY GUARANTOR AND, IN THE CASE OF OBLIGATIONS UNDER REVOLVING CREDIT
FACILITIES OR OTHER SIMILAR INDEBTEDNESS, TO CORRESPONDINGLY PERMANENTLY REDUCE
COMMITMENTS WITH RESPECT THERETO (OTHER THAN OBLIGATIONS OWED TO THE BORROWER OR
A RESTRICTED SUBSIDIARY); PROVIDED THAT IF THE BORROWER OR ANY RESTRICTED
SUBSIDIARY SHALL SO REDUCE OBLIGATIONS UNDER ANY SENIOR INDEBTEDNESS (OTHER THAN
SENIOR INDEBTEDNESS UNDER THE SENIOR SECURED ASSET-BASED REVOLVING CREDIT
FACILITY SECURED BY THE REVOLVING FACILITY FIRST LIEN COLLATERAL), THE BORROWER
OR SUCH SUBSIDIARY GUARANTOR WILL, EQUALLY AND RATABLY, REDUCE THE AMOUNT OF
INDEBTEDNESS OUTSTANDING UNDER THIS AGREEMENT BY, AT ITS OPTION, (I) PREPAYING
LOANS IN ACCORDANCE WITH SECTION 2.08 OR (II) MAKING AN OFFER (IN ACCORDANCE
WITH THE PROCEDURES SET FORTH BELOW FOR AN ASSET SALE OFFER) TO ALL LENDERS TO
PREPAY THEIR LOANS AT 100% OF THE PRINCIPAL AMOUNT THEREOF, PLUS THE AMOUNT OF
ACCRUED AND UNPAID INTEREST ON THE PRINCIPAL AMOUNT OF LOANS TO BE PREPAID, OR
(B) INDEBTEDNESS OF A RESTRICTED SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR,
OTHER THAN INDEBTEDNESS OWED TO THE BORROWER OR ANOTHER RESTRICTED SUBSIDIARY;
OR (II) TO AN INVESTMENT IN (A) ANY ONE OR MORE BUSINESSES; PROVIDED THAT SUCH
INVESTMENT IN ANY BUSINESS IS IN THE FORM OF THE ACQUISITION OF CAPITAL STOCK
AND RESULTS IN THE BORROWER OR ANY RESTRICTED SUBSIDIARY OWNING AN AMOUNT OF THE
CAPITAL STOCK OF SUCH BUSINESS SUCH THAT IT CONSTITUTES A RESTRICTED SUBSIDIARY,
(B) PROPERTIES, (C) CAPITAL EXPENDITURES OR (D) ACQUISITIONS OF OTHER ASSETS,
THAT IN EACH OF (A), (B), (C) AND (D), ARE USED OR USEFUL IN A SIMILAR BUSINESS
OR REPLACE THE BUSINESSES, PROPERTIES AND ASSETS THAT ARE THE SUBJECT OF SUCH
ASSET SALE.  NOTWITHSTANDING THE FOREGOING, IF DURING SUCH 450-DAY PERIOD THE
BORROWER OR A RESTRICTED SUBSIDIARY ENTERS INTO A DEFINITIVE BINDING AGREEMENT
COMMITTING IT TO APPLY SUCH NET PROCEEDS IN ACCORDANCE WITH THE REQUIREMENTS OF
CLAUSE (II) OF THIS PARAGRAPH (B), SUCH 450-DAY PERIOD WILL BE EXTENDED WITH
RESPECT TO THE AMOUNT OF NET PROCEEDS SO COMMITTED UNTIL SUCH NET PROCEEDS ARE
REQUIRED TO BE APPLIED IN ACCORDANCE WITH SUCH AGREEMENT (BUT SUCH EXTENSION
WILL IN NO EVENT BE FOR A PERIOD LONGER THAN 180 DAYS) (OR, IF EARLIER, UNTIL
TERMINATION OF SUCH AGREEMENT).

 

(C)  ANY NET PROCEEDS FROM AN ASSET SALE THAT ARE NOT INVESTED OR APPLIED IN
ACCORDANCE WITH PARAGRAPH (A) OR (B) OF THIS SECTION 2.20 WITHIN 450 DAYS FROM
THE DATE OF THE RECEIPT OF SUCH NET PROCEEDS WILL BE DEEMED TO CONSTITUTE
“EXCESS PROCEEDS”.  WHEN THE AGGREGATE AMOUNT OF EXCESS PROCEEDS EXCEEDS
$45,000,000, THE BORROWER SHALL (I) MAKE AN OFFER WITHIN TEN (10) BUSINESS DAYS
AFTER THE DATE THAT EXCESS PROCEEDS EXCEED $45,000,000 TO ALL LENDERS AND, IF
REQUIRED BY THE TERMS OF ANY OTHER SENIOR INDEBTEDNESS, TO THE HOLDERS OF SUCH
SENIOR INDEBTEDNESS (OTHER THAN WITH RESPECT TO HEDGING OBLIGATIONS) IN
ACCORDANCE WITH THE PROCEDURES SET FORTH BELOW FOR PREPAYMENT OR AN ASSET SALE
OFFER, TO PREPAY THE MAXIMUM AGGREGATE PRINCIPAL AMOUNT OF LOANS AND PREPAY OR
PURCHASE THE MAXIMUM PRINCIPAL AMOUNT OF SUCH SENIOR INDEBTEDNESS THAT IS AN
INTEGRAL MULTIPLE OF $1,000 THAT MAY BE PURCHASED OUT OF THE EXCESS PROCEEDS AT
A PREPAYMENT OR PURCHASE PRICE IN CASH EQUAL TO 100% OF THE PRINCIPAL AMOUNT
THEREOF, PLUS ACCRUED AND UNPAID INTEREST TO THE DATE OF PREPAYMENT OR
REPURCHASE, IN ACCORDANCE WITH THE TERMS CONTEMPLATED IN THIS SECTION 2.20; AND
(II) PREPAY ALL THE LOANS OF LENDERS PROPERLY ACCEPTING SUCH OFFER OF PREPAYMENT
IN ACCORDANCE WITH SUCH ASSET SALE OFFER (SUBJECT TO THE PRORATION PROVISIONS
SET FORTH IN PARAGRAPH (F) OF THIS SECTION 2.20).  THE BORROWER MAY SATISFY THE
FOREGOING OBLIGATIONS WITH RESPECT TO ANY NET PROCEEDS FROM AN ASSET SALE BY
MAKING AN ASSET SALE OFFER WITH RESPECT TO SUCH NET PROCEEDS PRIOR TO THE
EXPIRATION OF THE RELEVANT 450 DAY PERIOD OR WITH RESPECT TO EXCESS PROCEEDS OF
$45,000,000 OR LESS.

 

50

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

 

(D)  AN “ASSET SALE OFFER” MEANS A NOTICE DELIVERED TO THE AGENT (WHICH WILL
PROMPTLY FURNISH SUCH NOTICE TO THE LENDERS) STATING:

 

(I) THAT AN ASSET SALE OFFER IS BEING MADE PURSUANT TO THIS SECTION 2.20 AND
THAT SUCH LENDER HAS THE RIGHT TO REQUIRE THE BORROWER TO PREPAY ALL OR A
PORTION OF SUCH LENDER’S LOANS (SUBJECT TO THE PRORATION PROVISIONS SET FORTH IN
PARAGRAPH (F) OF THIS SECTION 2.20) AT A PURCHASE PRICE IN CASH EQUAL TO 100% OF
THE PRINCIPAL AMOUNT THEREOF, PLUS ACCRUED AND UNPAID INTEREST TO THE DATE OF
PREPAYMENT; AND

 

(II) THE PREPAYMENT DATE (WHICH SHALL BE NO EARLIER THAN THIRTY (30) DAYS NOR
LATER THAN SIXTY (60) DAYS FROM THE DATE SUCH NOTICE IS MAILED).

 

(E)  ON THE PREPAYMENT DATE, THE BORROWER (SUBJECT TO THE PRORATION PROVISIONS
SET FORTH IN PARAGRAPH (F) OF THIS SECTION 2.20) SHALL PREPAY THE LOANS OF ALL
LENDERS WHO ACCEPT THE ASSET SALE OFFER AT A PURCHASE PRICE IN CASH EQUAL TO
100% OF THE PRINCIPAL AMOUNT THEREOF, PLUS ACCRUED AND UNPAID INTEREST TO THE
DATE OF PREPAYMENT.  IF AT THE TIME OF ANY PREPAYMENT PURSUANT TO THIS
SECTION 2.20 THERE SHALL BE OUTSTANDING BORROWINGS OF DIFFERENT TYPES OR LIBOR
RATE BORROWINGS WITH DIFFERENT INTEREST PERIODS, AND IF SOME BUT NOT ALL LENDERS
SHALL HAVE ACCEPTED SUCH ASSET SALE OFFER, THEN THE AGGREGATE AMOUNT OF SUCH
PREPAYMENT SHALL BE ALLOCATED RATABLY TO EACH OUTSTANDING BORROWING THAT
COMPRISES THE LOANS OF THE ACCEPTING LENDERS.  ALL PREPAYMENTS OF LOANS UNDER
THIS SECTION 2.20 SHALL BE SUBJECT TO SECTION 2.14.

 

(F)  TO THE EXTENT THAT THE AGGREGATE AMOUNT OF LOANS AND OTHER SENIOR
INDEBTEDNESS TENDERED PURSUANT TO AN ASSET SALE OFFER IS LESS THAN THE EXCESS
PROCEEDS, THE BORROWER MAY USE ANY REMAINING EXCESS PROCEEDS FOR GENERAL
CORPORATE PURPOSES, SUBJECT TO THE TERMS OF THIS AGREEMENT.  IF THE AGGREGATE
PRINCIPAL AMOUNT OF LOANS AND OTHER SENIOR INDEBTEDNESS TENDERED PURSUANT TO AN
ASSET SALE OFFER EXCEEDS THE AMOUNT OF EXCESS PROCEEDS, THE BORROWER SHALL
SELECT OR CAUSE TO BE SELECTED THE LOANS AND SUCH OTHER SENIOR INDEBTEDNESS TO
BE PREPAID OR PURCHASED ON A PRO RATA BASIS BASED ON THE PRINCIPAL AMOUNT (OR
ACCRETED VALUE) OF THE LOANS AND OTHER SENIOR INDEBTEDNESS TENDERED.  UPON
COMPLETION OF ANY SUCH ASSET SALE OFFER, THE AMOUNT OF EXCESS PROCEEDS RELATED
TO SUCH ASSET SALE OFFER SHALL BE RESET AT ZERO.

 

(G)  PENDING THE FINAL APPLICATION OF ANY NET PROCEEDS PURSUANT TO THIS
SECTION 2.20, THE BORROWER OR THE APPLICABLE RESTRICTED SUBSIDIARY MAY APPLY
SUCH NET PROCEEDS TEMPORARILY TO REDUCE INDEBTEDNESS OUTSTANDING UNDER A
REVOLVING CREDIT FACILITY OR OTHERWISE INVEST SUCH NET PROCEEDS IN ANY MANNER
NOT PROHIBITED HEREUNDER.

 

SECTION 2.21.  REPRICING PROTECTION.  IN THE EVENT THAT, PRIOR TO THE FIRST
ANNIVERSARY OF THE CLOSING DATE, ANY LENDER RECEIVES A REPRICING PREPAYMENT (AS
DEFINED BELOW), THEN, AT THE TIME THEREOF, THE BORROWER SHALL PAY TO SUCH LENDER
A PREPAYMENT PREMIUM EQUAL TO 1.00% OF THE AMOUNT OF SUCH REPRICING PREPAYMENT. 
AS USED HEREIN, WITH RESPECT TO ANY LENDER, A “REPRICING PREPAYMENT” IS THE
AMOUNT OF PRINCIPAL OF THE LOANS OF SUCH LENDER THAT IS RECEIVED BY SUCH LENDER
AS A RESULT OF THE MANDATORY ASSIGNMENT OF SUCH LOANS IN THE CIRCUMSTANCES
DESCRIBED IN SECTION 9.02(E) FOLLOWING THE FAILURE OF SUCH LENDER TO CONSENT TO
AN AMENDMENT OF THIS AGREEMENT THAT WOULD HAVE THE EFFECT OF REDUCING THE
APPLICABLE RATE WITH RESPECT TO SUCH LOANS.

 

51

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

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents and warrants to the Lenders that:

 

SECTION 3.01.  ORGANIZATION; POWERS.  EACH OF THE LOAN PARTIES AND EACH OF ITS
SUBSIDIARIES IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE JURISDICTION OF ITS ORGANIZATION, HAS ALL REQUISITE POWER AND
AUTHORITY TO OWN ITS PROPERTY AND ASSETS AND TO CARRY ON ITS BUSINESS AS NOW
CONDUCTED AND, EXCEPT WHERE THE FAILURE TO DO SO, INDIVIDUALLY OR IN THE
AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT, IS QUALIFIED TO DO BUSINESS IN, AND IS IN GOOD STANDING IN, EVERY
JURISDICTION WHERE SUCH QUALIFICATION IS REQUIRED.

 

SECTION 3.02.  AUTHORIZATION; ENFORCEABILITY.  THE TRANSACTIONS ARE WITHIN EACH
APPLICABLE LOAN PARTY’S CORPORATE POWERS AND HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY CORPORATE AND, IF REQUIRED, STOCKHOLDER ACTION OF SUCH LOAN PARTY. 
EACH LOAN DOCUMENT TO WHICH EACH LOAN PARTY IS A PARTY HAVE BEEN DULY EXECUTED
AND DELIVERED BY SUCH LOAN PARTY AND IS A LEGAL, VALID AND BINDING OBLIGATION OF
SUCH LOAN PARTY, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, SUBJECT TO APPLICABLE
BANKRUPTCY, INSOLVENCY OR SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND
TO GENERAL PRINCIPLES OF EQUITY.

 

SECTION 3.03.  GOVERNMENTAL APPROVALS; NO CONFLICTS.  THE TRANSACTIONS (A) DO
NOT REQUIRE ANY CONSENT OR APPROVAL OF, REGISTRATION OR FILING WITH, OR ANY
OTHER ACTION BY, ANY GOVERNMENTAL AUTHORITY, EXCEPT SUCH AS HAVE BEEN OBTAINED
OR MADE AND ARE IN FULL FORCE AND EFFECT, EXCEPT FOR FILINGS NECESSARY TO
PERFECT LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS AND THE ABL SECURITY
DOCUMENTS AND EXCEPT FOR FILINGS IN CONNECTION WITH CONSUMMATING THE MERGER AND
FILINGS AS MAY BE REQUIRED UNDER THE EXCHANGE ACT AND APPLICABLE STOCK EXCHANGE
RULES IN CONNECTION THEREWITH, (B) WILL NOT VIOLATE ANY REQUIREMENT OF LAW
APPLICABLE TO ANY LOAN PARTY OR ANY OF ITS SUBSIDIARIES, (C) WILL NOT VIOLATE OR
RESULT IN A DEFAULT UNDER ANY INDENTURE, AGREEMENT OR OTHER INSTRUMENT BINDING
UPON ANY LOAN PARTY OR ANY OF ITS SUBSIDIARIES OR ITS ASSETS, OR (EXCEPT FOR THE
MERGER CONSIDERATION AND THE 2008 NOTES CALL FOR REDEMPTION) GIVE RISE TO A
RIGHT THEREUNDER TO REQUIRE ANY PAYMENT TO BE MADE BY ANY LOAN PARTY OR ANY OF
ITS SUBSIDIARIES, AND (D) WILL NOT RESULT IN THE CREATION OR IMPOSITION OF ANY
LIEN ON ANY ASSET OF ANY LOAN PARTY OR ANY OF ITS SUBSIDIARIES, EXCEPT LIENS
CREATED PURSUANT TO THE LOAN DOCUMENTS AND THE ABL SECURITY DOCUMENTS; EXCEPT,
IN EACH CASE OTHER THAN WITH RESPECT TO THE CREATION OF LIENS, TO THE EXTENT
THAT ANY SUCH VIOLATION, DEFAULT OR RIGHT, OR ANY FAILURE TO OBTAIN SUCH CONSENT
OR APPROVAL OR TO TAKE ANY SUCH ACTION, WOULD NOT REASONABLY BE EXPECTED TO
RESULT IN A MATERIAL ADVERSE EFFECT.

 

SECTION 3.04.  FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.  (A)  THE
BORROWER HAS HERETOFORE FURNISHED TO THE LENDERS ITS CONSOLIDATED BALANCE SHEET
AND STATEMENTS OF EARNINGS, SHAREHOLDERS’ EQUITY AND CASH FLOWS (I) AS OF AND
FOR THE FISCAL YEARS ENDED JULY 31, 2004 AND JULY 30, 2005, EACH REPORTED ON BY
DELOITTE & TOUCHE LLP, INDEPENDENT PUBLIC ACCOUNTANTS, AND (II) TO THE EXTENT
POSSIBLE IN THE EXERCISE OF THE BORROWER’S COMMERCIALLY REASONABLE EFFORTS, AS
OF AND FOR EACH SUBSEQUENT FISCAL MONTH ENDED AT LEAST THIRTY (30) DAYS BEFORE
THE CLOSING DATE, CERTIFIED BY ITS CHIEF FINANCIAL OFFICER.  SUCH FINANCIAL
STATEMENTS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION AND
RESULTS OF OPERATIONS AND CASH FLOWS OF THE BORROWER AND ITS CONSOLIDATED
SUBSIDIARIES AS OF SUCH DATES AND FOR SUCH PERIODS IN ACCORDANCE WITH GAAP,
SUBJECT TO THE ABSENCE OF FOOTNOTES AND NORMAL YEAR-END ADJUSTMENTS IN THE CASE
OF THE STATEMENTS REFERRED TO IN CLAUSE (II) ABOVE.

 

(B)  THE BORROWER HAS HERETOFORE DELIVERED TO THE LENDERS ITS UNAUDITED PRO
FORMA CONSOLIDATED BALANCE SHEET AND RELATED PRO FORMA STATEMENTS OF EARNINGS,
SHAREHOLDER’S EQUITY AND CASH FLOWS AS OF JULY 30, 2005, PREPARED GIVING EFFECT
TO THE TRANSACTIONS AS IF THEY HAD OCCURRED, WITH RESPECT TO SUCH BALANCE SHEET,
ON SUCH DATE AND, WITH RESPECT TO SUCH OTHER FINANCIAL STATEMENTS, ON THE FIRST
DAY OF

 

52

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

 

THE 12-MONTH PERIOD ENDING ON SUCH DATE. SUCH PRO FORMA FINANCIAL STATEMENTS
HAVE BEEN PREPARED IN GOOD FAITH BY THE BORROWER, BASED ON THE ASSUMPTIONS USED
TO PREPARE THE PRO FORMA FINANCIAL INFORMATION CONTAINED IN THE INFORMATION
MEMORANDUM (WHICH ASSUMPTIONS ARE BELIEVED BY THE BORROWER ON THE DATE HEREOF
AND ON THE CLOSING DATE TO BE REASONABLE), ARE BASED ON THE BEST INFORMATION
AVAILABLE TO THE BORROWER AS OF THE DATE OF DELIVERY THEREOF, ACCURATELY REFLECT
ALL ADJUSTMENTS REQUIRED TO BE MADE TO GIVE EFFECT TO THE TRANSACTIONS AND
PRESENT FAIRLY ON A PRO FORMA BASIS THE ESTIMATED CONSOLIDATED FINANCIAL
POSITION OF THE BORROWER AND ITS CONSOLIDATED SUBSIDIARIES AS OF SUCH DATE AND
FOR SUCH PERIOD, ASSUMING THAT THE TRANSACTIONS HAD ACTUALLY OCCURRED AT SUCH
DATE OR AT THE BEGINNING OF SUCH PERIOD, AS THE CASE MAY BE.

 

(C)  NO EVENT, CHANGE OR CONDITION HAS OCCURRED THAT HAS HAD, OR WOULD
REASONABLY BE EXPECTED TO HAVE, A MATERIAL ADVERSE EFFECT, SINCE JULY 30, 2005.

 

SECTION 3.05.  PROPERTIES.  (A)  AS OF THE DATE OF THIS AGREEMENT,
SCHEDULE 3.05(A) SETS FORTH THE ADDRESS OF EACH PARCEL OF REAL PROPERTY (OR EACH
SET OF PARCELS THAT COLLECTIVELY COMPRISE ONE OPERATING PROPERTY) THAT IS OWNED
OR LEASED BY EACH LOAN PARTY, TOGETHER WITH A LIST OF THE LESSORS WITH RESPECT
TO ALL SUCH LEASED PROPERTY.  SCHEDULE 3.05(A) ALSO IDENTIFIES THE PRINCIPAL
PLACE OF BUSINESS AND CHIEF EXECUTIVE OFFICE OF EACH LOAN PARTY.  THE BOOKS AND
RECORDS OF EACH LOAN PARTY, AND ALL OF THEIR RESPECTIVE CHATTEL PAPER AND
RECORDS OF ACCOUNTS, ARE MAINTAINED EXCLUSIVELY AT SUCH LOCATIONS. THERE IS NO
LOCATION AT WHICH ANY LOAN PARTY HAS ANY COLLATERAL (EXCEPT FOR VEHICLES AND
INVENTORY IN TRANSIT IN THE ORDINARY COURSE OF BUSINESS) OTHER THAN THOSE
LOCATIONS IDENTIFIED ON SCHEDULE 3.05(A).

 

(B)  EACH OF THE BORROWER AND EACH OF THE SUBSIDIARIES HAS GOOD AND INSURABLE
FEE SIMPLE TITLE TO, OR VALID LEASEHOLD INTERESTS IN, OR EASEMENTS OR OTHER
LIMITED PROPERTY INTERESTS IN, ALL ITS REAL PROPERTIES (INCLUDING ALL MORTGAGED
PROPERTIES) AND HAS GOOD AND MARKETABLE TITLE TO ITS PERSONAL PROPERTY AND
ASSETS, IN EACH CASE, EXCEPT FOR DEFECTS IN TITLE THAT DO NOT MATERIALLY
INTERFERE WITH ITS ABILITY TO CONDUCT ITS BUSINESS AS CURRENTLY CONDUCTED OR TO
UTILIZE SUCH PROPERTIES AND ASSETS FOR THEIR INTENDED PURPOSES AND EXCEPT WHERE
THE FAILURE TO HAVE SUCH TITLE WOULD NOT REASONABLY BE EXPECTED TO HAVE,
INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.  ALL SUCH
PROPERTIES AND ASSETS ARE FREE AND CLEAR OF LIENS, OTHER THAN LIENS
(I) PERMITTED BY SECTION 6.02 OR (II) ARISING BY OPERATION OF LAW (WHICH LIENS,
IN THE CASE OF THIS CLAUSE (II) DO NOT MATERIALLY INTERFERE WITH THE ABILITY OF
HOLDINGS, THE BORROWER OR THE RELEVANT SUBSIDIARY TO CARRY ON ITS BUSINESS AS
NOW CONDUCTED OR TO UTILIZE THE AFFECTED PROPERTIES OR ASSETS FOR THEIR INTENDED
PURPOSES).

 

(C)  EACH OF THE BORROWER AND EACH OF THE SUBSIDIARIES HAS COMPLIED WITH ALL
OBLIGATIONS UNDER ALL LEASES TO WHICH IT IS A PARTY, EXCEPT WHERE THE FAILURE TO
COMPLY WOULD NOT REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT, AND ALL SUCH LEASES ARE IN FULL FORCE AND
EFFECT, EXCEPT LEASES IN RESPECT OF WHICH THE FAILURE TO BE IN FULL FORCE AND
EFFECT WOULD NOT REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT.  EACH OF THE BORROWER AND EACH OF THE
SUBSIDIARIES ENJOYS PEACEFUL AND UNDISTURBED POSSESSION UNDER ALL SUCH LEASES,
OTHER THAN LEASES IN RESPECT OF WHICH THE FAILURE TO ENJOY PEACEFUL AND
UNDISTURBED POSSESSION WOULD NOT REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR
IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

(D)  AS OF THE CLOSING DATE, NONE OF HOLDINGS, THE BORROWER OR ANY SUBSIDIARY
HAS RECEIVED ANY NOTICE OF, NOR HAS ANY KNOWLEDGE OF, ANY PENDING OR
CONTEMPLATED CONDEMNATION PROCEEDING AFFECTING ANY OF THE MORTGAGED PROPERTIES
OR ANY SALE OR DISPOSITION THEREOF IN LIEU OF CONDEMNATION.

 

(E)  TO THE BORROWER’S KNOWLEDGE, AS OF THE CLOSING DATE, NONE OF THE BORROWER
OR ANY SUBSIDIARY IS OBLIGATED UNDER ANY RIGHT OF FIRST REFUSAL, OPTION OR OTHER
CONTRACTUAL RIGHT TO SELL, ASSIGN OR OTHERWISE DISPOSE OF ANY MORTGAGED PROPERTY
OR ANY INTEREST THEREIN.

 

53

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

 

(F)  COPIES OF CERTIFICATES OF OCCUPANCY RELATING TO EACH MORTGAGED PROPERTY
THAT THE MORTGAGOR HAS IN ITS POSSESSION HAVE BEEN DELIVERED TO THE AGENT AS
MORTGAGEE WITH RESPECT TO EACH MORTGAGED PROPERTY.

 

(G)  EACH OF THE BORROWER AND THE SUBSIDIARIES OWNS OR POSSESSES, OR IS LICENSED
TO USE, ALL PATENTS, TRADEMARKS, SERVICE MARKS, TRADE NAMES AND COPYRIGHTS AND
ALL LICENSES AND RIGHTS WITH RESPECT TO THE FOREGOING, NECESSARY FOR THE PRESENT
CONDUCT OF ITS BUSINESS, WITHOUT ANY CONFLICT WITH THE RIGHTS OF OTHERS, AND
FREE FROM ANY BURDENSOME RESTRICTIONS ON THE PRESENT CONDUCT OF ITS BUSINESS,
EXCEPT WHERE SUCH FAILURE TO OWN, POSSESS OR HOLD PURSUANT TO A LICENSE OR SUCH
CONFLICTS AND RESTRICTIONS WOULD NOT REASONABLY BE EXPECTED TO HAVE,
INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT OR EXCEPT AS SET
FORTH ON SCHEDULE 3.05(G).

 

SECTION 3.06.  LITIGATION AND ENVIRONMENTAL MATTERS.  (A)  OTHER THAN THE
DISCLOSED MATTERS, THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS BY OR BEFORE ANY
ARBITRATOR OR GOVERNMENTAL AUTHORITY PENDING AGAINST OR, TO THE KNOWLEDGE OF ANY
LOAN PARTY, THREATENED AGAINST OR AFFECTING THE LOAN PARTIES OR ANY OF THEIR
SUBSIDIARIES (I) AS TO WHICH THERE IS A REASONABLE POSSIBILITY OF AN ADVERSE
DETERMINATION AND THAT, IF ADVERSELY DETERMINED, WOULD REASONABLY BE EXPECTED,
INDIVIDUALLY OR IN THE AGGREGATE, TO RESULT IN A MATERIAL ADVERSE EFFECT OR
(II) THAT INVOLVE ANY LOAN DOCUMENTS OR THE TRANSACTIONS.

 

(B)  EXCEPT FOR THE DISCLOSED MATTERS OR ANY OTHER MATTERS THAT, INDIVIDUALLY OR
IN THE AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT (I) NO LOAN PARTY NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED NOTICE
OF ANY CLAIM WITH RESPECT TO ANY ENVIRONMENTAL LIABILITY OR KNOWS OF ANY BASIS
FOR ANY ENVIRONMENTAL LIABILITY AND (II) NO LOAN PARTY NOR ANY OF ITS
SUBSIDIARIES (1) HAS FAILED TO COMPLY WITH ANY ENVIRONMENTAL LAW OR TO OBTAIN,
MAINTAIN OR COMPLY WITH ANY PERMIT, LICENSE OR OTHER APPROVAL REQUIRED UNDER ANY
ENVIRONMENTAL LAW OR (2) HAS BECOME SUBJECT TO ANY ENVIRONMENTAL LIABILITY.

 

(C)  SINCE THE DATE OF THIS AGREEMENT, THERE HAS BEEN NO CHANGE IN THE STATUS OF
THE DISCLOSED MATTERS THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAS RESULTED IN,
OR MATERIALLY INCREASED THE LIKELIHOOD OF, A MATERIAL ADVERSE EFFECT.

 

SECTION 3.07.  COMPLIANCE WITH LAWS AND AGREEMENTS; LICENSES AND PERMITS. 
(A)  EACH LOAN PARTY IS IN COMPLIANCE WITH ALL REQUIREMENTS OF LAW APPLICABLE TO
IT OR ITS PROPERTY AND ALL INDENTURES, AGREEMENTS AND OTHER INSTRUMENTS BINDING
UPON IT OR ITS PROPERTY, EXCEPT WHERE THE FAILURE TO DO SO, INDIVIDUALLY OR IN
THE AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.

 

(B)  EACH LOAN PARTY AND ITS SUBSIDIARIES HAS OBTAINED AND HOLDS IN FULL FORCE
AND EFFECT, ALL FRANCHISES, LICENSES, LEASES, PERMITS, CERTIFICATES,
AUTHORIZATIONS, QUALIFICATIONS, EASEMENTS, RIGHTS OF WAY AND OTHER RIGHTS AND
APPROVALS WHICH ARE NECESSARY OR ADVISABLE FOR THE OPERATION OF ITS BUSINESSES
AS PRESENTLY CONDUCTED AND AS PROPOSED TO BE CONDUCTED, EXCEPT WHERE THE FAILURE
TO HAVE SO OBTAINED OR HOLD OR TO BE IN FORCE, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NO
LOAN PARTY OR ANY OF ITS SUBSIDIARIES IS IN VIOLATION OF THE TERMS OF ANY SUCH
FRANCHISE, LICENSE, LEASE, PERMIT, CERTIFICATE, AUTHORIZATION, QUALIFICATION,
EASEMENT, RIGHT OF WAY, RIGHT OR APPROVAL, EXCEPT WHERE ANY SUCH VIOLATION,
INDIVIDUALLY OR IN THE AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE EFFECT.

 

SECTION 3.08.  INVESTMENT AND HOLDING COMPANY STATUS.  NO LOAN PARTY IS (A) AN
“INVESTMENT COMPANY” AS DEFINED IN, OR IS REQUIRED TO BE REGISTERED UNDER, THE
INVESTMENT COMPANY ACT OF 1940 OR (B) A “HOLDING COMPANY” AS DEFINED IN, OR
SUBJECT TO REGULATION UNDER, THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

 

54

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

 

SECTION 3.09.  TAXES.  EACH LOAN PARTY AND ITS SUBSIDIARIES HAS TIMELY FILED OR
CAUSED TO BE FILED ALL TAX RETURNS AND REPORTS REQUIRED TO HAVE BEEN FILED AND
HAS PAID OR CAUSED TO BE PAID ALL TAXES REQUIRED TO HAVE BEEN PAID BY IT, EXCEPT
(A) TAXES THAT ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND
FOR WHICH SUCH LOAN PARTY OR SUCH SUBSIDIARY, AS APPLICABLE, HAS SET ASIDE ON
ITS BOOKS ADEQUATE RESERVES IN ACCORDANCE WITH GAAP OR (B) TO THE EXTENT THAT
THE FAILURE TO DO SO, INDIVIDUALLY OR IN THE AGGREGATE, WOULD NOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

SECTION 3.10.  ERISA.  NO ERISA EVENT HAS OCCURRED IN THE FIVE YEAR PERIOD PRIOR
TO THE DATE ON WHICH THIS REPRESENTATION IS MADE OR DEEMED MADE AND IS
CONTINUING OR IS REASONABLY EXPECTED TO OCCUR THAT, WHEN TAKEN TOGETHER WITH ALL
OTHER SUCH ERISA EVENTS FOR WHICH LIABILITY IS REASONABLY EXPECTED TO OCCUR,
WOULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  EXCEPT AS
WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, THE PRESENT
VALUE OF ALL ACCUMULATED BENEFIT OBLIGATIONS UNDER ALL PLANS (BASED ON THE
ASSUMPTIONS USED FOR PURPOSES OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 87) DID NOT, AS OF THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS
REFLECTING SUCH AMOUNTS, EXCEED THE FAIR MARKET VALUE OF THE ASSETS OF SUCH
PLANS, IN THE AGGREGATE.

 

SECTION 3.11.  DISCLOSURE.  (A)  ALL WRITTEN INFORMATION (OTHER THAN THE
PROJECTIONS, THE PRO FORMA FINANCIAL STATEMENTS AND ESTIMATES AND INFORMATION OF
A GENERAL ECONOMIC NATURE) CONCERNING HOLDINGS, THE BORROWER, THE SUBSIDIARIES,
THE TRANSACTIONS AND ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY INCLUDED IN THE
INFORMATION MEMORANDUM OR OTHERWISE PREPARED BY OR ON BEHALF OF THE FOREGOING OR
THEIR REPRESENTATIVES AND MADE AVAILABLE TO ANY LENDERS OR THE AGENT IN
CONNECTION WITH THE TRANSACTIONS ON OR BEFORE THE DATE HEREOF (THE
“INFORMATION”), WHEN TAKEN AS A WHOLE, AS OF THE DATE SUCH INFORMATION WAS
FURNISHED TO THE LENDERS AND AS OF THE CLOSING DATE, DID NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT AS OF ANY SUCH DATE OR OMIT TO STATE A MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED THEREIN NOT MATERIALLY
MISLEADING IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS WERE MADE.

 

(B)  THE PROJECTIONS, PRO FORMA FINANCIAL STATEMENTS AND ESTIMATES AND
INFORMATION OF A GENERAL ECONOMIC NATURE PREPARED BY OR ON BEHALF OF THE
BORROWER OR ANY OF ITS REPRESENTATIVES AND THAT HAVE BEEN MADE AVAILABLE TO ANY
LENDERS OR THE AGENT IN CONNECTION WITH THE TRANSACTIONS ON OR BEFORE THE DATE
HEREOF (THE “OTHER INFORMATION”) (I) HAVE BEEN PREPARED IN GOOD FAITH BASED UPON
ASSUMPTIONS BELIEVED BY THE BORROWER TO BE REASONABLE AS OF THE DATE THEREOF (IT
BEING UNDERSTOOD THAT ACTUAL RESULTS MAY VARY MATERIALLY FROM THE OTHER
INFORMATION), AND (II) AS OF THE CLOSING DATE, HAVE NOT BEEN MODIFIED IN ANY
MATERIAL RESPECT BY THE BORROWER.

 

SECTION 3.12.  MATERIAL AGREEMENTS.  NO LOAN PARTY IS IN DEFAULT IN ANY MATERIAL
RESPECT IN THE PERFORMANCE, OBSERVANCE OR FULFILLMENT OF ANY OF ITS OBLIGATIONS
CONTAINED IN (I) ANY MATERIAL AGREEMENT TO WHICH IT IS A PARTY OR (II) ANY
AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY EVIDENCING OR GOVERNING
INDEBTEDNESS, EXCEPT WHERE ANY SUCH DEFAULT WOULD NOT REASONABLY BE EXPECTED,
INDIVIDUALLY OR IN THE AGGREGATE, TO HAVE A MATERIAL ADVERSE EFFECT.

 

SECTION 3.13.  SOLVENCY.  (A)  IMMEDIATELY AFTER THE CONSUMMATION OF THE
TRANSACTIONS TO OCCUR ON THE CLOSING DATE, (I) THE FAIR VALUE OF THE ASSETS OF
THE LOAN PARTIES ON A CONSOLIDATED BASIS, AT A FAIR VALUATION, WILL EXCEED THE
DEBTS AND LIABILITIES, DIRECT, SUBORDINATED, CONTINGENT OR OTHERWISE, OF THE
LOAN PARTIES ON A CONSOLIDATED BASIS; (II) THE PRESENT FAIR SALEABLE VALUE OF
THE PROPERTY OF THE LOAN PARTIES ON A CONSOLIDATED BASIS WILL BE GREATER THAN
THE AMOUNT THAT WILL BE REQUIRED TO PAY THE PROBABLE LIABILITY OF THE LOAN
PARTIES ON A CONSOLIDATED BASIS, ON THEIR DEBTS AND OTHER LIABILITIES, DIRECT,
SUBORDINATED, CONTINGENT OR OTHERWISE, AS SUCH DEBTS AND OTHER LIABILITIES
BECOME ABSOLUTE AND MATURED; (III) THE LOAN PARTIES ON A CONSOLIDATED BASIS WILL
BE ABLE TO PAY THEIR DEBTS AND LIABILITIES, DIRECT, SUBORDINATED, CONTINGENT OR
OTHERWISE, AS SUCH DEBTS AND LIABILITIES BECOME ABSOLUTE AND MATURED; AND
(IV) THE LOAN PARTIES ON A CONSOLIDATED BASIS WILL NOT HAVE UNREASONABLY SMALL
CAPITAL WITH WHICH TO CONDUCT THE

 

55

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

 

BUSINESSES IN WHICH THEY ARE ENGAGED AS SUCH BUSINESSES ARE NOW CONDUCTED AND
ARE PROPOSED TO BE CONDUCTED FOLLOWING THE CLOSING DATE.

 

(B)  THE LOAN PARTIES DO NOT INTEND TO INCUR DEBTS BEYOND THEIR ABILITY TO PAY
SUCH DEBTS AS THEY MATURE, TAKING INTO ACCOUNT THE TIMING AND AMOUNTS OF CASH TO
BE RECEIVED BY THE LOAN PARTIES AND THE TIMING AND AMOUNTS OF CASH TO BE PAYABLE
BY THE LOAN PARTIES ON OR IN RESPECT OF THEIR INDEBTEDNESS.

 

SECTION 3.14.  INSURANCE.  SCHEDULE 3.14 SETS FORTH A TRUE, COMPLETE AND CORRECT
DESCRIPTION OF ALL INSURANCE MAINTAINED BY OR ON BEHALF OF THE LOAN PARTIES AND
THE SUBSIDIARIES AS OF THE CLOSING DATE.  AS OF THE CLOSING DATE, ALL SUCH
INSURANCE IS IN FULL FORCE AND EFFECT AND ALL PREMIUMS IN RESPECT OF SUCH
INSURANCE HAVE BEEN DULY PAID.  THE BORROWER BELIEVES THAT THE INSURANCE
MAINTAINED BY OR ON BEHALF OF THE BORROWER AND THE SUBSIDIARIES IS ADEQUATE AND
IS IN ACCORDANCE WITH NORMAL INDUSTRY PRACTICE.

 

SECTION 3.15.  CAPITALIZATION AND SUBSIDIARIES.  SCHEDULE 3.15 SETS FORTH (A) A
CORRECT AND COMPLETE LIST OF THE NAME AND RELATIONSHIP TO THE BORROWER OF EACH
AND ALL OF THE BORROWER’S SUBSIDIARIES, (B) A TRUE AND COMPLETE LISTING OF EACH
CLASS OF EACH OF THE BORROWER’S AUTHORIZED EQUITY INTERESTS, OF WHICH ALL OF
SUCH ISSUED SHARES ARE VALIDLY ISSUED, OUTSTANDING, FULLY PAID AND
NON-ASSESSABLE, AND OWNED BENEFICIALLY AND OF RECORD BY THE PERSONS IDENTIFIED
ON SCHEDULE 3.15, AND (C) THE TYPE OF ENTITY OF THE BORROWER AND EACH OF ITS
SUBSIDIARIES.  ALL OF THE ISSUED AND OUTSTANDING EQUITY INTERESTS OF THE
SUBSIDIARIES OWNED BY ANY LOAN PARTY HAVE BEEN (TO THE EXTENT SUCH CONCEPTS ARE
RELEVANT WITH RESPECT TO SUCH OWNERSHIP INTERESTS) DULY AUTHORIZED AND ISSUED
AND ARE FULLY PAID AND NON-ASSESSABLE FREE AND CLEAR OF ALL LIENS (OTHER THAN
LIENS CREATED UNDER THE LOAN DOCUMENTS AND THE ABL SECURITY DOCUMENTS).

 

SECTION 3.16.  SECURITY INTEREST IN COLLATERAL.  THE PROVISIONS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS CREATE LEGAL AND VALID LIENS ON ALL THE
COLLATERAL IN FAVOR OF THE AGENT, FOR THE BENEFIT OF THE AGENT AND THE LENDERS;
AND UPON THE PROPER FILING OF UCC FINANCING STATEMENTS REQUIRED PURSUANT TO
PARAGRAPH (L) OF ARTICLE IV AND ANY MORTGAGES WITH RESPECT TO MORTGAGED
PROPERTIES, SUCH LIENS CONSTITUTE PERFECTED AND CONTINUING LIENS ON THE
COLLATERAL, SECURING THE SECURED OBLIGATIONS, ENFORCEABLE AGAINST THE APPLICABLE
LOAN PARTY AND ALL THIRD PARTIES, AND HAVING PRIORITY OVER ALL OTHER LIENS ON
THE COLLATERAL EXCEPT IN THE CASE OF (A) PERMITTED LIENS, TO THE EXTENT ANY SUCH
PERMITTED LIENS WOULD HAVE PRIORITY OVER THE LIENS IN FAVOR OF THE AGENT
PURSUANT TO ANY APPLICABLE LAW, (B) LIENS PERFECTED ONLY BY POSSESSION
(INCLUDING POSSESSION OF ANY CERTIFICATE OF TITLE) TO THE EXTENT THE AGENT HAS
NOT OBTAINED OR DOES NOT MAINTAIN POSSESSION OF SUCH COLLATERAL AND (C) SUBJECT
TO AND AS PROVIDED FOR UNDER THE TERMS OF THE INTERCREDITOR AGREEMENT, THE LIENS
GRANTED UNDER THE ABL SECURITY DOCUMENTS.

 

SECTION 3.17.  LABOR DISPUTES.  AS OF THE CLOSING DATE, EXCEPT AS, INDIVIDUALLY
OR IN THE AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT: (A) THERE ARE NO STRIKES, LOCKOUTS OR SLOWDOWNS AGAINST ANY LOAN PARTY
PENDING OR, TO THE KNOWLEDGE OF THE BORROWER, THREATENED, (B) THE HOURS WORKED
BY AND PAYMENTS MADE TO EMPLOYEES OF THE LOAN PARTIES AND THE SUBSIDIARIES HAVE
NOT BEEN IN VIOLATION OF THE FAIR LABOR STANDARDS ACT OR ANY OTHER APPLICABLE
FEDERAL, STATE, LOCAL OR FOREIGN LAW DEALING WITH SUCH MATTERS AND (C) ALL
PAYMENTS DUE FROM ANY LOAN PARTY OR ANY SUBSIDIARY, ON ACCOUNT OF WAGES AND
EMPLOYEE HEALTH AND WELFARE INSURANCE AND OTHER BENEFITS, HAVE BEEN PAID OR
ACCRUED AS A LIABILITY ON THE BOOKS OF THE LOAN PARTY OR SUCH SUBSIDIARY TO THE
EXTENT REQUIRED BY GAAP.  EXCEPT (I) AS, INDIVIDUALLY OR IN THE AGGREGATE, WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR (II) AS SET
FORTH ON SCHEDULE 3.17, THE CONSUMMATION OF THE TRANSACTIONS WILL NOT GIVE RISE
TO A RIGHT OF TERMINATION OR RIGHT OF RENEGOTIATION ON THE PART OF ANY UNION
UNDER ANY COLLECTIVE BARGAINING AGREEMENT TO WHICH HOLDINGS, THE BORROWER OR ANY
OF THE SUBSIDIARIES (OR ANY PREDECESSOR) IS A PARTY OR BY WHICH HOLDINGS, THE
BORROWER OR ANY OF THE SUBSIDIARIES (OR ANY PREDECESSOR) IS BOUND.

 

56

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

 

SECTION 3.18.  FEDERAL RESERVE REGULATIONS.  (A)  ON THE CLOSING DATE, NONE OF
THE COLLATERAL IS MARGIN STOCK.

 

(B)  NONE OF HOLDINGS, THE BORROWER AND THE SUBSIDIARIES IS ENGAGED PRINCIPALLY,
OR AS ONE OF ITS IMPORTANT ACTIVITIES, IN THE BUSINESS OF EXTENDING CREDIT FOR
THE PURPOSE OF BUYING OR CARRYING MARGIN STOCK.

 

(C)  NO PART OF THE PROCEEDS OF ANY LOAN WILL BE USED, WHETHER DIRECTLY OR
INDIRECTLY, AND WHETHER IMMEDIATELY, INCIDENTALLY OR ULTIMATELY, (I) TO PURCHASE
OR CARRY MARGIN STOCK (OTHER THAN PURSUANT TO, OR IN CONNECTION WITH, THE
MERGER) OR TO EXTEND CREDIT TO OTHERS FOR THE PURPOSE OF PURCHASING OR CARRYING
MARGIN STOCK OR TO REFUND INDEBTEDNESS ORIGINALLY INCURRED FOR SUCH PURPOSE, OR
(II) FOR ANY PURPOSE THAT ENTAILS A VIOLATION OF, OR THAT IS INCONSISTENT WITH,
THE PROVISIONS OF REGULATION T, U OR X.

 

SECTION 3.19.  TRANSACTION DOCUMENTS.  HOLDINGS AND THE BORROWER HAVE DELIVERED
TO THE AGENT A COMPLETE AND CORRECT COPY OF THE MERGER AGREEMENT (INCLUDING ALL
SCHEDULES, EXHIBITS, AMENDMENTS, SUPPLEMENTS AND MODIFICATIONS THERETO). NEITHER
HOLDINGS, THE BORROWER NOR ANY OTHER LOAN PARTY OR, TO THE KNOWLEDGE OF
HOLDINGS, THE BORROWER OR EACH LOAN PARTY, ANY OTHER PERSON PARTY THERETO IS IN
DEFAULT IN THE PERFORMANCE OR COMPLIANCE WITH ANY MATERIAL PROVISIONS THEREOF. 
EXCEPT AS WOULD NOT REASONABLY BE EXPECTED, INDIVIDUALLY OR IN THE AGGREGATE, TO
HAVE A MATERIAL ADVERSE EFFECT, ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN
THE MERGER AGREEMENT WERE TRUE AND CORRECT IN ALL MATERIAL RESPECTS AT THE TIME
AS OF WHICH SUCH REPRESENTATIONS AND WARRANTIES WERE MADE (OR DEEMED MADE).

 

SECTION 3.20.  SENIOR INDEBTEDNESS.  THE OBLIGATIONS CONSTITUTE “SENIOR
INDEBTEDNESS” AND “DESIGNATED SENIOR INDEBTEDNESS” UNDER AND AS DEFINED IN THE
SENIOR SUBORDINATED NOTE DOCUMENTS.

 

ARTICLE IV

 

CONDITIONS

 

The obligations of the Lenders to make Loans hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(A) CREDIT AGREEMENT AND LOAN DOCUMENTS.  THE AGENT (OR ITS COUNSEL) SHALL HAVE
RECEIVED (I) FROM EACH PARTY HERETO EITHER (A) A COUNTERPART OF THIS AGREEMENT
SIGNED ON BEHALF OF SUCH PARTY OR (B) WRITTEN EVIDENCE SATISFACTORY TO THE AGENT
(WHICH MAY INCLUDE FACSIMILE TRANSMISSION OF A SIGNED SIGNATURE PAGE OF THIS
AGREEMENT) THAT SUCH PARTY HAS SIGNED A COUNTERPART OF THIS AGREEMENT AND
(II) DULY EXECUTED COPIES OF THE LOAN DOCUMENTS AND SUCH OTHER CERTIFICATES,
DOCUMENTS, INSTRUMENTS AND AGREEMENTS AS THE AGENT SHALL REASONABLY REQUEST IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, INCLUDING ANY PROMISSORY NOTES REQUESTED BY A LENDER PURSUANT TO
SECTION 2.07.

 

(B) LEGAL OPINIONS.  THE AGENT SHALL HAVE RECEIVED, ON BEHALF OF ITSELF AND THE
LENDERS ON THE CLOSING DATE, A FAVORABLE WRITTEN OPINION OF (I) CLEARY GOTTLIEB
STEEN & HAMILTON LLP, SPECIAL COUNSEL FOR HOLDINGS AND THE BORROWER, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE AGENT AND (II) LOCAL OR OTHER COUNSEL
REASONABLY SATISFACTORY TO THE AGENT AS SPECIFIED ON SCHEDULE 4.01(B), IN EACH
CASE (A) DATED THE CLOSING DATE, (B) ADDRESSED TO THE AGENT AND THE LENDERS AND
(C) IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE AGENT AND COVERING SUCH
OTHER MATTERS RELATING TO THE LOAN DOCUMENTS AND THE TRANSACTIONS AS THE AGENT
SHALL REASONABLY REQUEST.

 

57

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

 

(C) FINANCIAL STATEMENTS AND PROJECTIONS.  THE LENDERS SHALL HAVE RECEIVED
(I) THE FINANCIAL STATEMENTS AND OPINION REFERRED TO IN SECTION 3.04(A) AND
(B) AND (II)  PROJECTIONS IN CUSTOMARY FORM FOR THE BORROWER AND ITS
SUBSIDIARIES ON A PRO FORMA BASIS FOR COMPLETION OF THE TRANSACTIONS FOR THE
FISCAL YEARS 2006 THROUGH 2010.

 

(D) CLOSING CERTIFICATES; CERTIFIED CERTIFICATE OF INCORPORATION; GOOD STANDING
CERTIFICATES.  THE AGENT SHALL HAVE RECEIVED (I) A CERTIFICATE OF EACH LOAN
PARTY, DATED THE CLOSING DATE AND EXECUTED BY ITS SECRETARY OR ASSISTANT
SECRETARY (OR, IN THE CASE OF NM NEVADA TRUST, ITS CLERK), WHICH SHALL
(A) CERTIFY THE RESOLUTIONS OF ITS BOARD OF DIRECTORS, MEMBERS OR OTHER BODY
AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS TO
WHICH IT IS A PARTY, (B) IDENTIFY BY NAME AND TITLE AND BEAR THE SIGNATURES OF
THE FINANCIAL OFFICERS AND ANY OTHER OFFICERS OF SUCH LOAN PARTY AUTHORIZED TO
SIGN THE LOAN DOCUMENTS TO WHICH IT IS A PARTY, AND (C) CONTAIN APPROPRIATE
ATTACHMENTS, INCLUDING THE CERTIFICATE OR ARTICLES OF INCORPORATION OR
ORGANIZATION OF EACH LOAN PARTY CERTIFIED BY THE RELEVANT AUTHORITY OF THE
JURISDICTION OF ORGANIZATION OF SUCH LOAN PARTY AND A TRUE AND CORRECT COPY OF
ITS BY-LAWS OR OPERATING, MANAGEMENT OR PARTNERSHIP AGREEMENT, AND (II) A GOOD
STANDING CERTIFICATE FOR EACH LOAN PARTY FROM ITS JURISDICTION OF ORGANIZATION.

 

(E) NO DEFAULT CERTIFICATE.  THE AGENT SHALL HAVE RECEIVED A CERTIFICATE, SIGNED
BY THE CHIEF FINANCIAL OFFICER OF THE BORROWER, DATED THE CLOSING DATE
(I) STATING THAT NO DEFAULT HAS OCCURRED AND IS CONTINUING (OTHER THAN ANY
DEFAULT ARISING PURSUANT TO CLAUSE (C) OF ARTICLE VII WITH RESPECT TO ANY OF THE
REPRESENTATIONS ENUMERATED CLAUSE (II) BELOW) AND (II) STATING THAT THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III (EXCEPT THE
REPRESENTATIONS CONTAINED IN SECTIONS 3.04, 3.05, 3.06, 3.07, 3.09, 3.10, 3.11,
3.12, 3.13, 3.14, 3.15, 3.17 AND 3.19) ARE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF SUCH DATE.

 

(F) FEES. THE LENDERS AND THE AGENT SHALL HAVE RECEIVED ALL FEES REQUIRED TO BE
PAID, AND ALL EXPENSES FOR WHICH INVOICES HAVE BEEN PRESENTED (INCLUDING THE
REASONABLE DOCUMENTED FEES AND EXPENSES OF LEGAL COUNSEL), ON OR BEFORE THE
CLOSING DATE.

 

(G) LIEN AND JUDGMENT SEARCHES.  THE AGENT SHALL HAVE RECEIVED THE RESULTS OF
RECENT LIEN AND JUDGMENT SEARCHES IN EACH OF THE JURISDICTIONS CONTEMPLATED BY
THE PERFECTION CERTIFICATE, AND SUCH SEARCH SHALL REVEAL NO MATERIAL JUDGMENTS
AND NO LIENS ON ANY OF THE ASSETS OF THE LOAN PARTIES EXCEPT FOR PERMITTED LIENS
OR LIENS DISCHARGED ON OR PRIOR TO THE CLOSING DATE PURSUANT TO A PAY-OFF LETTER
OR OTHER DOCUMENTATION REASONABLY SATISFACTORY TO THE AGENT.

 

(H) PAY-OFF LETTER.  THE AGENT SHALL HAVE RECEIVED A PAY-OFF LETTER REASONABLY
SATISFACTORY TO IT IN RESPECT OF THE REPAYMENT OF THE EXISTING CREDIT AGREEMENT
FROM THE PROCEEDS OF THE LOANS, CONFIRMING THAT ALL LIENS UPON ANY OF THE
PROPERTY OF THE LOAN PARTIES CONSTITUTING COLLATERAL ARISING UNDER THE EXISTING
CREDIT AGREEMENT, IF ANY, WILL BE TERMINATED CONCURRENTLY WITH SUCH PAYMENT AND
ALL LETTERS OF CREDIT ISSUED OR GUARANTEED AS PART OF SUCH INDEBTEDNESS SHALL
HAVE BEEN CASH COLLATERALIZED OR SUPPORTED BY A LETTER OF CREDIT ISSUED UNDER
THE SENIOR SECURED ASSET-BASED REVOLVING CREDIT FACILITY.

 

(I) SOLVENCY.  THE AGENT SHALL HAVE RECEIVED A CUSTOMARY CERTIFICATE FROM THE
CHIEF FINANCIAL OFFICER OF THE BORROWER CERTIFYING THAT HOLDINGS AND ITS
SUBSIDIARIES, ON A CONSOLIDATED BASIS AFTER GIVING EFFECT TO THE TRANSACTIONS TO
OCCUR ON THE CLOSING DATE, ARE SOLVENT (WITHIN THE MEANING OF SECTION 3.13).

 

(J) EQUITY CONTRIBUTION.  THE EQUITY CONTRIBUTION SHALL HAVE BEEN MADE IN FULL.

 

58

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

 

(K) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES.  THE AGENT SHALL HAVE RECEIVED
(I) THE CERTIFICATES REPRESENTING THE SHARES OF CAPITAL STOCK PLEDGED PURSUANT
TO THE SECURITY AGREEMENT, TOGETHER WITH AN UNDATED STOCK POWER FOR EACH SUCH
CERTIFICATE EXECUTED IN BLANK BY A DULY AUTHORIZED OFFICER OF THE PLEDGOR
THEREOF AND (II) EACH PROMISSORY NOTE (IF ANY) PLEDGED TO THE AGENT PURSUANT TO
THE SECURITY AGREEMENT ENDORSED (WITHOUT RECOURSE) IN BLANK (OR ACCOMPANIED BY
AN EXECUTED TRANSFER FORM IN BLANK) BY THE PLEDGOR THEREOF.

 

(L) PERFECTION CERTIFICATE; FILINGS, REGISTRATIONS AND RECORDINGS.  THE AGENT
SHALL HAVE RECEIVED A COMPLETED PERFECTION CERTIFICATE DATED THE CLOSING DATE
AND SIGNED BY A RESPONSIBLE OFFICER OF THE BORROWER, TOGETHER WITH ALL
ATTACHMENTS CONTEMPLATED THEREBY.  EACH DOCUMENT (INCLUDING ANY UNIFORM
COMMERCIAL CODE FINANCING STATEMENT) REQUIRED BY THE COLLATERAL DOCUMENTS OR
UNDER LAW OR REASONABLY REQUESTED BY THE AGENT TO BE FILED, REGISTERED OR
RECORDED IN ORDER TO CREATE IN FAVOR OF THE AGENT, FOR THE BENEFIT OF THE
LENDERS, A PERFECTED LIEN ON THE COLLATERAL DESCRIBED THEREIN, PRIOR AND
SUPERIOR IN RIGHT TO ANY OTHER PERSON (OTHER THAN WITH RESPECT TO PERMITTED
LIENS), SHALL BE IN PROPER FORM FOR FILING, REGISTRATION OR RECORDATION. THE
AGENT, ON BEHALF OF THE LENDERS, SHALL HAVE A SECURITY INTEREST IN THE
COLLATERAL OF THE TYPE AND PRIORITY DESCRIBED IN THE COLLATERAL DOCUMENTS
(SUBJECT TO LIENS EXPRESSLY PERMITTED BY SECTION 6.02 AND, SUBJECT TO THE TERMS
OF THE INTERCREDITOR AGREEMENT, THE LIENS GRANTED UNDER THE ABL SECURITY
DOCUMENTS).

 

(M) MORTGAGES, ETC.  THE AGENT SHALL HAVE RECEIVED, WITH RESPECT TO EACH
MORTGAGED PROPERTY, EACH OF THE FOLLOWING, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE AGENT:

 

(i) a Mortgage on such property;

 

(ii) evidence that a counterpart of the Mortgage has been recorded or delivered
to the appropriate title insurance company subject to arrangements reasonably
satisfactory to the Agent for recording promptly following the closing
hereunder, in each case, in the place necessary, in the Agent’s reasonable
judgment, to create a valid and enforceable first priority Lien (subject to the
Intercreditor Agreement) in favor of the Agent for the benefit of itself and the
Lenders;

 

(iii) ALTA or other mortgagee’s title policy;

 

(iv) an opinion of counsel in the state in which such parcel of real property is
located in form and substance and from counsel reasonably satisfactory to the
Agent; and

 

(v) such other information, documentation, and certifications as may be
reasonably required by the Agent.

 

provided, that, (i) the amount of debt secured by each Mortgage in any State
that imposes a mortgage tax shall be reasonably limited to an amount less than
the Commitments so as to avoid multiple mortgage tax assessments and
(ii) notwithstanding the foregoing, the conditions set forth in this clause (m)
shall be considered satisfied even if the Borrower does not deliver such items
by the Closing Date, so long as the Borrower has used commercially reasonable
efforts to obtain and deliver such items to Agent by the Closing Date.

 

(N) CLOSING DATE MATERIAL ADVERSE EFFECT.  SINCE JULY 31, 2004 AND EXCEPT AS
CONTEMPLATED BY THE MERGER AGREEMENT, THERE SHALL NOT HAVE BEEN ANY EVENT,
CONDITION, DEVELOPMENT OR OCCURRENCE THAT, HAS HAD, OR WOULD REASONABLY BE
EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, ANY CHANGE, CIRCUMSTANCE,
EFFECT, EVENT OR OCCURRENCE THAT WOULD BE

 

59

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

 

MATERIALLY ADVERSE TO THE ASSETS, LIABILITIES, BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS OF NEIMAN MARCUS AND ITS SUBSIDIARIES TAKEN AS A WHOLE,
OTHER THAN ANY CHANGE OR EFFECT RESULTING FROM (I) CHANGES IN GENERAL ECONOMIC
CONDITIONS, (II) GENERAL CHANGES OR DEVELOPMENTS IN THE INDUSTRIES IN WHICH
NEIMAN MARCUS AND ITS SUBSIDIARIES OPERATE, (III) THE ANNOUNCEMENT OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING ANY TERMINATION
OF, REDUCTION IN OR SIMILAR NEGATIVE IMPACT ON RELATIONSHIPS, CONTRACTUAL OR
OTHERWISE, WITH ANY CUSTOMERS, SUPPLIERS, DISTRIBUTORS, PARTNERS OR EMPLOYEES OF
NEIMAN MARCUS AND ITS SUBSIDIARIES TO THE EXTENT DUE TO THE ANNOUNCEMENT AND
PERFORMANCE OF THE MERGER AGREEMENT OR THE IDENTITY OF THE PARTIES TO THE MERGER
AGREEMENT, OR THE PERFORMANCE OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING COMPLIANCE WITH THE COVENANTS SET FORTH THEREIN,
(IV) ANY ACTIONS REQUIRED UNDER THE MERGER AGREEMENT TO OBTAIN ANY APPROVAL OR
AUTHORIZATION UNDER APPLICABLE ANTITRUST OR COMPETITION LAWS FOR THE
CONSUMMATION OF THE MERGER CONTEMPLATED BY THE MERGER AGREEMENT OR (V) CHANGES
IN ANY TAX LAWS OR REGULATIONS OR APPLICABLE ACCOUNTING REGULATIONS OR
PRINCIPLES, UNLESS, IN THE CASE OF THE FOREGOING CLAUSES (I) AND (II), SUCH
CHANGES REFERRED TO THEREIN HAVE A DISPROPORTIONATE EFFECT ON NEIMAN MARCUS AND
ITS SUBSIDIARIES TAKEN AS A WHOLE RELATIVE TO OTHER PARTICIPANTS IN THE
INDUSTRIES IN WHICH NEIMAN MARCUS AND ITS SUBSIDIARIES OPERATE.  FOR THE
PURPOSES OF THIS CLAUSE (N), “INDUSTRIES IN WHICH NEIMAN MARCUS AND ITS
SUBSIDIARIES OPERATE” MEANS THE LUXURY RETAIL SEGMENTS OF THE APPAREL,
ACCESSORIES, JEWELRY, BEAUTY AND DECORATIVE HOME PRODUCTS INDUSTRIES.

 

(O) OTHER INDEBTEDNESS.  THE 2008 NOTES CALL FOR REDEMPTION AND THE EXISTING
BANK DEBT REFINANCING SHALL HAVE BEEN EFFECTED.  AFTER GIVING EFFECT TO THE
TRANSACTIONS AND THE OTHER TRANSACTIONS CONTEMPLATED HEREBY, HOLDINGS, THE
BORROWER AND THE SUBSIDIARIES SHALL NOT HAVE ANY OUTSTANDING INDEBTEDNESS OR
PREFERRED STOCK OTHER THAN (A) THE OBLIGATIONS, (B) INDEBTEDNESS UNDER THE
SENIOR SECURED ASSET-BASED REVOLVING CREDIT FACILITY, (C) THE NEW NOTES, (D) THE
2028 DEBENTURES, (E) PREFERRED EQUITY INTERESTS ISSUED IN CONNECTION WITH THE
EQUITY CONTRIBUTION, IF ANY, (F) THE 2008 NOTES AND (G)  INDEBTEDNESS SET FORTH
ON SCHEDULE 6.01.

 

(P) INSURANCE.  THE AGENT SHALL HAVE RECEIVED EVIDENCE OF INSURANCE COVERAGE IN
FORM, SCOPE, AND SUBSTANCE REASONABLY SATISFACTORY TO THE AGENT AND OTHERWISE IN
COMPLIANCE WITH THE TERMS OF SECTION 5.10 AND SECTION 4.11 OF THE SECURITY
AGREEMENT.

 

(Q) MERGER.  THE MERGER SHALL BE CONSUMMATED SUBSTANTIALLY SIMULTANEOUSLY WITH
THE MAKING OF THE LOANS, IN ACCORDANCE WITH THE MERGER AGREEMENT (WHICH SHALL
NOT HAVE BEEN AMENDED OR MODIFIED PRIOR TO THE CLOSING DATE IN A MANNER ADVERSE
TO THE LENDERS IN ANY MATERIAL RESPECT WITHOUT THE PRIOR WRITTEN CONSENT OF THE
JOINT LEAD ARRANGERS).

 

(R) OTHER FINANCING.  THE BORROWER SHALL HAVE (I) RECEIVED GROSS CASH PROCEEDS
OF NOT LESS THAN $1,200,000,000 FROM THE ISSUANCE OF THE NEW NOTES AND
(II) OBTAINED THE SENIOR SECURED ASSET-BASED REVOLVING CREDIT FACILITY.  THE
TERMS AND CONDITIONS OF THE NEW NOTES AND THE SENIOR SECURED ASSET-BASED
REVOLVING CREDIT FACILITY SHALL BE REASONABLY SATISFACTORY TO THE AGENT.

 

(S) INTERCREDITOR AGREEMENT.  THE INTERCREDITOR AGREEMENT SHALL HAVE BEEN DULY
EXECUTED AND DELIVERED BY EACH PARTY THERETO, AND SHALL BE IN FULL FORCE AND
EFFECT.

 

(T) PATRIOT ACT.  THE AGENT SHALL HAVE RECEIVED ALL DOCUMENTATION AND OTHER
INFORMATION REASONABLY REQUESTED BY IT THAT IS REQUIRED BY REGULATORY
AUTHORITIES UNDER APPLICABLE “KNOW YOUR CUSTOMER” AND ANTI-MONEY LAUNDERING
RULES AND REGULATIONS, INCLUDING THE USA PATRIOT ACT.

 

60

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

 

The Agent shall notify the Borrower and the Lenders of the Closing Date, and
such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans hereunder shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 9.02) at or prior to 5:00 p.m., New York City time, on the Termination
Date (as defined in the Merger Agreement) (and, in the event such conditions are
not so satisfied or waived, the Commitments shall terminate at such time).

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, each Loan Party executing this Agreement covenants and agrees, jointly and
severally with all of the Loan Parties, with the Lenders that:

 

SECTION 5.01.  FINANCIAL STATEMENTS AND OTHER INFORMATION.  THE BORROWER WILL
FURNISH TO THE AGENT (WHICH WILL PROMPTLY FURNISH SUCH INFORMATION TO THE
LENDERS):

 

(A) WITHIN NINETY (90) DAYS AFTER THE END OF EACH FISCAL YEAR OF THE BORROWER,
ITS AUDITED CONSOLIDATED BALANCE SHEET AND RELATED STATEMENTS OF EARNINGS,
SHAREHOLDERS’ EQUITY AND CASH FLOWS AS OF THE END OF AND FOR SUCH YEAR, SETTING
FORTH IN EACH CASE IN COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS FISCAL YEAR,
ALL REPORTED ON BY DELOITTE & TOUCHE LLP OR OTHER INDEPENDENT PUBLIC ACCOUNTANTS
OF RECOGNIZED NATIONAL STANDING AND REASONABLY ACCEPTABLE TO THE AGENT (WITHOUT
A “GOING CONCERN” OR LIKE QUALIFICATION OR EXCEPTION OR EXCEPTION AS TO THE
SCOPE OF SUCH AUDIT) TO THE EFFECT THAT SUCH CONSOLIDATED FINANCIAL STATEMENTS
PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE BORROWER AND ITS CONSOLIDATED SUBSIDIARIES ON A CONSOLIDATED
BASIS IN ACCORDANCE WITH GAAP;

 

(B) WITHIN FORTY-FIVE (45) DAYS AFTER THE END OF EACH OF THE FIRST THREE FISCAL
QUARTERS OF EACH FISCAL YEAR OF THE BORROWER, ITS CONSOLIDATED BALANCE SHEET AND
RELATED STATEMENTS OF EARNINGS, SHAREHOLDERS’ EQUITY AND CASH FLOWS AS OF THE
END OF AND FOR SUCH FISCAL QUARTER AND THE THEN ELAPSED PORTION OF THE FISCAL
YEAR, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE FIGURES FOR THE
CORRESPONDING PERIOD OR PERIODS OF (OR, IN THE CASE OF THE BALANCE SHEET, AS OF
THE END OF) THE PREVIOUS FISCAL YEAR, ALL CERTIFIED BY ONE OF ITS FINANCIAL
OFFICERS AS PRESENTING FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE BORROWER AND ITS CONSOLIDATED SUBSIDIARIES ON A
CONSOLIDATED BASIS IN ACCORDANCE WITH GAAP, SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES;

 

(C) CONCURRENTLY WITH ANY DELIVERY OF FINANCIAL STATEMENTS UNDER CLAUSE (A) OR
(B) ABOVE, A CERTIFICATE OF A FINANCIAL OFFICER OF THE BORROWER IN SUBSTANTIALLY
THE FORM OF EXHIBIT C (I) CERTIFYING THAT NO EVENT OF DEFAULT OR DEFAULT HAS
OCCURRED AND, IF AN EVENT OF DEFAULT OR DEFAULT HAS OCCURRED, SPECIFYING THE
DETAILS THEREOF AND ANY ACTION TAKEN OR PROPOSED TO BE TAKEN WITH RESPECT
THERETO AND (II) SETTING FORTH, IN THE CASE OF THE FINANCIAL STATEMENTS
DELIVERED UNDER CLAUSE (A), (X) THE BORROWER’S CALCULATION OF EXCESS CASH FLOW
FOR SUCH FISCAL YEAR AND (Y) A LIST OF NAMES OF ALL IMMATERIAL SUBSIDIARIES (IF
ANY), THAT EACH SUBSIDIARY SET FORTH ON SUCH LIST INDIVIDUALLY QUALIFIES AS AN
IMMATERIAL SUBSIDIARY AND THAT ALL DOMESTIC SUBSIDIARIES LISTED AS IMMATERIAL
SUBSIDIARIES IN THE AGGREGATE COMPRISE LESS THAN 5% OF TOTAL ASSETS OF THE
BORROWER AND THE SUBSIDIARIES AT THE END OF THE PERIOD TO WHICH SUCH FINANCIAL
STATEMENTS RELATE AND

 

61

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

 

REPRESENTED (ON A CONTRIBUTION BASIS) LESS THAN 5% OF EBITDA FOR THE PERIOD TO
WHICH SUCH FINANCIAL STATEMENTS RELATE;

 

(D) CONCURRENTLY WITH ANY DELIVERY OF FINANCIAL STATEMENTS UNDER CLAUSE
(A) ABOVE, A CERTIFICATE OF THE ACCOUNTING FIRM THAT REPORTED ON SUCH FINANCIAL
STATEMENTS STATING WHETHER THEY OBTAINED KNOWLEDGE DURING THE COURSE OF THEIR
EXAMINATION OF SUCH FINANCIAL STATEMENTS OF ANY DEFAULT OR EVENT OF DEFAULT
(WHICH CERTIFICATE MAY BE LIMITED TO THE EXTENT REQUIRED BY ACCOUNTING RULES OR
GUIDELINES);

 

(E) CONCURRENTLY WITH ANY DELIVERY OF CONSOLIDATED FINANCIAL STATEMENTS UNDER
CLAUSE (A) OR (B) ABOVE, THE RELATED UNAUDITED CONSOLIDATING FINANCIAL
STATEMENTS REFLECTING THE ADJUSTMENTS NECESSARY TO ELIMINATE THE ACCOUNTS OF
UNRESTRICTED SUBSIDIARIES (IF ANY) FROM SUCH CONSOLIDATED FINANCIAL STATEMENTS;

 

(F) WITHIN NINETY (90) DAYS AFTER THE BEGINNING OF EACH FISCAL YEAR, A DETAILED
CONSOLIDATED BUDGET OF THE BORROWER AND ITS SUBSIDIARIES FOR SUCH FISCAL YEAR
(INCLUDING A PROJECTED CONSOLIDATED BALANCE SHEET AND THE RELATED CONSOLIDATED
STATEMENTS OF PROJECTED CASH FLOWS AND PROJECTED INCOME AS OF THE END OF AND FOR
SUCH FISCAL YEAR), INCLUDING A SUMMARY OF THE UNDERLYING MATERIAL ASSUMPTIONS
WITH RESPECT THERETO (COLLECTIVELY, THE “BUDGET”), AND, AS SOON AS AVAILABLE,
SIGNIFICANT REVISIONS, IF ANY, OF SUCH BUDGET, WHICH BUDGET OR REVISIONS THERETO
SHALL IN EACH CASE BE ACCOMPANIED BY THE STATEMENT OF A FINANCIAL OFFICER OF THE
BORROWER TO THE EFFECT THAT, TO THE BEST OF HIS KNOWLEDGE, THE BUDGET IS A
REASONABLE ESTIMATE FOR THE PERIOD COVERED THEREBY;

 

(G) AS SOON AS PRACTICABLE UPON THE REASONABLE REQUEST OF THE AGENT, DELIVER AN
UPDATED PERFECTION CERTIFICATE (OR, TO THE EXTENT SUCH REQUEST RELATES TO
SPECIFIED INFORMATION CONTAINED IN THE PERFECTION CERTIFICATE, SUCH INFORMATION)
REFLECTING ALL CHANGES SINCE THE DATE OF THE INFORMATION MOST RECENTLY RECEIVED
PURSUANT TO THIS CLAUSE (G) OR SECTION 5.11;

 

(H) PROMPTLY AFTER THE SAME BECOME PUBLICLY AVAILABLE, COPIES OF ALL PERIODIC
AND OTHER REPORTS, PROXY STATEMENTS AND OTHER MATERIALS PUBLICLY FILED BY THE
BORROWER OR ANY SUBSIDIARY WITH THE SEC, OR WITH ANY NATIONAL SECURITIES
EXCHANGE, OR, AFTER AN INITIAL PUBLIC OFFERING OF SHARES OF CAPITAL STOCK OF THE
BORROWER, DISTRIBUTED BY THE BORROWER TO ITS SHAREHOLDERS GENERALLY, AS THE CASE
MAY BE;

 

(I) PROMPTLY, A COPY OF ANY FINAL “MANAGEMENT LETTER” RECEIVED FROM THE
BORROWER’S INDEPENDENT PUBLIC ACCOUNTANTS TO THE EXTENT SUCH INDEPENDENT PUBLIC
ACCOUNTANTS HAVE CONSENTED TO THE DELIVERY OF SUCH MANAGEMENT LETTER TO THE
AGENT UPON THE REQUEST OF THE BORROWER;

 

(J) PROMPTLY FOLLOWING THE AGENT’S REQUEST THEREFOR, ALL DOCUMENTATION AND OTHER
INFORMATION THAT THE AGENT REASONABLY REQUESTS ON ITS BEHALF OR ON BEHALF OF ANY
LENDER IN ORDER TO COMPLY WITH ITS ONGOING OBLIGATIONS UNDER APPLICABLE “KNOW
YOUR CUSTOMER” AND ANTI-MONEY LAUNDERING RULES AND REGULATIONS, INCLUDING THE
USA PATRIOT ACT; AND

 

(K) AS PROMPTLY AS REASONABLY PRACTICABLE FROM TIME TO TIME FOLLOWING THE
AGENT’S REQUEST THEREFOR, SUCH OTHER INFORMATION REGARDING THE OPERATIONS,
BUSINESS AFFAIRS AND FINANCIAL CONDITION OF HOLDINGS, THE BORROWER OR ANY
SUBSIDIARY, OR COMPLIANCE WITH THE TERMS OF ANY LOAN DOCUMENT, AS THE AGENT MAY
REASONABLY REQUEST (ON BEHALF OF ITSELF OR ANY LENDER).

 

Notwithstanding the foregoing, the obligations in clauses (a) and (b) of this
Section 5.01 may be satisfied with respect to financial information of the
Borrower and its Subsidiaries by furnishing

 

62

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

 

(A) the applicable financial statements of Holdings (or any direct or indirect
parent of Holdings) or (B) the Borrower’s or Holdings’ (or any direct or
indirect parent thereof), as applicable, Form 10-K or 10-Q, as applicable, filed
with the SEC; provided that, with respect to each of clauses (A) and (B), (i) to
the extent such information relates to Holdings (or a parent thereof), such
information is accompanied by consolidating information that explains in
reasonable detail the differences between the information relating to Holdings
(or such parent), on the one hand, and the information relating to the Borrower
and its Subsidiaries on a standalone basis, on the other hand and (ii) to the
extent such information is in lieu of information required to be provided under
clause (a) of this Section 5.01, such materials are accompanied by a report and
opinion of Deloitte & Touche LLP or other independent public accountants of
recognized national standing and reasonably acceptable to the Agent, which
report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit.

 

Documents required to be delivered pursuant to clauses (a), (b) or (h) of this
Section 5.01 may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts such
documents, or provides a link thereto on the Borrower’s website on the Internet
at the website address listed on Schedule 9.01; or (ii) on which such documents
are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and the Agent have access
(whether a commercial, third-party website or whether sponsored by the Agent);
provided that:  (i) upon written request by the Agent, the Borrower shall
deliver paper copies of such documents to the Agent for further distribution to
each Lender until a written request to cease delivering paper copies is given by
the Agent and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Agent of the posting of any such documents and provide to
the Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the compliance
certificates required by clause (c) of this Section 5.01 to the Agent.

 

The financial statements required to be delivered pursuant to clause (b) of this
Section 5.01 with respect to the first fiscal quarter after the Closing Date
shall not be required to contain all purchase accounting adjustments relating to
the Transactions to the extent it is not practicable to include any such
adjustments in such financial statements.

 

SECTION 5.02.  NOTICES OF MATERIAL EVENTS.  THE BORROWER WILL FURNISH TO THE
AGENT WRITTEN NOTICE OF THE FOLLOWING PROMPTLY AFTER ANY RESPONSIBLE OFFICER OF
HOLDINGS OR THE BORROWER OBTAINS KNOWLEDGE THEREOF:

 

(A) THE OCCURRENCE OF ANY EVENT OF DEFAULT OR DEFAULT;

 

(B) THE FILING OR COMMENCEMENT OF, OR ANY WRITTEN THREAT OR NOTICE OF INTENTION
OF ANY PERSON TO FILE OR COMMENCE, ANY ACTION, SUIT OR PROCEEDING, WHETHER AT
LAW OR IN EQUITY OR BY OR BEFORE ANY GOVERNMENTAL AUTHORITY OR IN ARBITRATION,
AGAINST HOLDINGS, THE BORROWER OR ANY OF THE SUBSIDIARIES AS TO WHICH AN ADVERSE
DETERMINATION IS REASONABLY PROBABLE AND WHICH, IF ADVERSELY DETERMINED, WOULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

 

(C) ANY LOSS, DAMAGE, OR DESTRUCTION TO THE COLLATERAL IN THE AMOUNT OF
$10,000,000 OR MORE, WHETHER OR NOT COVERED BY INSURANCE;

 

(D) ANY AND ALL DEFAULT NOTICES RECEIVED UNDER OR WITH RESPECT TO ANY LEASED
LOCATION OR PUBLIC WAREHOUSE WHERE ANY MATERIAL COLLATERAL IS LOCATED;

 

63

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

 

(E) THE OCCURRENCE OF ANY ERISA EVENT THAT, TOGETHER WITH ALL OTHER ERISA EVENTS
THAT HAVE OCCURRED AND ARE CONTINUING, WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT; AND

 

(F) ANY OTHER DEVELOPMENT THAT RESULTS IN, OR WOULD REASONABLY BE EXPECTED TO
RESULT IN, A MATERIAL ADVERSE EFFECT.

 

Each notice delivered under this Section 5.02 shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.

 

SECTION 5.03.  EXISTENCE; CONDUCT OF BUSINESS.  EACH LOAN PARTY WILL, AND WILL
CAUSE EACH SUBSIDIARY TO, DO OR CAUSE TO BE DONE ALL THINGS REASONABLY NECESSARY
TO PRESERVE, RENEW AND KEEP IN FULL FORCE AND EFFECT ITS LEGAL EXISTENCE AND THE
RIGHTS, QUALIFICATIONS, LICENSES, PERMITS, FRANCHISES, GOVERNMENTAL
AUTHORIZATIONS, INTELLECTUAL PROPERTY RIGHTS, LICENSES AND PERMITS (EXCEPT AS
SUCH WOULD OTHERWISE REASONABLY EXPIRE, BE ABANDONED OR PERMITTED TO LAPSE IN
THE ORDINARY COURSE OF BUSINESS), NECESSARY OR DESIRABLE IN THE NORMAL CONDUCT
OF ITS BUSINESS, AND MAINTAIN ALL REQUISITE AUTHORITY TO CONDUCT ITS BUSINESS IN
EACH JURISDICTION IN WHICH ITS BUSINESS IS CONDUCTED, EXCEPT (I) OTHER THAN WITH
RESPECT TO HOLDINGS’ OR THE BORROWER’S EXISTENCE, TO THE EXTENT SUCH FAILURE TO
DO SO WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR
(II) PURSUANT TO A TRANSACTION PERMITTED BY SECTION 6.03.

 

SECTION 5.04.  PAYMENT OF OBLIGATIONS.  EACH LOAN PARTY WILL, AND WILL CAUSE
EACH SUBSIDIARY TO, PAY OR DISCHARGE ALL MATERIAL TAX LIABILITIES, BEFORE THE
SAME SHALL BECOME DELINQUENT OR IN DEFAULT, EXCEPT WHERE (A) THE VALIDITY OR
AMOUNT THEREOF IS BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS,
(B) SUCH LOAN PARTY OR SUCH SUBSIDIARY HAS SET ASIDE ON ITS BOOKS ADEQUATE
RESERVES WITH RESPECT THERETO IN ACCORDANCE WITH GAAP AND (C) THE FAILURE TO
MAKE PAYMENT PENDING SUCH CONTEST WOULD NOT REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE EFFECT.

 

SECTION 5.05.  MAINTENANCE OF PROPERTIES.  EACH LOAN PARTY WILL, AND WILL CAUSE
EACH SUBSIDIARY TO (A) AT ALL TIMES MAINTAIN AND PRESERVE ALL MATERIAL PROPERTY
NECESSARY TO THE NORMAL CONDUCT OF ITS BUSINESS IN GOOD REPAIR, WORKING ORDER
AND CONDITION, ORDINARY WEAR AND TEAR EXCEPTED AND CASUALTY OR CONDEMNATION
EXCEPTED AND (B) MAKE, OR CAUSE TO BE MADE, ALL NEEDFUL AND PROPER REPAIRS,
RENEWALS, ADDITIONS, IMPROVEMENTS AND REPLACEMENTS THERETO AS NECESSARY IN
ACCORDANCE WITH PRUDENT INDUSTRY PRACTICE IN ORDER THAT THE BUSINESS CARRIED ON
IN CONNECTION THEREWITH, IF ANY, MAY BE PROPERLY CONDUCTED AT ALL TIMES, EXCEPT,
IN EACH CASE, WHERE THE FAILURE TO DO SO, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

SECTION 5.06.  BOOKS AND RECORDS; INSPECTION RIGHTS.  EACH LOAN PARTY WILL, AND
WILL CAUSE EACH SUBSIDIARY TO, (I) KEEP PROPER BOOKS OF RECORD AND ACCOUNT IN
ACCORDANCE WITH GAAP IN WHICH FULL, TRUE AND CORRECT ENTRIES ARE MADE OF ALL
DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS AND ACTIVITIES AND
(II) PERMIT ANY REPRESENTATIVES DESIGNATED BY THE AGENT (INCLUDING EMPLOYEES OF
THE AGENT OR ANY CONSULTANTS, ACCOUNTANTS, LAWYERS AND APPRAISERS RETAINED BY
THE AGENT), UPON REASONABLE PRIOR NOTICE, TO VISIT AND INSPECT ITS PROPERTIES,
TO EXAMINE AND MAKE EXTRACTS FROM ITS BOOKS AND RECORDS, INCLUDING ENVIRONMENTAL
ASSESSMENT REPORTS AND PHASE I OR PHASE II STUDIES, AND TO DISCUSS ITS AFFAIRS,
FINANCES AND CONDITION WITH ITS OFFICERS AND INDEPENDENT ACCOUNTANTS, ALL AT
SUCH REASONABLE TIMES DURING NORMAL BUSINESS HOURS AND AS OFTEN AS REASONABLY
REQUESTED.

 

SECTION 5.07.  MAINTENANCE OF RATINGS.  HOLDINGS AND THE BORROWER SHALL USE
THEIR COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE CREDIT FACILITIES PROVIDED
FOR HEREIN TO BE CONTINUOUSLY RATED BY S&P AND MOODY’S.

 

64

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

 

SECTION 5.08.  COMPLIANCE WITH LAWS.  EACH LOAN PARTY WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, COMPLY IN ALL MATERIAL RESPECTS WITH ALL REQUIREMENTS OF LAW
APPLICABLE TO IT OR ITS PROPERTY, EXCEPT WHERE THE FAILURE TO DO SO,
INDIVIDUALLY OR IN THE AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE EFFECT.

 

SECTION 5.09.  USE OF PROCEEDS.  THE PROCEEDS OF THE LOANS WILL BE USED ONLY FOR
THE PURPOSES SPECIFIED IN THE INTRODUCTORY STATEMENT TO THIS AGREEMENT.  NO PART
OF THE PROCEEDS OF ANY LOAN WILL BE USED, WHETHER DIRECTLY OR INDIRECTLY, FOR
ANY PURPOSE THAT WOULD ENTAIL A VIOLATION OF REGULATIONS T, U OR X.

 

SECTION 5.10.  INSURANCE.  EACH LOAN PARTY WILL, AND WILL CAUSE EACH SUBSIDIARY
TO, MAINTAIN, WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE COMPANIES
(A) INSURANCE IN SUCH AMOUNTS AND AGAINST SUCH RISKS, AS ARE CUSTOMARILY
MAINTAINED BY SIMILARLY SITUATED COMPANIES ENGAGED IN THE SAME OR SIMILAR
BUSINESSES OPERATING IN THE SAME OR SIMILAR LOCATIONS (AFTER GIVING EFFECT TO
ANY SELF-INSURANCE REASONABLE AND CUSTOMARY FOR SIMILARLY SITUATED COMPANIES)
AND (B) ALL INSURANCE REQUIRED PURSUANT TO THE COLLATERAL DOCUMENTS (AND SHALL
CAUSE THE AGENT TO BE LISTED AS A LOSS PAYEE (TOGETHER WITH ANY OTHER LOSS PAYEE
IN ACCORDANCE WITH THE INTERCREDITOR AGREEMENT) ON PROPERTY AND CASUALTY
POLICIES COVERING LOSS OR DAMAGE TO COLLATERAL AND AS AN ADDITIONAL INSURED ON
LIABILITY POLICIES).  THE BORROWER WILL FURNISH TO THE AGENT, UPON REQUEST,
INFORMATION IN REASONABLE DETAIL AS TO THE INSURANCE SO MAINTAINED.

 

SECTION 5.11.  ADDITIONAL COLLATERAL; FURTHER ASSURANCES.  (A)  SUBJECT TO
APPLICABLE LAW, THE BORROWER AND EACH SUBSIDIARY THAT IS A LOAN PARTY SHALL
CAUSE (I) EACH OF ITS DOMESTIC SUBSIDIARIES (OTHER THAN ANY IMMATERIAL
SUBSIDIARY (EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH (E) OF THIS SECTION 5.11)
OR UNRESTRICTED SUBSIDIARY) FORMED OR ACQUIRED AFTER THE DATE OF THIS AGREEMENT
IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT THAT IS REQUIRED TO BECOME A
SUBSIDIARY GUARANTOR PURSUANT TO SECTION 6.08 AND (II) ANY SUCH DOMESTIC
SUBSIDIARY THAT WAS AN IMMATERIAL SUBSIDIARY BUT, AS OF THE END OF THE MOST
RECENTLY ENDED FISCAL QUARTER OF THE BORROWER HAS CEASED TO QUALIFY AS AN
IMMATERIAL SUBSIDIARY, TO BECOME A LOAN PARTY AS PROMPTLY THEREAFTER AS
REASONABLY PRACTICABLE BY EXECUTING A JOINDER AGREEMENT IN SUBSTANTIALLY THE
FORM SET FORTH AS EXHIBIT D HERETO (THE “JOINDER AGREEMENT”). UPON EXECUTION AND
DELIVERY THEREOF, EACH SUCH PERSON (I) SHALL AUTOMATICALLY BECOME A LOAN
GUARANTOR HEREUNDER AND THEREUPON SHALL HAVE ALL OF THE RIGHTS, BENEFITS,
DUTIES, AND OBLIGATIONS IN SUCH CAPACITY UNDER THE LOAN DOCUMENTS AND (II) WILL
SIMULTANEOUSLY THEREWITH OR AS SOON AS PRACTICABLE THEREAFTER GRANT LIENS TO THE
AGENT, FOR THE BENEFIT OF THE AGENT AND THE LENDERS AND EACH OTHER SECURED PARTY
AT SUCH TIME PARTY TO OR BENEFITING FROM THE INTERCREDITOR AGREEMENT OR THE
SECURITY AGREEMENT (INCLUDING, IF APPLICABLE, THE HOLDERS OF THE 2028 DEBENTURES
OR THE 2008 NOTES), IN EACH CASE TO THE EXTENT REQUIRED BY THE TERMS THEREOF, IN
ANY PROPERTY (SUBJECT TO THE LIMITATIONS WITH RESPECT TO EQUITY INTERESTS SET
FORTH IN PARAGRAPH (B) OF THIS SECTION 5.11, THE LIMITATIONS WITH RESPECT TO
REAL PROPERTY SET FORTH IN PARAGRAPH (F) OF THIS SECTION 5.11 AND ANY OTHER
LIMITATIONS SET FORTH IN THE SECURITY AGREEMENT) OF SUCH LOAN PARTY WHICH
CONSTITUTES COLLATERAL, ON SUCH TERMS AS MAY BE REQUIRED PURSUANT TO THE TERMS
OF THE COLLATERAL DOCUMENTS AND IN SUCH PRIORITY AS MAY BE REQUIRED PURSUANT TO
THE TERMS OF THE INTERCREDITOR AGREEMENT.

 

(B)  THE BORROWER AND EACH SUBSIDIARY THAT IS A LOAN PARTY WILL CAUSE (I) 100%
OF THE ISSUED AND OUTSTANDING EQUITY INTERESTS OF EACH OF ITS DOMESTIC
SUBSIDIARIES, OTHER THAN ANY DOMESTIC SUBSIDIARY TAXED AS A PARTNERSHIP FOR
FEDERAL INCOME TAX PURPOSES THAT HOLDS CAPITAL STOCK OF A FOREIGN SUBSIDIARY
WHOSE EQUITY INTERESTS ARE PLEDGED PURSUANT TO CLAUSE (II) BELOW, AND (II) 65%
OF THE ISSUED AND OUTSTANDING EQUITY INTERESTS ENTITLED TO VOTE (WITHIN THE
MEANING OF TREAS. REG. SECTION 1.956-2(C)(2)) AND 100% OF THE ISSUED AND
OUTSTANDING EQUITY INTERESTS NOT ENTITLED TO VOTE (WITHIN THE MEANING OF TREAS.
REG. SECTION 1.956-2(C)(2)) IN EACH FOREIGN SUBSIDIARY DIRECTLY OWNED BY THE
BORROWER OR ANY SUBSIDIARY THAT IS A LOAN PARTY TO BE SUBJECT AT ALL TIMES TO A
FIRST PRIORITY PERFECTED LIEN IN FAVOR OF THE AGENT PURSUANT TO THE TERMS AND
CONDITIONS OF THE LOAN DOCUMENTS OR OTHER SECURITY DOCUMENTS AS THE AGENT SHALL
REASONABLY REQUEST; PROVIDED, HOWEVER THIS PARAGRAPH (B) SHALL NOT REQUIRE THE
BORROWER OR

 

65

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

 

ANY SUBSIDIARY TO GRANT A SECURITY INTEREST IN (I) ANY EQUITY INTERESTS OF A
SUBSIDIARY TO THE EXTENT A PLEDGE OF SUCH EQUITY INTERESTS IN FAVOR OF THE AGENT
OR TO SECURE ANY DEBT SECURITIES OF THE BORROWER OR ANY SUBSIDIARY THAT WOULD BE
ENTITLED TO SUCH A SECURITY INTEREST WOULD REQUIRE SEPARATE FINANCIAL STATEMENTS
OF A SUBSIDIARY TO BE FILED WITH THE SEC (OR ANY OTHER GOVERNMENT AGENCY) UNDER
RULE 3-10 OR RULE 3-16 OF REGULATION S-X UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR THERETO) OR ANY OTHER LAW, RULE OR REGULATION OR (II) THE EQUITY
INTERESTS OF ANY UNRESTRICTED SUBSIDIARY.

 

(C)  WITHOUT LIMITING THE FOREGOING, EACH LOAN PARTY WILL, AND WILL CAUSE EACH
SUBSIDIARY THAT IS A LOAN PARTY TO, EXECUTE AND DELIVER, OR CAUSE TO BE EXECUTED
AND DELIVERED, TO THE AGENT SUCH DOCUMENTS, AGREEMENTS AND INSTRUMENTS, AND WILL
TAKE OR CAUSE TO BE TAKEN SUCH FURTHER ACTIONS (INCLUDING THE FILING AND
RECORDING OF FINANCING STATEMENTS, FIXTURE FILINGS, MORTGAGES, DEEDS OF TRUST
AND OTHER DOCUMENTS AND SUCH OTHER ACTIONS OR DELIVERIES OF THE TYPE REQUIRED BY
ARTICLE IV, AS APPLICABLE (INCLUDING THE DELIVERY OF THE ITEMS CONTEMPLATED BY
PARAGRAPH (M) THEREOF TO THE EXTENT THE BORROWER HAS BEEN UNABLE TO DELIVER SUCH
ITEMS BY THE CLOSING DATE AFTER HAVING USED ITS COMMERCIALLY REASONABLE EFFORTS
TO OBTAIN AND DELIVER SUCH ITEMS BY THE CLOSING DATE)), WHICH MAY BE REQUIRED BY
LAW OR WHICH THE AGENT MAY, FROM TIME TO TIME, REASONABLY REQUEST TO CARRY OUT
THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND TO
ENSURE PERFECTION AND PRIORITY OF THE LIENS CREATED OR INTENDED TO BE CREATED BY
THE COLLATERAL DOCUMENTS, ALL AT THE EXPENSE OF THE LOAN PARTIES.

 

(D)  SUBJECT TO THE LIMITATIONS SET FORTH OR REFERRED TO IN THIS SECTION 5.11,
IF ANY MATERIAL ASSETS (INCLUDING ANY REAL PROPERTY OR IMPROVEMENTS THERETO OR
ANY INTEREST THEREIN) ARE ACQUIRED BY THE BORROWER OR ANY SUBSIDIARY THAT IS A
LOAN PARTY AFTER THE CLOSING DATE (OTHER THAN ASSETS CONSTITUTING COLLATERAL
UNDER THE SECURITY AGREEMENT THAT BECOME SUBJECT TO THE LIEN IN FAVOR OF THE
AGENT UPON ACQUISITION THEREOF), THE BORROWER WILL NOTIFY THE AGENT AND THE
LENDERS THEREOF, AND, IF REQUESTED BY THE AGENT OR THE REQUIRED LENDERS, THE
BORROWER WILL CAUSE SUCH ASSETS TO BE SUBJECTED TO A LIEN SECURING THE SECURED
OBLIGATIONS AND WILL TAKE, AND CAUSE THE LOAN PARTIES THAT ARE SUBSIDIARIES TO
TAKE, SUCH ACTIONS AS SHALL BE NECESSARY OR REASONABLY REQUESTED BY THE AGENT TO
GRANT AND PERFECT SUCH LIENS, INCLUDING ACTIONS DESCRIBED IN PARAGRAPH (C) OF
THIS SECTION, ALL AT THE EXPENSE OF THE LOAN PARTIES.

 

(E)  IF, AT ANY TIME AND FROM TIME TO TIME AFTER THE CLOSING DATE, SUBSIDIARIES
THAT ARE NOT LOAN PARTIES BECAUSE THEY ARE IMMATERIAL SUBSIDIARIES COMPRISE IN
THE AGGREGATE MORE THAN 5% OF TOTAL ASSETS AS OF THE END OF THE MOST RECENTLY
ENDED FISCAL QUARTER OF THE BORROWER OR MORE THAN 5% OF EBITDA OF THE BORROWER
AND THE RESTRICTED SUBSIDIARIES FOR THE PERIOD OF FOUR CONSECUTIVE FISCAL
QUARTERS AS OF THE END OF THE MOST RECENTLY ENDED FISCAL QUARTER OF THE
BORROWER, THEN THE BORROWER SHALL, NOT LATER THAN 45 DAYS AFTER THE DATE BY
WHICH FINANCIAL STATEMENTS FOR SUCH QUARTER ARE REQUIRED TO BE DELIVERED
PURSUANT TO THIS AGREEMENT, CAUSE ONE OR MORE SUCH SUBSIDIARIES TO BECOME
ADDITIONAL LOAN PARTIES (NOTWITHSTANDING THAT SUCH SUBSIDIARIES ARE,
INDIVIDUALLY, IMMATERIAL SUBSIDIARIES) SUCH THAT THE FOREGOING CONDITION CEASES
TO BE TRUE.

 

(F)  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 5.11, REAL
PROPERTY REQUIRED TO BE MORTGAGED UNDER THIS SECTION 5.11 SHALL BE LIMITED TO
REAL PROPERTY LOCATED IN THE U.S. THAT ARE FULL-LINE NEIMAN MARCUS RETAIL STORES
OWNED IN FEE BY A LOAN PARTY OR LEASED BY A LOAN PARTY PURSUANT TO A FINANCEABLE
LEASE OR OTHER REAL PROPERTY OWNED IN FEE BY A LOAN PARTY HAVING A FAIR MARKET
VALUE AT THE TIME OF THE ACQUISITION THEREOF OF $5,000,000 OR MORE (PROVIDED
THAT THE COST OF PERFECTING SUCH LIEN IS NOT UNREASONABLE IN RELATION TO THE
BENEFITS TO THE LENDERS OF THE SECURITY AFFORDED THEREBY IN THE AGENT’S
REASONABLE JUDGMENT AFTER CONSULTATION WITH THE BORROWER; PROVIDED FURTHER THAT
THE BORROWER SHALL USE COMMERCIALLY REASONABLE EFFORTS TO ENSURE THAT ALL LEASES
ENTERED INTO AFTER THE CLOSING DATE BY THE BORROWER AND THE OTHER LOAN PARTIES
WILL BE FINANCEABLE LEASES).

 

(G)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE LOAN PARTIES
SHALL NOT BE REQUIRED TO INCLUDE AS COLLATERAL ANY EXCLUDED ASSETS (AS DEFINED
IN THE SECURITY AGREEMENT).

 

66

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

 

SECTION 5.12.  MAINTENANCE OF CORPORATE SEPARATENESS.  EACH LOAN PARTY WILL, AND
WILL CAUSE EACH SUBSIDIARY TO, SATISFY CUSTOMARY CORPORATE OR LIMITED LIABILITY
COMPANY FORMALITIES, INCLUDING THE MAINTENANCE OF CORPORATE AND BUSINESS
RECORDS.

 

SECTION 5.13.  2008 NOTES REDEMPTION.  WITHIN FORTY (40) DAYS AFTER THE CLOSING
DATE, THE BORROWER SHALL DEPOSIT WITH THE TRUSTEE UNDER THE INDENTURE GOVERNING
THE 2008 NOTES SUFFICIENT FUNDS FOR THE FULL SATISFACTION AND DISCHARGE OF THE
ENTIRE OUTSTANDING PRINCIPAL AMOUNT OF THE 2008 NOTES.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document have been paid in full, the Loan Parties covenant and agree,
jointly and severally, with the Lenders that:

 

SECTION 6.01.  LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK AND PREFERRED STOCK.  (A)  THE BORROWER WILL NOT, AND WILL
NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, DIRECTLY OR INDIRECTLY, CREATE, INCUR,
ISSUE, ASSUME, GUARANTEE OR OTHERWISE BECOME DIRECTLY OR INDIRECTLY LIABLE,
CONTINGENTLY OR OTHERWISE (COLLECTIVELY, “INCUR” AND COLLECTIVELY, AN
“INCURRENCE”) WITH RESPECT TO ANY INDEBTEDNESS (INCLUDING ACQUIRED
INDEBTEDNESS), AND THE BORROWER WILL NOT ISSUE ANY SHARES OF DISQUALIFIED STOCK
AND WILL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO ISSUE ANY SHARES OF
DISQUALIFIED STOCK OR PREFERRED STOCK; PROVIDED THAT THE BORROWER MAY INCUR
INDEBTEDNESS (INCLUDING ACQUIRED INDEBTEDNESS) OR ISSUE SHARES OF DISQUALIFIED
STOCK, AND ANY RESTRICTED SUBSIDIARY MAY INCUR INDEBTEDNESS (INCLUDING ACQUIRED
INDEBTEDNESS), ISSUE SHARES OF DISQUALIFIED STOCK OR ISSUE SHARES OF PREFERRED
STOCK, IF THE FIXED CHARGE COVERAGE RATIO ON A CONSOLIDATED BASIS FOR THE
BORROWER’S AND ITS RESTRICTED SUBSIDIARIES’ MOST RECENTLY ENDED FOUR FULL FISCAL
QUARTERS FOR WHICH INTERNAL FINANCIAL STATEMENTS ARE AVAILABLE IMMEDIATELY
PRECEDING THE DATE ON WHICH SUCH ADDITIONAL INDEBTEDNESS IS INCURRED OR SUCH
DISQUALIFIED STOCK OR PREFERRED STOCK IS ISSUED WOULD HAVE BEEN AT LEAST 2.00 TO
1.00, DETERMINED ON A PRO FORMA BASIS (INCLUDING A PRO FORMA APPLICATION OF THE
NET PROCEEDS THEREFROM), AS IF THE ADDITIONAL INDEBTEDNESS HAD BEEN INCURRED, OR
THE DISQUALIFIED STOCK OR PREFERRED STOCK HAD BEEN ISSUED, AS THE CASE MAY BE,
AND THE APPLICATION OF THE PROCEEDS THEREFROM HAD OCCURRED AT THE BEGINNING OF
SUCH FOUR-QUARTER PERIOD; PROVIDED THAT THE AMOUNT OF INDEBTEDNESS (INCLUDING
ACQUIRED INDEBTEDNESS), DISQUALIFIED STOCK AND PREFERRED STOCK THAT MAY BE
INCURRED OR ISSUED, AS APPLICABLE, PURSUANT TO THE FOREGOING BY RESTRICTED
SUBSIDIARIES THAT ARE NOT SUBSIDIARY GUARANTORS SHALL NOT EXCEED $100,000,000 AT
ANY ONE TIME OUTSTANDING;

 

(B)  THE LIMITATIONS SET FORTH IN PARAGRAPH (A) OF THIS SECTION 6.01 SHALL NOT
APPLY TO ANY OF THE FOLLOWING ITEMS (COLLECTIVELY, “PERMITTED DEBT”):

 

(I) INDEBTEDNESS INCURRED PURSUANT TO THE SENIOR SECURED ASSET-BASED REVOLVING
CREDIT FACILITY BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY; PROVIDED THAT
IMMEDIATELY AFTER GIVING EFFECT TO ANY SUCH INCURRENCE, THE AGGREGATE PRINCIPAL
AMOUNT OF ALL INDEBTEDNESS INCURRED UNDER THIS CLAUSE (I) AND THEN OUTSTANDING
DOES NOT EXCEED THE GREATER OF (A) $800,000,000 LESS UP TO $150,000,000 IN THE
AGGREGATE OF ALL PRINCIPAL PAYMENTS WITH RESPECT TO SUCH INDEBTEDNESS MADE
PURSUANT TO SECTION 2.20(B)(I)(A) AND (B) THE LESSER OF (1) 80% OF THE VALUE OF
THE ELIGIBLE INVENTORY OF THE BORROWER AND ITS RESTRICTED SUBSIDIARIES VALUED AT
THE LOWER OF COST OR MARKET VALUE AND (2) 85% OF THE NET ORDERLY LIQUIDATION
VALUE OF THE ELIGIBLE INVENTORY OF THE BORROWER AND ITS RESTRICTED SUBSIDIARIES;

 

67

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

 

(II) INDEBTEDNESS INCURRED PURSUANT TO THE SENIOR SECURED TERM LOAN FACILITY BY
THE BORROWER OR ANY RESTRICTED SUBSIDIARY; PROVIDED THAT AFTER GIVING EFFECT TO
ANY SUCH INCURRENCE, THE AGGREGATE PRINCIPAL AMOUNT OF ALL INDEBTEDNESS INCURRED
UNDER THIS CLAUSE (II) AND THEN OUTSTANDING DOES NOT EXCEED $1,975,000,000 LESS
UP TO $250,000,000 IN THE AGGREGATE OF ALL PRINCIPAL PAYMENTS WITH RESPECT TO
SUCH INDEBTEDNESS MADE PURSUANT TO SECTION 2.20(A)(I) OR SECTION 2.20(B)(I)(A);

 

(III) THE INCURRENCE BY THE BORROWER AND ANY SUBSIDIARY GUARANTOR OF
INDEBTEDNESS REPRESENTED BY THE SENIOR NOTES ISSUED ON THE CLOSING DATE
(INCLUDING ANY GUARANTEES THEREOF) AND THE EXCHANGE NOTES AND RELATED EXCHANGE
GUARANTEES TO BE ISSUED IN EXCHANGE FOR THE SENIOR NOTES PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT (OTHER THAN ANY ADDITIONAL SENIOR NOTES (AS
DEFINED IN THE SENIOR NOTES INDENTURE));

 

(IV) THE INCURRENCE BY THE BORROWER AND ANY SUBSIDIARY GUARANTOR OF INDEBTEDNESS
REPRESENTED BY THE SENIOR SUBORDINATED NOTES ISSUED ON THE CLOSING DATE
(INCLUDING ANY GUARANTEES THEREOF) AND THE EXCHANGE NOTES AND RELATED EXCHANGE
GUARANTEES TO BE ISSUED IN EXCHANGE FOR THE SENIOR SUBORDINATED NOTES PURSUANT
TO THE REGISTRATION RIGHTS AGREEMENT (OTHER THAN ANY ADDITIONAL SENIOR
SUBORDINATED NOTES (AS DEFINED IN THE SENIOR SUBORDINATED NOTES INDENTURE));

 

(V) INDEBTEDNESS EXISTING ON THE DATE HEREOF AND SET FORTH IN SCHEDULE 6.01;

 

(VI) INDEBTEDNESS (INCLUDING CAPITALIZED LEASE OBLIGATIONS), DISQUALIFIED STOCK
AND PREFERRED STOCK INCURRED BY THE BORROWER OR ANY OF THE RESTRICTED
SUBSIDIARIES, TO FINANCE THE DEVELOPMENT, CONSTRUCTION, PURCHASE, LEASE (OTHER
THAN THE LEASE, PURSUANT TO SALE AND LEASE-BACK TRANSACTIONS, OF PROPERTY (REAL
OR PERSONAL), EQUIPMENT OR OTHER FIXED OR CAPITAL ASSETS OWNED BY THE BORROWER
OR ANY RESTRICTED SUBSIDIARY AS OF THE CLOSING DATE OR ACQUIRED BY THE BORROWER
OR ANY RESTRICTED SUBSIDIARY AFTER THE CLOSING DATE IN EXCHANGE FOR, OR WITH THE
PROCEEDS OF THE SALE OF, SUCH ASSETS OWNED BY THE BORROWER OR ANY RESTRICTED
SUBSIDIARY AS OF THE CLOSING DATE), REPAIRS, ADDITIONS OR IMPROVEMENT OF
PROPERTY (REAL OR PERSONAL), EQUIPMENT OR OTHER FIXED OR CAPITAL ASSETS THAT ARE
USED OR USEFUL IN A SIMILAR BUSINESS, WHETHER THROUGH THE DIRECT PURCHASE OF
ASSETS OR THE CAPITAL STOCK OF ANY PERSON OWNING SUCH ASSETS; PROVIDED THAT THE
AGGREGATE AMOUNT OF INDEBTEDNESS, DISQUALIFIED STOCK AND PREFERRED STOCK
INCURRED PURSUANT TO THIS CLAUSE (VI) DOES NOT EXCEED $250,000,000 AT ANY ONE
TIME OUTSTANDING;

 

(VII) INDEBTEDNESS INCURRED BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY
CONSTITUTING REIMBURSEMENT OBLIGATIONS WITH RESPECT TO LETTERS OF CREDIT ISSUED
IN THE ORDINARY COURSE OF BUSINESS, INCLUDING LETTERS OF CREDIT IN RESPECT OF
WORKERS’ COMPENSATION CLAIMS, OR OTHER INDEBTEDNESS WITH RESPECT TO
REIMBURSEMENT TYPE OBLIGATIONS REGARDING WORKERS’ COMPENSATION CLAIMS; PROVIDED
THAT UPON THE DRAWING OF SUCH LETTERS OF CREDIT OR THE INCURRENCE OF SUCH
INDEBTEDNESS, SUCH OBLIGATIONS ARE REIMBURSED WITHIN THIRTY (30) DAYS FOLLOWING
SUCH DRAWING OR INCURRENCE;

 

(VIII) INDEBTEDNESS ARISING FROM AGREEMENTS OF THE BORROWER OR A RESTRICTED
SUBSIDIARY PROVIDING FOR INDEMNIFICATION, ADJUSTMENT OF PURCHASE PRICE OR
SIMILAR OBLIGATIONS, IN EACH CASE, INCURRED OR ASSUMED IN CONNECTION WITH THE
DISPOSITION OF ANY BUSINESS, ASSETS OR A SUBSIDIARY, OTHER THAN GUARANTEES OF
INDEBTEDNESS INCURRED BY ANY PERSON ACQUIRING ALL OR ANY PORTION OF SUCH
BUSINESS, ASSETS OR SUBSIDIARY FOR THE PURPOSE OF FINANCING SUCH ACQUISITION;
PROVIDED THAT (A) SUCH INDEBTEDNESS IS NOT REFLECTED ON THE BALANCE SHEET OF THE
BORROWER OR ANY RESTRICTED SUBSIDIARY (CONTINGENT OBLIGATIONS REFERRED TO IN A
FOOTNOTE TO FINANCIAL STATEMENTS AND NOT

 

68

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

 

OTHERWISE REFLECTED ON THE BALANCE SHEET SHALL NOT BE DEEMED TO BE REFLECTED ON
SUCH BALANCE SHEET FOR PURPOSES OF THIS CLAUSE (A)) AND (B) THE MAXIMUM
ASSUMABLE LIABILITY IN RESPECT OF ALL SUCH INDEBTEDNESS SHALL AT NO TIME EXCEED
THE GROSS PROCEEDS INCLUDING NONCASH PROCEEDS (THE FAIR MARKET VALUE OF SUCH
NONCASH PROCEEDS BEING MEASURED AT THE TIME RECEIVED AND WITHOUT GIVING EFFECT
TO ANY SUBSEQUENT CHANGES IN VALUE) ACTUALLY RECEIVED BY THE BORROWER AND THE
RESTRICTED SUBSIDIARIES IN CONNECTION WITH SUCH DISPOSITION;

 

(IX) INDEBTEDNESS OF THE BORROWER TO A RESTRICTED SUBSIDIARY; PROVIDED THAT ANY
SUCH INDEBTEDNESS OWING TO A RESTRICTED SUBSIDIARY THAT IS NOT A SUBSIDIARY
GUARANTOR IS SUBORDINATED IN RIGHT OF PAYMENT TO THE OBLIGATIONS; PROVIDED,
FURTHER, THAT THAT ANY SUBSEQUENT ISSUANCE OR TRANSFER OF ANY CAPITAL STOCK OR
ANY OTHER EVENT WHICH RESULTS IN ANY SUCH RESTRICTED SUBSIDIARY CEASING TO BE A
RESTRICTED SUBSIDIARY OR ANY OTHER SUBSEQUENT TRANSFER OF ANY SUCH INDEBTEDNESS
(EXCEPT TO THE BORROWER OR ANOTHER RESTRICTED SUBSIDIARY) SHALL BE DEEMED, IN
EACH CASE, TO BE AN INCURRENCE OF SUCH INDEBTEDNESS;

 

(X) INDEBTEDNESS OF A RESTRICTED SUBSIDIARY TO THE BORROWER OR ANOTHER
RESTRICTED SUBSIDIARY; PROVIDED THAT IF A SUBSIDIARY GUARANTOR INCURS SUCH
INDEBTEDNESS TO A RESTRICTED SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR SUCH
INDEBTEDNESS IS SUBORDINATED IN RIGHT OF PAYMENT TO THE OBLIGATIONS OF SUCH
SUBSIDIARY GUARANTOR UNDER ITS LOAN GUARANTY; PROVIDED, FURTHER, THAT ANY
SUBSEQUENT ISSUANCE OR TRANSFER OF CAPITAL STOCK OR ANY OTHER EVENT THAT RESULTS
IN ANY SUCH RESTRICTED SUBSIDIARY CEASING TO BE A RESTRICTED SUBSIDIARY OR ANY
SUBSEQUENT TRANSFER OF ANY SUCH INDEBTEDNESS (EXCEPT TO THE BORROWER OR ANOTHER
RESTRICTED SUBSIDIARY) SHALL BE DEEMED, IN EACH CASE, TO BE AN INCURRENCE OF
SUCH INDEBTEDNESS;

 

(XI) SHARES OF PREFERRED STOCK OF A RESTRICTED SUBSIDIARY ISSUED TO THE BORROWER
OR ANOTHER RESTRICTED SUBSIDIARY; PROVIDED THAT ANY SUBSEQUENT ISSUANCE OR
TRANSFER OF ANY CAPITAL STOCK OR ANY OTHER EVENT WHICH RESULTS IN ANY SUCH
RESTRICTED SUBSIDIARY CEASING TO BE A RESTRICTED SUBSIDIARY OR ANY OTHER
SUBSEQUENT TRANSFER OF ANY SUCH SHARES OF PREFERRED STOCK (EXCEPT TO THE
BORROWER OR ANOTHER RESTRICTED SUBSIDIARY) SHALL BE DEEMED, IN EACH CASE, TO BE
AN ISSUANCE OF SUCH SHARES OF PREFERRED STOCK;

 

(XII) HEDGING OBLIGATIONS (EXCLUDING HEDGING OBLIGATIONS ENTERED INTO FOR
SPECULATIVE PURPOSES) FOR THE PURPOSE OF LIMITING: (A) INTEREST RATE RISK WITH
RESPECT TO ANY INDEBTEDNESS THAT IS PERMITTED UNDER THIS AGREEMENT TO BE
OUTSTANDING, (B) EXCHANGE RATE RISK WITH RESPECT TO ANY CURRENCY EXCHANGE OR
(C) COMMODITY PRICING RISK WITH RESPECT TO ANY COMMODITY;

 

(XIII) OBLIGATIONS IN RESPECT OF PERFORMANCE, BID, APPEAL AND SURETY BONDS AND
COMPLETION GUARANTEES AND SIMILAR OBLIGATIONS PROVIDED BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY IN THE ORDINARY COURSE OF BUSINESS;

 

(XIV) (A) ANY GUARANTEE BY THE BORROWER OR A RESTRICTED SUBSIDIARY OF
INDEBTEDNESS OR OTHER OBLIGATIONS OF ANY RESTRICTED SUBSIDIARY, SO LONG AS THE
INCURRENCE OF SUCH INDEBTEDNESS BY SUCH RESTRICTED SUBSIDIARY IS PERMITTED UNDER
THE TERMS OF THIS AGREEMENT OR (B) ANY GUARANTEE BY A RESTRICTED SUBSIDIARY OF
INDEBTEDNESS OF THE BORROWER PERMITTED TO BE INCURRED UNDER THE TERMS OF THIS
AGREEMENT; PROVIDED THAT SUCH GUARANTEE IS INCURRED IN ACCORDANCE WITH
SECTION 6.08;

 

(XV) THE INCURRENCE BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY OF
INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK THAT SERVES TO EXTEND,
REPLACE, REFUND, REFINANCE, RENEW OR DEFEASE ANY INDEBTEDNESS, DISQUALIFIED
STOCK OR PREFERRED STOCK INCURRED AS PERMITTED UNDER

 

69

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

 

PARAGRAPH (A) OF THIS SECTION 6.01 AND CLAUSES (III), (IV), (V) AND (VI) ABOVE,
THIS CLAUSE (XV) AND CLAUSES (XVI) AND (XXII)(B) OF THIS PARAGRAPH (B) OR ANY
INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK ISSUED TO SO EXTEND,
REPLACE, REFUND, REFINANCE, RENEW OR DEFEASE SUCH INDEBTEDNESS, DISQUALIFIED
STOCK OR PREFERRED STOCK INCLUDING ADDITIONAL INDEBTEDNESS, DISQUALIFIED STOCK
OR PREFERRED STOCK INCURRED TO PAY PREMIUMS AND FEES IN CONNECTION THEREWITH
(THE “REFINANCING INDEBTEDNESS”) PRIOR TO ITS RESPECTIVE MATURITY; PROVIDED,
HOWEVER, THAT SUCH REFINANCING INDEBTEDNESS (A) HAS A WEIGHTED AVERAGE LIFE TO
MATURITY AT THE TIME SUCH REFINANCING INDEBTEDNESS IS INCURRED WHICH IS NOT LESS
THAN THE REMAINING WEIGHTED AVERAGE LIFE TO MATURITY OF THE INDEBTEDNESS,
DISQUALIFIED STOCK OR PREFERRED STOCK BEING EXTENDED, REPLACED, REFUNDED,
REFINANCED, RENEWED OR DEFEASED (PROVIDED THAT THIS CLAUSE (A) SHALL NOT APPLY
TO ANY REFUNDING OR REFINANCING OF ANY SENIOR INDEBTEDNESS OUTSTANDING UNDER THE
2028 DEBENTURES), (B) TO THE EXTENT SUCH REFINANCING INDEBTEDNESS EXTENDS,
REPLACES, REFUNDS, REFINANCES, RENEWS OR DEFEASES (1) INDEBTEDNESS SUBORDINATED
TO THE OBLIGATIONS OR THE LOAN GUARANTY OF ANY SUBSIDIARY GUARANTOR, SUCH
REFINANCING INDEBTEDNESS IS SUBORDINATED TO THE OBLIGATIONS OR SUCH LOAN
GUARANTY AT LEAST TO THE SAME EXTENT AS THE INDEBTEDNESS BEING EXTENDED,
REPLACED, REFUNDED, REFINANCED, RENEWED OR DEFEASED OR (2) DISQUALIFIED STOCK OR
PREFERRED STOCK, SUCH REFINANCING INDEBTEDNESS MUST BE DISQUALIFIED STOCK OR
PREFERRED STOCK, RESPECTIVELY, AND (C) SHALL NOT INCLUDE (1) INDEBTEDNESS,
DISQUALIFIED STOCK OR PREFERRED STOCK OF A SUBSIDIARY THAT IS NOT A SUBSIDIARY
GUARANTOR THAT REFINANCES INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK OF
THE BORROWER, (2) INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK OF A
SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR THAT REFINANCES INDEBTEDNESS,
DISQUALIFIED STOCK OR PREFERRED STOCK OF A SUBSIDIARY GUARANTOR OR
(3) INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK OF THE BORROWER OR A
RESTRICTED SUBSIDIARY THAT REFINANCES INDEBTEDNESS, DISQUALIFIED STOCK OR
PREFERRED STOCK OF AN UNRESTRICTED SUBSIDIARY;

 

(XVI) INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK (X) OF THE BORROWER OR
ANY OF ITS RESTRICTED SUBSIDIARIES INCURRED TO FINANCE THE ACQUISITION OF ANY
PERSON OR ASSETS OR (Y) OF PERSONS THAT ARE ACQUIRED BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY OR MERGED INTO THE BORROWER OR A RESTRICTED SUBSIDIARY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT; PROVIDED THAT EITHER (A) AFTER
GIVING EFFECT TO SUCH ACQUISITION OR MERGER, EITHER (1) THE BORROWER WOULD BE
PERMITTED TO INCUR AT LEAST $1.00 OF ADDITIONAL INDEBTEDNESS PURSUANT TO THE
FIXED CHARGE COVERAGE RATIO TEST SET FORTH IN PARAGRAPH (A) OF THIS
SECTION 6.01; OR (2) THE FIXED CHARGE COVERAGE RATIO OF THE BORROWER AND THE
RESTRICTED SUBSIDIARIES ON A CONSOLIDATED BASIS IS GREATER THAN IMMEDIATELY
PRIOR TO SUCH ACQUISITION OR MERGER; OR (B) SUCH INDEBTEDNESS, DISQUALIFIED
STOCK OR PREFERRED STOCK (1) IS NOT SECURED INDEBTEDNESS AND IS SUBORDINATED
INDEBTEDNESS WITH SUBORDINATION TERMS NO MORE FAVORABLE TO THE HOLDERS THEREOF
THAN THE SUBORDINATION TERMS SET FORTH IN THE INDENTURE GOVERNING THE SENIOR
SUBORDINATED NOTES AS IN EFFECT ON THE CLOSING DATE, (2) IS NOT INCURRED WHILE A
DEFAULT EXISTS AND NO DEFAULT SHALL RESULT THEREFROM, (3) DOES NOT MATURE (AND
IS NOT MANDATORILY REDEEMABLE IN THE CASE OF DISQUALIFIED STOCK OR PREFERRED
STOCK) AND DOES NOT REQUIRE ANY PAYMENT OF PRINCIPAL PRIOR TO MATURITY DATE AND
(4) IN THE CASE OF CLAUSE (Y) ABOVE ONLY, IS NOT INCURRED IN CONTEMPLATION OF
SUCH ACQUISITION OR MERGER;

 

(XVII) INDEBTEDNESS ARISING FROM THE HONORING BY A BANK OR OTHER FINANCIAL
INSTITUTION OF A CHECK, DRAFT OR SIMILAR INSTRUMENT DRAWN AGAINST INSUFFICIENT
FUNDS IN THE ORDINARY COURSE OF BUSINESS; PROVIDED THAT SUCH INDEBTEDNESS IS
EXTINGUISHED WITHIN TWO (2) BUSINESS DAYS OF ITS INCURRENCE;

 

(XVIII) INDEBTEDNESS OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY SUPPORTED BY A
LETTER OF CREDIT ISSUED PURSUANT TO THE SENIOR SECURED ASSET-BASED REVOLVING
CREDIT FACILITY, IN A PRINCIPAL AMOUNT NOT IN EXCESS OF THE STATED AMOUNT OF
SUCH LETTER OF CREDIT;

 

70

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

 

(XIX) INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK OF A RESTRICTED
SUBSIDIARY INCURRED TO FINANCE OR ASSUMED IN CONNECTION WITH AN ACQUISITION
WHICH, WHEN AGGREGATED WITH THE PRINCIPAL AMOUNT OF ALL OTHER INDEBTEDNESS,
DISQUALIFIED STOCK AND PREFERRED STOCK INCURRED PURSUANT TO THIS CLAUSE (XIX)
AND THEN OUTSTANDING, DOES NOT EXCEED $75,000,000 (IT BEING UNDERSTOOD THAT ANY
INDEBTEDNESS, DISQUALIFIED STOCK AND PREFERRED STOCK INCURRED PURSUANT TO THIS
CLAUSE (XIX) SHALL CEASE TO BE DEEMED INCURRED OR OUTSTANDING FOR PURPOSES OF
THIS CLAUSE (XIX) BUT SHALL BE DEEMED INCURRED PURSUANT TO PARAGRAPH (A) OF THIS
SECTION 6.01 FROM AND AFTER THE FIRST DATE ON WHICH THE BORROWER OR SUCH
RESTRICTED SUBSIDIARY COULD HAVE INCURRED SUCH INDEBTEDNESS, DISQUALIFIED STOCK
OR PREFERRED STOCK PURSUANT TO PARAGRAPH (A) OF THIS SECTION 6.01 WITHOUT
RELIANCE ON THIS CLAUSE (XIX));

 

(XX) INDEBTEDNESS INCURRED BY A FOREIGN SUBSIDIARY WHICH, WHEN AGGREGATED WITH
THE PRINCIPAL AMOUNT OF ALL OTHER INDEBTEDNESS INCURRED PURSUANT TO THIS
CLAUSE (XX) AND THEN OUTSTANDING, DOES NOT EXCEED 5.0% OF FOREIGN SUBSIDIARY
TOTAL ASSETS (IT BEING UNDERSTOOD THAT ANY INDEBTEDNESS, DISQUALIFIED STOCK AND
PREFERRED STOCK INCURRED PURSUANT TO THIS CLAUSE (XX) SHALL CEASE TO BE DEEMED
INCURRED OR OUTSTANDING FOR PURPOSES OF THIS CLAUSE (XX) BUT SHALL BE DEEMED
INCURRED PURSUANT TO PARAGRAPH (A) OF THIS SECTION 6.01 FROM AND AFTER THE FIRST
DATE ON WHICH THE BORROWER OR SUCH RESTRICTED SUBSIDIARY COULD HAVE INCURRED
SUCH INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK PURSUANT TO
PARAGRAPH (A) OF THIS SECTION 6.01 WITHOUT RELIANCE ON THIS CLAUSE (XX));

 

(XXI) INDEBTEDNESS CONSISTING OF INDEBTEDNESS ISSUED BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY TO CURRENT OR FORMER OFFICERS, MANAGERS, DIRECTORS AND
EMPLOYEES THEREOF, THEIR RESPECTIVE ESTATES, SPOUSES OR FORMER SPOUSES, IN EACH
CASE TO FINANCE THE PURCHASE OR REDEMPTION OF EQUITY INTERESTS OF THE BORROWER
OR ANY DIRECT OR INDIRECT PARENT COMPANY OF THE BORROWER TO THE EXTENT DESCRIBED
IN SECTION 6.04(B)(IV);

 

(XXII) INDEBTEDNESS, DISQUALIFIED STOCK AND PREFERRED STOCK OF THE BORROWER OR
ANY RESTRICTED SUBSIDIARY NOT OTHERWISE PERMITTED HEREUNDER IN AN AGGREGATE
PRINCIPAL AMOUNT OR LIQUIDATION PREFERENCE, WHICH, WHEN AGGREGATED WITH THE
PRINCIPAL AMOUNT AND LIQUIDATION PREFERENCE OF ALL OTHER INDEBTEDNESS,
DISQUALIFIED STOCK AND PREFERRED STOCK INCURRED PURSUANT TO THIS CLAUSE (XXII)
AND THEN OUTSTANDING, DOES NOT AT ANY ONE TIME OUTSTANDING EXCEED THE SUM OF
(A) $175,000,000 (IT BEING UNDERSTOOD THAT ANY INDEBTEDNESS, DISQUALIFIED STOCK
AND PREFERRED STOCK INCURRED PURSUANT TO THIS CLAUSE (XXII)(A) SHALL CEASE TO BE
DEEMED INCURRED OR OUTSTANDING FOR PURPOSES OF THIS CLAUSE (XXII)(A) BUT SHALL
BE DEEMED INCURRED PURSUANT TO PARAGRAPH (A) OF THIS SECTION 6.01 FROM AND AFTER
THE FIRST DATE ON WHICH THE BORROWER OR SUCH RESTRICTED SUBSIDIARY COULD HAVE
INCURRED SUCH INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK PURSUANT TO
PARAGRAPH (A) OF THIS SECTION 6.01 WITHOUT RELIANCE ON THIS CLAUSE (XXII)(A)),
PLUS (B) 200% OF THE NET CASH PROCEEDS RECEIVED BY THE BORROWER SINCE AFTER THE
CLOSING DATE FROM THE ISSUE OR SALE OF EQUITY INTERESTS OF THE BORROWER OR CASH
CONTRIBUTED TO THE CAPITAL OF THE BORROWER (IN EACH CASE, OTHER THAN PROCEEDS OF
DISQUALIFIED STOCK OR SALES OF EQUITY INTERESTS TO THE BORROWER OR ANY OF ITS
SUBSIDIARIES) AS DETERMINED IN ACCORDANCE WITH SECTIONS 6.04(A)(III)(B) AND
(A)(III)(C) TO THE EXTENT SUCH NET CASH PROCEEDS OR CASH HAVE NOT BEEN APPLIED
PURSUANT TO SUCH CLAUSES TO MAKE RESTRICTED PAYMENTS OR TO MAKE OTHER
INVESTMENTS, PAYMENTS OR EXCHANGES PURSUANT TO SECTION 6.04(B) OR TO MAKE
PERMITTED INVESTMENTS (OTHER THAN PERMITTED INVESTMENTS SPECIFIED IN
CLAUSES (A) AND (C) OF THE DEFINITION THEREOF); AND

 

(XXIII) ATTRIBUTABLE DEBT INCURRED BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY
PURSUANT TO SALE AND LEASE-BACK TRANSACTIONS OF PROPERTY (REAL OR PERSONAL),
EQUIPMENT OR OTHER FIXED OR CAPITAL ASSETS OWNED BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY AS OF THE CLOSING DATE OR

 

71

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

 

ACQUIRED BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY AFTER THE CLOSING DATE IN
EXCHANGE FOR, OR WITH THE PROCEEDS OF THE SALE OF, SUCH ASSETS OWNED BY THE
BORROWER OR ANY RESTRICTED SUBSIDIARY AS OF THE CLOSING DATE, PROVIDED THAT THE
AGGREGATE AMOUNT OF ATTRIBUTABLE DEBT INCURRED UNDER THIS CLAUSE (XXIII) DOES
NOT EXCEED $100,000,000.

 

(C)  FOR PURPOSES OF DETERMINING COMPLIANCE WITH THIS SECTION 6.01, IN THE EVENT
THAT AN ITEM OF INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK MEETS THE
CRITERIA OF MORE THAN ONE OF THE CATEGORIES OF PERMITTED DEBT DESCRIBED IN
CLAUSES (I) THROUGH (XXIII) OF PARAGRAPH (B) OF THIS SECTION 6.01 OR IS ENTITLED
TO BE INCURRED PURSUANT TO PARAGRAPH (A) OF THIS SECTION 6.01, THE BORROWER, IN
ITS SOLE DISCRETION, SHALL CLASSIFY OR RECLASSIFY, OR LATER DIVIDE, CLASSIFY OR
RECLASSIFY, SUCH ITEM OF INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK (OR
ANY PORTION THEREOF) AND SHALL ONLY BE REQUIRED TO INCLUDE THE AMOUNT AND TYPE
OF SUCH INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK IN ONE OR MORE OF
THE ABOVE CLAUSES; PROVIDED THAT ALL INDEBTEDNESS OUTSTANDING UNDER THE SENIOR
SECURED ASSET-BASED REVOLVING CREDIT FACILITY AND THE TERM LOAN FACILITY
PROVIDED FOR HEREIN ON THE CLOSING DATE SHALL BE DEEMED TO HAVE BEEN INCURRED ON
SUCH DATE IN RELIANCE ON THE EXCEPTION IN CLAUSES (I) AND (II) OF THE DEFINITION
OF “PERMITTED DEBT”.

 

(D)  THE ACCRUAL OF INTEREST, THE ACCRETION OF ACCRETED VALUE AND THE PAYMENT OF
INTEREST IN THE FORM OF ADDITIONAL INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED
STOCK SHALL NOT BE DEEMED TO BE AN INCURRENCE OF INDEBTEDNESS, DISQUALIFIED
STOCK OR PREFERRED STOCK FOR PURPOSES OF THIS SECTION 6.01.

 

(E)  FOR PURPOSES OF DETERMINING COMPLIANCE WITH ANY DOLLAR-DENOMINATED
RESTRICTION ON THE INCURRENCE OF INDEBTEDNESS, THE DOLLAR-EQUIVALENT PRINCIPAL
AMOUNT OF INDEBTEDNESS DENOMINATED IN A FOREIGN CURRENCY SHALL BE CALCULATED
BASED ON THE RELEVANT CURRENCY EXCHANGE RATE IN EFFECT ON THE DATE SUCH
INDEBTEDNESS WAS INCURRED, IN THE CASE OF TERM DEBT, OR FIRST COMMITTED, IN THE
CASE OF REVOLVING CREDIT DEBT; PROVIDED THAT IF SUCH INDEBTEDNESS IS INCURRED TO
EXTEND, REPLACE, REFUND, REFINANCE, RENEW OR DEFEASE OTHER INDEBTEDNESS
DENOMINATED IN A FOREIGN CURRENCY, AND SUCH EXTENSION, REPLACEMENT, REFUNDING,
REFINANCING, RENEWAL OR DEFEASANCE WOULD CAUSE THE APPLICABLE DOLLAR-DENOMINATED
RESTRICTION TO BE EXCEEDED IF CALCULATED AT THE RELEVANT CURRENCY EXCHANGE RATE
IN EFFECT ON THE DATE OF SUCH EXTENSION, REPLACEMENT, REFUNDING, REFINANCING,
RENEWAL OR DEFEASANCE, SUCH DOLLAR-DENOMINATED RESTRICTION SHALL BE DEEMED NOT
TO HAVE BEEN EXCEEDED SO LONG AS THE PRINCIPAL AMOUNT OF SUCH REFINANCING
INDEBTEDNESS DOES NOT EXCEED THE PRINCIPAL AMOUNT OF SUCH INDEBTEDNESS BEING
EXTENDED, REPLACED, REFUNDED, REFINANCED, RENEWED OR DEFEASED.

 

(F)  THE PRINCIPAL AMOUNT OF ANY INDEBTEDNESS INCURRED TO EXTEND, REPLACE,
REFUND, REFINANCE, RENEW OR DEFEASE OTHER INDEBTEDNESS, IF INCURRED IN A
DIFFERENT CURRENCY FROM THE INDEBTEDNESS BEING EXTENDED, REPLACED, REFUNDED,
REFINANCED, RENEWED OR DEFEASED, SHALL BE CALCULATED BASED ON THE CURRENCY
EXCHANGE RATE APPLICABLE TO THE CURRENCIES IN WHICH SUCH RESPECTIVE INDEBTEDNESS
IS DENOMINATED THAT IS IN EFFECT ON THE DATE OF SUCH EXTENSION, REPLACEMENT,
REFUNDING, REFINANCING, RENEWAL OR DEFEASANCE.

 

SECTION 6.02.  LIMITATION ON LIENS.  HOLDINGS AND THE BORROWER WILL NOT, AND THE
BORROWER WILL NOT PERMIT ANY OF THE SUBSIDIARY GUARANTORS TO, DIRECTLY OR
INDIRECTLY, CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY LIEN (THE “INITIAL
LIEN”) THAT SECURES OBLIGATIONS UNDER ANY INDEBTEDNESS ON ANY ASSET OR PROPERTY
OF HOLDINGS, THE BORROWER OR ANY SUBSIDIARY GUARANTOR NOW OWNED OR HEREAFTER
ACQUIRED, OR ANY INCOME OR PROFITS THEREFROM, OR ASSIGN OR CONVEY ANY RIGHT TO
RECEIVE INCOME THEREFROM, EXCEPT:

 

(A) IN THE CASE OF THE TERM LOAN FIRST LIEN COLLATERAL, ANY INITIAL LIEN IF
(I) SUCH INITIAL LIEN EXPRESSLY RANKS JUNIOR TO THE FIRST-PRIORITY SECURITY
INTEREST INTENDED TO BE CREATED IN FAVOR OF THE AGENT FOR THE BENEFIT OF THE
TERM LOAN SECURED PARTIES (AS DEFINED IN THE INTERCREDITOR AGREEMENT) PURSUANT
TO THE COLLATERAL DOCUMENTS; PROVIDED, HOWEVER, THAT THE TERMS OF SUCH

 

72

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

 

JUNIOR INTEREST SHALL BE NO MORE FAVORABLE TO THE BENEFICIARIES THEREOF THAN THE
TERMS CONTAINED IN THE INTERCREDITOR AGREEMENT; OR (II) SUCH INITIAL LIEN IS A
PERMITTED COLLATERAL LIEN;

 

(B) IN THE CASE OF THE REVOLVING FACILITY FIRST LIEN COLLATERAL, ANY INITIAL
LIEN IF (I) THE OBLIGATIONS OR THE APPLICABLE LOAN GUARANTY OF A LOAN PARTY, AS
THE CASE MAY BE, ARE EQUALLY AND RATABLY SECURED ON A SECOND-PRIORITY BASIS BY
SUCH REVOLVING FACILITY FIRST LIEN COLLATERAL UNTIL SUCH TIME AS SUCH INITIAL
LIEN IS RELEASED (OTHER THAN THROUGH THE EXERCISE OF REMEDIES WITH RESPECT
THERETO) OR (II) SUCH INITIAL LIEN IS A PERMITTED LIEN; AND

 

(C) IN THE CASE OF ANY OTHER ASSET OR PROPERTY, ANY INITIAL LIEN IF (I) THE
OBLIGATIONS OR THE APPLICABLE LOAN GUARANTY OF A LOAN PARTY, AS THE CASE MAY BE,
ARE EQUALLY AND RATABLY SECURED WITH (OR ON A SENIOR BASIS TO, IN THE CASE SUCH
INITIAL LIEN SECURES ANY SUBORDINATED INDEBTEDNESS) THE OBLIGATIONS SECURED BY
SUCH INITIAL LIEN OR (II) SUCH INITIAL LIEN IS A PERMITTED LIEN.

 

Any Lien created for the benefit of the Secured Parties pursuant to clause
(b) or (c) of the preceding paragraph shall provide by its terms that such Lien
shall be automatically and unconditionally released and discharged upon the
release and discharge of the Initial Lien (other than through the exercise of
remedies with respect thereto).

 

SECTION 6.03.  MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL
ASSETS. 
(A)  THE BORROWER SHALL NOT CONSOLIDATE OR MERGE WITH OR INTO OR WIND UP INTO
(WHETHER OR NOT THE BORROWER IS THE SURVIVING ENTITY), OR SELL, ASSIGN,
TRANSFER, LEASE, CONVEY OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS
PROPERTIES OR ASSETS, IN ONE OR MORE RELATED TRANSACTIONS, TO ANY PERSON UNLESS:

 

(I) THE BORROWER IS THE SURVIVING CORPORATION OR THE PERSON FORMED BY OR
SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN THE BORROWER) OR TO
WHICH SUCH SALE, ASSIGNMENT, TRANSFER, LEASE, CONVEYANCE OR OTHER DISPOSITION
SHALL HAVE BEEN MADE IS A CORPORATION ORGANIZED OR EXISTING UNDER THE LAWS OF
THE UNITED STATES OF AMERICA, ANY STATE THEREOF, THE DISTRICT OF COLUMBIA, OR
ANY TERRITORY THEREOF (THE BORROWER OR SUCH PERSON, AS THE CASE MAY BE, BEING
HEREIN CALLED THE “SUCCESSOR BORROWER”);

 

(II) THE SUCCESSOR BORROWER, IF OTHER THAN THE BORROWER, EXPRESSLY ASSUMES ALL
THE OBLIGATIONS OF THE BORROWER UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS PURSUANT TO SUPPLEMENTS TO THE LOAN DOCUMENTS OR OTHER DOCUMENTS OR
INSTRUMENTS IN FORM REASONABLY SATISFACTORY TO THE AGENT;

 

(III) IMMEDIATELY AFTER SUCH TRANSACTION, NO DEFAULT EXISTS;

 

(IV) IMMEDIATELY AFTER GIVING PRO FORMA EFFECT TO SUCH TRANSACTION, AS IF SUCH
TRANSACTION HAD OCCURRED AT THE BEGINNING OF THE APPLICABLE FOUR-QUARTER PERIOD,
(A) THE SUCCESSOR BORROWER WOULD BE PERMITTED TO INCUR AT LEAST $1.00 OF
ADDITIONAL INDEBTEDNESS PURSUANT TO THE FIXED CHARGE COVERAGE RATIO TEST SET
FORTH IN SECTION 6.01(A) OR (B) THE FIXED CHARGE COVERAGE RATIO FOR THE
SUCCESSOR BORROWER AND THE RESTRICTED SUBSIDIARIES ON A CONSOLIDATED BASIS WOULD
BE GREATER THAN SUCH RATIO FOR THE BORROWER AND THE RESTRICTED SUBSIDIARIES
IMMEDIATELY PRIOR TO SUCH TRANSACTION;

 

(V) EACH LOAN GUARANTOR, UNLESS IT IS THE OTHER PARTY TO THE TRANSACTIONS
DESCRIBED ABOVE (IN WHICH CASE CLAUSE (I)(B) OF PARAGRAPH (C) OF THIS
SECTION 6.03 OR CLAUSE (II) OF PARAGRAPH (E) OF THIS SECTION 6.03, AS
APPLICABLE, SHALL APPLY) SHALL HAVE BY SUPPLEMENT TO THE LOAN DOCUMENTS
CONFIRMED THAT ITS GUARANTEE OF THE OBLIGATIONS SHALL APPLY TO SUCH PERSON’S
OBLIGATIONS UNDER THE LOAN DOCUMENTS AND THE LOANS; AND

 

73

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

 

(VI) THE BORROWER SHALL HAVE DELIVERED TO THE AGENT AN OFFICERS’ CERTIFICATE AND
AN OPINION OF COUNSEL, EACH STATING THAT SUCH CONSOLIDATION, MERGER OR TRANSFER
AND SUCH SUPPLEMENTS TO THE LOAN DOCUMENTS, IF ANY, COMPLY WITH THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.

 

(B)  THE SUCCESSOR BORROWER SHALL SUCCEED TO, AND BE SUBSTITUTED FOR, THE
BORROWER UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND, EXCEPT IN THE
CASE OF A LEASE TRANSACTION, THE PREDECESSOR BORROWER WILL BE RELEASED FROM ITS
OBLIGATIONS HEREUNDER AND THEREUNDER.  NOTWITHSTANDING CLAUSES (III) AND (IV) OF
PARAGRAPH (A) OF THIS SECTION 6.03, (I) ANY RESTRICTED SUBSIDIARY MAY
CONSOLIDATE WITH, MERGE INTO OR TRANSFER ALL OR PART OF ITS PROPERTIES AND
ASSETS TO, THE BORROWER, AND (II) THE BORROWER MAY MERGE WITH AN AFFILIATE OF
THE BORROWER INCORPORATED SOLELY FOR THE PURPOSE OF REINCORPORATING THE BORROWER
IN ANOTHER STATE OF THE UNITED STATES OF AMERICA SO LONG AS THE AMOUNT OF
INDEBTEDNESS OF THE BORROWER AND THE RESTRICTED SUBSIDIARIES IS NOT INCREASED
THEREBY.

 

(C)  SUBJECT TO SECTION 10.12, NO SUBSIDIARY GUARANTOR SHALL, AND THE BORROWER
SHALL NOT PERMIT ANY SUBSIDIARY GUARANTOR TO, CONSOLIDATE OR MERGE WITH OR INTO
OR WIND UP INTO (WHETHER OR NOT SUCH SUBSIDIARY GUARANTOR IS THE SURVIVING
CORPORATION), OR SELL, ASSIGN, TRANSFER, LEASE, CONVEY OR OTHERWISE DISPOSE OF
ALL OR SUBSTANTIALLY ALL OF ITS PROPERTIES OR ASSETS IN ONE OR MORE RELATED
TRANSACTIONS TO, ANY PERSON UNLESS:

 

(I) (A) SUCH SUBSIDIARY GUARANTOR IS THE SURVIVING CORPORATION OR THE PERSON
FORMED BY OR SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN SUCH
SUBSIDIARY GUARANTOR) OR TO WHICH SUCH SALE, ASSIGNMENT, TRANSFER, LEASE,
CONVEYANCE OR OTHER DISPOSITION SHALL HAVE BEEN MADE IS A CORPORATION ORGANIZED
OR EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, ANY STATE THEREOF,
THE DISTRICT OF COLUMBIA, OR ANY TERRITORY THEREOF (SUCH SUBSIDIARY GUARANTOR OR
SUCH PERSON, AS THE CASE MAY BE, BEING HEREIN CALLED THE “SUCCESSOR PERSON”),
(B) THE SUCCESSOR PERSON, IF OTHER THAN SUCH SUBSIDIARY GUARANTOR, EXPRESSLY
ASSUMES ALL THE OBLIGATIONS OF SUCH SUBSIDIARY GUARANTOR UNDER SUCH SUBSIDIARY
GUARANTOR’S LOAN GUARANTY AND THE OTHER LOAN DOCUMENTS, PURSUANT TO A JOINDER
AGREEMENT AND SUPPLEMENTS TO THE LOAN DOCUMENTS OR OTHER DOCUMENTS OR
INSTRUMENTS IN FORM REASONABLY SATISFACTORY TO THE AGENT, (C) IMMEDIATELY AFTER
SUCH TRANSACTION, NO DEFAULT EXISTS AND (D) THE BORROWER SHALL HAVE DELIVERED TO
THE AGENT AN OFFICERS’ CERTIFICATE AND AN OPINION OF COUNSEL, EACH STATING THAT
SUCH CONSOLIDATION, MERGER OR TRANSFER AND SUCH JOINDER AGREEMENT AND
SUPPLEMENTS, IF ANY, COMPLY WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; OR

 

(II) THE TRANSACTION IS MADE IN COMPLIANCE WITH SECTION 2.20.

 

(D)  THE SUCCESSOR PERSON SHALL SUCCEED TO, AND BE SUBSTITUTED FOR, SUCH
SUBSIDIARY GUARANTOR UNDER SUCH SUBSIDIARY GUARANTOR’S LOAN GUARANTY AND THE
OTHER LOAN DOCUMENTS AND, EXCEPT IN THE CASE OF A LEASE TRANSACTION, SUCH
SUBSIDIARY GUARANTOR WILL BE RELEASED FROM ITS OBLIGATIONS THEREUNDER. 
NOTWITHSTANDING THE FOREGOING, ANY SUBSIDIARY GUARANTOR MAY MERGE INTO OR
TRANSFER ALL OR PART OF ITS PROPERTIES AND ASSETS TO ANOTHER SUBSIDIARY
GUARANTOR OR THE BORROWER.

 

(E)  HOLDINGS WILL NOT CONSOLIDATE OR MERGE WITH OR INTO OR WIND UP INTO
(WHETHER OR NOT HOLDINGS IS THE SURVIVING CORPORATION), OR SELL, ASSIGN,
TRANSFER, LEASE, CONVEY OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS
PROPERTIES OR ASSETS IN ONE OR MORE RELATED TRANSACTIONS TO, ANY PERSON UNLESS
(I) HOLDINGS IS THE SURVIVING CORPORATION OR THE PERSON FORMED BY OR SURVIVING
ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN HOLDINGS) OR TO WHICH SUCH SALE,
ASSIGNMENT, TRANSFER, LEASE, CONVEYANCE OR OTHER DISPOSITION SHALL HAVE BEEN
MADE IS A CORPORATION ORGANIZED OR EXISTING UNDER THE LAWS OF THE UNITED STATES
OF AMERICA, ANY STATE THEREOF, THE DISTRICT OF COLUMBIA, OR ANY TERRITORY
THEREOF (HOLDINGS OR SUCH PERSON, AS THE CASE MAY BE, BEING HEREIN CALLED THE
“SUCCESSOR HOLDINGS GUARANTOR”), (II) THE SUCCESSOR HOLDINGS GUARANTOR, IF OTHER
THAN HOLDINGS, EXPRESSLY ASSUMES ALL THE OBLIGATIONS OF HOLDINGS UNDER

 

74

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

 

HOLDINGS’ LOAN GUARANTY AND THE OTHER LOAN DOCUMENTS, PURSUANT TO A JOINDER
AGREEMENT OR OTHER SUPPLEMENTS OR OTHER DOCUMENTS OR INSTRUMENTS IN FORM
REASONABLY SATISFACTORY TO THE AGENT, (III) IMMEDIATELY AFTER SUCH TRANSACTION,
NO EVENT OF DEFAULT OR PAYMENT DEFAULT EXISTS AND (IV) THE BORROWER SHALL HAVE
DELIVERED TO THE AGENT AN OFFICERS’ CERTIFICATE AND AN OPINION OF COUNSEL, EACH
STATING THAT SUCH CONSOLIDATION, MERGER OR TRANSFER AND THE JOINDER AGREEMENT
AND SUCH SUPPLEMENTS OR OTHER DOCUMENTS OR INSTRUMENTS, IF ANY, COMPLY WITH THIS
AGREEMENT.

 

(F)  THE SUCCESSOR HOLDINGS GUARANTOR WILL SUCCEED TO, AND BE SUBSTITUTED FOR,
HOLDINGS UNDER HOLDINGS’ LOAN GUARANTY AND THE OTHER LOAN DOCUMENTS AND, EXCEPT
IN THE CASE OF A LEASE TRANSACTION, THE PREDECESSOR HOLDINGS WILL BE RELEASED
FROM ITS OBLIGATIONS THEREUNDER.  NOTWITHSTANDING THE FOREGOING, HOLDINGS MAY
MERGE INTO OR TRANSFER ALL OR PART OF ITS PROPERTIES AND ASSETS TO A SUBSIDIARY
GUARANTOR OR THE BORROWER, AND HOLDINGS MAY MERGE WITH AN AFFILIATE OF THE
BORROWER INCORPORATED SOLELY FOR THE PURPOSE OF REINCORPORATING HOLDINGS IN
ANOTHER STATE OF THE UNITED STATES OF AMERICA SO LONG AS THE AMOUNT OF
INDEBTEDNESS OF HOLDINGS, THE BORROWER AND THE RESTRICTED SUBSIDIARIES IS NOT
INCREASED THEREBY.

 

(G)  NOTWITHSTANDING THE FOREGOING, THE MERGER SHALL BE PERMITTED WITHOUT
COMPLIANCE WITH THIS SECTION 6.03.

 

(H)  FOR PURPOSES OF THIS SECTION 6.03, THE SALE, LEASE, CONVEYANCE, ASSIGNMENT,
TRANSFER OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTIES AND
ASSETS OF ONE OR MORE SUBSIDIARIES OF THE BORROWER OR HOLDINGS, AS APPLICABLE,
WHICH PROPERTIES AND ASSETS, IF HELD BY THE BORROWER OR HOLDINGS, AS APPLICABLE,
INSTEAD OF SUCH SUBSIDIARIES, WOULD CONSTITUTE ALL OR SUBSTANTIALLY ALL OF THE
PROPERTIES AND ASSETS OF THE BORROWER AND ITS SUBSIDIARIES ON A CONSOLIDATED
BASIS OR HOLDINGS AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS, AS APPLICABLE,
SHALL BE DEEMED TO BE THE TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTIES
AND ASSETS OF THE BORROWER OR HOLDINGS, AS APPLICABLE.

 

SECTION 6.04.  LIMITATION ON RESTRICTED PAYMENTS.  (A)  THE BORROWER SHALL NOT,
AND SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, DIRECTLY OR INDIRECTLY
(W) DECLARE OR PAY ANY DIVIDEND OR MAKE ANY DISTRIBUTION ON ACCOUNT OF THE
BORROWER’S OR ANY RESTRICTED SUBSIDIARY’S EQUITY INTERESTS, INCLUDING ANY
DIVIDEND OR DISTRIBUTION PAYABLE IN CONNECTION WITH ANY MERGER OR CONSOLIDATION,
OTHER THAN (A) DIVIDENDS OR DISTRIBUTIONS BY THE BORROWER PAYABLE IN EQUITY
INTERESTS (OTHER THAN DISQUALIFIED STOCK) OF THE BORROWER OR (B) DIVIDENDS OR
DISTRIBUTIONS BY A RESTRICTED SUBSIDIARY SO LONG AS, IN THE CASE OF ANY DIVIDEND
OR DISTRIBUTION PAYABLE ON OR IN RESPECT OF ANY CLASS OR SERIES OF SECURITIES
ISSUED BY A RESTRICTED SUBSIDIARY OTHER THAN A WHOLLY-OWNED SUBSIDIARY, THE
BORROWER OR A RESTRICTED SUBSIDIARY RECEIVES AT LEAST ITS PRO RATA SHARE OF SUCH
DIVIDEND OR DISTRIBUTION IN ACCORDANCE WITH ITS EQUITY INTERESTS IN SUCH CLASS
OR SERIES OF SECURITIES, (X) PURCHASE, REDEEM, DEFEASE OR OTHERWISE ACQUIRE OR
RETIRE FOR VALUE ANY EQUITY INTERESTS OF THE BORROWER OR ANY DIRECT OR INDIRECT
PARENT OF THE BORROWER, INCLUDING IN CONNECTION WITH ANY MERGER OR
CONSOLIDATION, (Y) MAKE ANY PRINCIPAL PAYMENT ON, OR REDEEM, REPURCHASE, DEFEASE
OR OTHERWISE ACQUIRE OR RETIRE FOR VALUE IN EACH CASE, PRIOR TO ANY SCHEDULED
REPAYMENT, SINKING FUND PAYMENT OR MATURITY, ANY SUBORDINATED INDEBTEDNESS OTHER
THAN (A) INDEBTEDNESS PERMITTED UNDER CLAUSES (IX) AND (X) OF SECTION 6.01(B) OR
(B) THE PURCHASE, REPURCHASE OR OTHER ACQUISITION OF SUBORDINATED INDEBTEDNESS
PURCHASED IN ANTICIPATION OF SATISFYING A SINKING FUND OBLIGATION, PRINCIPAL
INSTALLMENT OR FINAL MATURITY, IN EACH CASE DUE WITHIN ONE YEAR OF THE DATE OF
PURCHASE, REPURCHASE OR ACQUISITION OR (Z) MAKE ANY RESTRICTED INVESTMENT (ALL
SUCH PAYMENTS AND OTHER ACTIONS SET FORTH IN CLAUSES (W) THROUGH (Z) ABOVE BEING
COLLECTIVELY REFERRED TO AS “RESTRICTED PAYMENTS”), UNLESS, AT THE TIME OF SUCH
RESTRICTED PAYMENT:

 

(I) NO DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING OR WOULD OCCUR AS A
CONSEQUENCE THEREOF;

 

75

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

 

(II) IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION ON A PRO FORMA BASIS,
THE BORROWER COULD INCUR $1.00 OF ADDITIONAL INDEBTEDNESS UNDER SECTION 6.01(A);
AND

 

(III) SUCH RESTRICTED PAYMENT, TOGETHER WITH THE AGGREGATE AMOUNT OF ALL OTHER
RESTRICTED PAYMENTS MADE BY THE BORROWER AND THE RESTRICTED SUBSIDIARIES AFTER
THE CLOSING DATE PURSUANT PARAGRAPH (A) OF THIS SECTION 6.04 OR CLAUSES (I),
(II) (WITH RESPECT TO THE PAYMENT OF DIVIDENDS ON REFUNDING CAPITAL STOCK
PURSUANT TO CLAUSE (B) THEREOF ONLY), (VI)(C), (VIII) AND (XII) OF PARAGRAPH
(B) OF THIS SECTION 6.04 (AND EXCLUDING, FOR THE AVOIDANCE OF DOUBT, ALL OTHER
RESTRICTED PAYMENTS MADE PURSUANT TO PARAGRAPH (B) OF THIS SECTION 6.04), IS
LESS THAN THE SUM, WITHOUT DUPLICATION, OF:

 

(A) 50% of the Consolidated Net Income of the Borrower for the period (taken as
one accounting period) from August 1, 2005 to the end of the Borrower’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment, or, in the case such
Consolidated Net Income for such period is a deficit, minus 100% of such
deficit, provided that if, at the time of a proposed Restricted Payment under
paragraph (a) of this Section 6.04, the Consolidated Leverage Ratio of the
Borrower is less than 4.50 to 1.00, for purposes of calculating availability of
amounts hereunder for such Restricted Payment only, the reference to 50% in this
clause (A) above shall be deemed to be 75%, plus

 

(B) 100% of the aggregate net cash proceeds and the fair market value, as
determined in good faith by the Borrower, of marketable securities or other
property received by the Borrower after the Closing Date (less the amount of
such net cash proceeds to the extent such amount has been relied upon to permit
the incurrence of Indebtedness or issuance of Disqualified Stock or Preferred
Stock pursuant to Section 6.01(b)(xxii)(B)) from the issue or sale of (x) Equity
Interests of the Borrower, including Retired Capital Stock, but excluding cash
proceeds and the fair market value, as determined in good faith by the Borrower,
of marketable securities or other property received from the sale of (1) Equity
Interests to any future, present or former employees, directors, managers or
consultants of the Borrower, any direct or indirect parent company of the
Borrower or any of the Borrower’s subsidiaries after the Closing Date to the
extent such amounts have been applied to Restricted Payments made in accordance
with clause (iv) of paragraph (b) of this Section 6.04 and (2) Designated
Preferred Stock, and to the extent actually contributed to the Borrower, Equity
Interests of the Borrower’s direct or indirect parent companies (excluding
contributions of the proceeds from the sale of Designated Preferred Stock of
such companies or contributions to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (iv) of paragraph (b) of this
Section 6.04) or (y) debt securities of the Borrower that have been converted
into or exchanged for such Equity Interests of the Borrower; provided that this
clause (B) shall not include the proceeds from (I) Refunding Capital Stock,
(II) Equity Interests of the Borrower or debt securities of the Borrower that
have been converted into or exchanged for Equity Interests of the Borrower sold
to a Restricted Subsidiary or the Borrower, as the case may be,
(III) Disqualified Stock or debt securities that have been converted into or
exchanged for Disqualified Stock or (IV) Excluded Contributions, plus

 

(C) 100% of the aggregate amount of cash and the fair market value, as
determined in good faith by the Borrower, of marketable securities or other
property contributed to the capital of the Borrower after the Closing Date (less
the amount of such net cash proceeds to the extent such amount has been relied
upon to permit the incurrence

 

76

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

 

of Indebtedness or issuance of Disqualified Stock or Preferred Stock pursuant to
Section 6.01(b)(xxii)(B)) (other than by a Restricted Subsidiary and other than
by any Excluded Contributions), plus

 

(D) to the extent not already included in Consolidated Net Income, 100% of the
aggregate amount received in cash and the fair market value, as determined in
good faith by the Borrower, of marketable securities or other property received
after the Closing Date by means of (1) the sale or other disposition (other than
to the Borrower or a Restricted Subsidiary) of Restricted Investments made by
the Borrower or any Restricted Subsidiary and repurchases and redemptions of
such Restricted Investments from the Borrower or any Restricted Subsidiary and
repayments of loans or advances that constitute Restricted Investments by the
Borrower or any Restricted Subsidiary or (2) the sale (other than to the
Borrower or a Restricted Subsidiary) of the Capital Stock of an Unrestricted
Subsidiary (other than Kate Spade) or a distribution from an Unrestricted
Subsidiary (other than an Extraordinary Distribution) (other than in each case
to the extent the Investment in such Unrestricted Subsidiary was made by the
Borrower or a Restricted Subsidiary pursuant to clauses (ix) or (xiii) of
paragraph (b) of this Section 6.04 or to the extent such Investment constituted
a Permitted Investment) or a dividend from an Unrestricted Subsidiary (other
than an Extraordinary Distribution), plus

 

(E) in the case of the redesignation of an Unrestricted Subsidiary (other than
Kate Spade) as a Restricted Subsidiary after the Closing Date, the fair market
value of the Investment in such Unrestricted Subsidiary, as determined by the
Borrower in good faith or if, in the case of an Unrestricted Subsidiary, such
fair market value may exceed $125,000,000, in writing by an Independent
Financial Advisor, at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary, other than an Unrestricted Subsidiary to
the extent the Investment in such Unrestricted Subsidiary was made by the
Borrower or a Restricted Subsidiary pursuant to clauses (ix) or (xiii) of
paragraph (b) of this Section 6.04 or to the extent such Investment constituted
a Permitted Investment.

 

(B)  THE PROVISIONS OF PARAGRAPH (A) OF THIS SECTION 6.04 SHALL NOT PROHIBIT:

 

(I) THE PAYMENT OF ANY DIVIDEND OR DISTRIBUTION WITHIN 60 DAYS AFTER THE DATE OF
DECLARATION THEREOF, IF AT THE DATE OF DECLARATION SUCH PAYMENT WOULD HAVE
COMPLIED WITH THE PROVISIONS OF THIS AGREEMENT;

 

(II) (A) THE REDEMPTION, REPURCHASE, RETIREMENT OR OTHER ACQUISITION OF ANY
EQUITY INTERESTS (“RETIRED CAPITAL STOCK”) OR SUBORDINATED INDEBTEDNESS OF THE
BORROWER OR ANY EQUITY INTERESTS OF ANY DIRECT OR INDIRECT PARENT COMPANY OF THE
BORROWER, IN EXCHANGE FOR, OR OUT OF THE PROCEEDS OF THE SUBSTANTIALLY
CONCURRENT SALE (OTHER THAN TO A RESTRICTED SUBSIDIARY) OF, EQUITY INTERESTS OF
THE BORROWER (IN EACH CASE, OTHER THAN ANY DISQUALIFIED STOCK) (“REFUNDING
CAPITAL STOCK”) AND (B) IF IMMEDIATELY PRIOR TO THE RETIREMENT OF RETIRED
CAPITAL STOCK, THE DECLARATION AND PAYMENT OF DIVIDENDS THEREON WAS PERMITTED
UNDER CLAUSE (VI) OF THIS PARAGRAPH (B), THE DECLARATION AND PAYMENT OF
DIVIDENDS ON THE REFUNDING CAPITAL STOCK (OTHER THAN REFUNDING CAPITAL STOCK THE
PROCEEDS OF WHICH WERE USED TO REDEEM, REPURCHASE, RETIRE OR OTHERWISE ACQUIRE
ANY EQUITY INTERESTS OF ANY DIRECT OR INDIRECT PARENT COMPANY OF THE BORROWER)
IN AN AGGREGATE AMOUNT PER YEAR NO GREATER THAN THE AGGREGATE AMOUNT OF
DIVIDENDS PER ANNUM THAT WAS DECLARABLE AND PAYABLE ON SUCH RETIRED CAPITAL
STOCK IMMEDIATELY PRIOR TO SUCH RETIREMENT;

 

77

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

 

(III) THE DEFEASANCE, REDEMPTION, REPURCHASE OR OTHER ACQUISITION OR RETIREMENT
OF SUBORDINATED INDEBTEDNESS OF THE BORROWER OR A SUBSIDIARY GUARANTOR MADE BY
EXCHANGE FOR, OR OUT OF THE PROCEEDS OF THE SUBSTANTIALLY CONCURRENT SALE OF,
NEW INDEBTEDNESS OF SUCH PERSON THAT IS INCURRED IN COMPLIANCE WITH SECTION 6.01
SO LONG AS (A) THE PRINCIPAL AMOUNT OF SUCH NEW INDEBTEDNESS DOES NOT EXCEED THE
PRINCIPAL AMOUNT (OR ACCRETED VALUE, IF APPLICABLE) OF THE SUBORDINATED
INDEBTEDNESS BEING SO DEFEASED, REDEEMED, REPURCHASED, ACQUIRED OR RETIRED FOR
VALUE, PLUS THE AMOUNT OF ANY REASONABLE PREMIUM REQUIRED TO BE PAID UNDER THE
TERMS OF THE INSTRUMENT GOVERNING THE SUBORDINATED INDEBTEDNESS BEING SO
DEFEASED, REDEEMED, REPURCHASED, ACQUIRED OR RETIRED AND ANY REASONABLE FEES AND
EXPENSES INCURRED IN CONNECTION WITH THE ISSUANCE OF SUCH NEW INDEBTEDNESS,
(B) SUCH INDEBTEDNESS IS SUBORDINATED TO THE OBLIGATIONS AT LEAST TO THE SAME
EXTENT AS SUCH SUBORDINATED INDEBTEDNESS SO DEFEASED, REDEEMED, REPURCHASED,
ACQUIRED OR RETIRED, (C) SUCH INDEBTEDNESS HAS A FINAL SCHEDULED MATURITY DATE
EQUAL TO OR LATER THAN THE FINAL SCHEDULED MATURITY DATE OF THE SUBORDINATED
INDEBTEDNESS BEING SO DEFEASED, REDEEMED, REPURCHASED, ACQUIRED OR RETIRED AND
(D) SUCH INDEBTEDNESS HAS A WEIGHTED AVERAGE LIFE TO MATURITY EQUAL TO OR
GREATER THAN THE REMAINING WEIGHTED AVERAGE LIFE TO MATURITY OF THE SUBORDINATED
INDEBTEDNESS BEING SO DEFEASED, REDEEMED, REPURCHASED, ACQUIRED OR RETIRED;

 

(IV) A RESTRICTED PAYMENT TO PAY FOR THE REPURCHASE, RETIREMENT OR OTHER
ACQUISITION OR RETIREMENT FOR VALUE OF EQUITY INTERESTS (OTHER THAN DISQUALIFIED
STOCK) OF THE BORROWER OR ANY OF ITS DIRECT OR INDIRECT PARENT COMPANIES HELD BY
ANY FUTURE, PRESENT OR FORMER EMPLOYEE, DIRECTOR, MANAGER OR CONSULTANT OF THE
BORROWER, ANY OF ITS SUBSIDIARIES OR ANY OF ITS DIRECT OR INDIRECT PARENT
COMPANIES PURSUANT TO ANY MANAGEMENT EQUITY PLAN OR STOCK OPTION PLAN OR ANY
OTHER MANAGEMENT OR EMPLOYEE BENEFIT PLAN OR AGREEMENT; PROVIDED THAT THE
AGGREGATE RESTRICTED PAYMENTS MADE UNDER THIS CLAUSE (IV) DO NOT EXCEED IN ANY
CALENDAR YEAR $10,000,000 (WITH UNUSED AMOUNTS IN ANY CALENDAR YEAR BEING
CARRIED OVER TO SUCCEEDING CALENDAR YEARS SUBJECT TO A MAXIMUM (WITHOUT GIVING
EFFECT TO THE FOLLOWING PROVISO) OF $20,000,000 IN ANY CALENDAR YEAR); PROVIDED,
FURTHER, THAT SUCH AMOUNT IN ANY CALENDAR YEAR MAY BE INCREASED BY AN AMOUNT NOT
TO EXCEED (A) THE CASH PROCEEDS FROM THE SALE OF EQUITY INTERESTS (OTHER THAN
DISQUALIFIED STOCK) OF THE BORROWER AND, TO THE EXTENT CONTRIBUTED TO THE
BORROWER, EQUITY INTERESTS OF ANY OF THE BORROWER’S DIRECT OR INDIRECT PARENT
COMPANIES, IN EACH CASE TO MEMBERS OF MANAGEMENT, DIRECTORS, MANAGERS OR
CONSULTANTS OF THE BORROWER, ANY OF ITS SUBSIDIARIES OR ANY OF ITS DIRECT OR
INDIRECT PARENT COMPANIES THAT OCCURS AFTER THE CLOSING DATE, TO THE EXTENT THE
CASH PROCEEDS FROM THE SALE OF SUCH EQUITY INTERESTS HAVE NOT OTHERWISE BEEN
APPLIED TO THE PAYMENT OF RESTRICTED PAYMENTS BY VIRTUE OF CLAUSE (III) OF
PARAGRAPH (A) OF THIS SECTION 6.04, PLUS (B) THE CASH PROCEEDS OF KEY MAN LIFE
INSURANCE POLICIES RECEIVED BY THE BORROWER AND THE RESTRICTED SUBSIDIARIES
AFTER THE CLOSING DATE, LESS (C) THE AMOUNT OF ANY RESTRICTED PAYMENTS
PREVIOUSLY MADE PURSUANT TO CLAUSES (A) AND (B) OF THIS CLAUSE (IV); AND
PROVIDED, FURTHER, THAT CANCELLATION OF INDEBTEDNESS OWING TO THE BORROWER FROM
MEMBERS OF MANAGEMENT, DIRECTORS, MANAGERS OR CONSULTANTS OF THE BORROWER, ANY
OF ITS DIRECT OR INDIRECT PARENT COMPANIES OR ANY RESTRICTED SUBSIDIARY IN
CONNECTION WITH A REPURCHASE OF EQUITY INTERESTS OF THE BORROWER OR ANY OF ITS
DIRECT OR INDIRECT PARENT COMPANIES SHALL NOT BE DEEMED TO CONSTITUTE A
RESTRICTED PAYMENT FOR PURPOSES OF THIS SECTION 6.04 OR ANY OTHER PROVISION OF
THIS AGREEMENT;

 

(V) THE DECLARATION AND PAYMENT OF DIVIDENDS TO HOLDERS OF ANY CLASS OR SERIES
OF DISQUALIFIED STOCK OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY ISSUED IN
ACCORDANCE SECTION 6.01 TO THE EXTENT SUCH DIVIDENDS ARE INCLUDED IN THE
DEFINITION OF “FIXED CHARGES”;

 

(VI) THE DECLARATION AND PAYMENT OF DIVIDENDS (A) TO HOLDERS OF ANY CLASS OR
SERIES OF DESIGNATED PREFERRED STOCK (OTHER THAN DISQUALIFIED STOCK) ISSUED BY
THE BORROWER AFTER THE CLOSING DATE, (B) TO A DIRECT OR INDIRECT PARENT COMPANY
OF THE BORROWER, THE PROCEEDS OF WHICH

 

78

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

 

WILL BE USED TO FUND THE PAYMENT OF DIVIDENDS TO HOLDERS OF ANY CLASS OR SERIES
OF DESIGNATED PREFERRED STOCK (OTHER THAN DISQUALIFIED STOCK) OF SUCH PARENT
COMPANY ISSUED AFTER THE CLOSING DATE; PROVIDED THAT THE AMOUNT OF DIVIDENDS
PAID PURSUANT TO THIS CLAUSE (B) SHALL NOT EXCEED THE AGGREGATE AMOUNT OF CASH
ACTUALLY CONTRIBUTED TO THE BORROWER FROM THE SALE OF SUCH DESIGNATED PREFERRED
STOCK, OR (C) ON REFUNDING CAPITAL STOCK THAT IS PREFERRED STOCK IN EXCESS OF
THE DIVIDENDS DECLARABLE AND PAYABLE THEREON PURSUANT TO CLAUSE (II) OF THIS
PARAGRAPH (B); PROVIDED, HOWEVER, IN THE CASE OF EACH OF (A), (B) AND (C) OF
THIS CLAUSE (VI), THAT FOR THE MOST RECENTLY ENDED FOUR FULL FISCAL QUARTERS FOR
WHICH INTERNAL FINANCIAL STATEMENTS ARE AVAILABLE IMMEDIATELY PRECEDING THE DATE
OF ISSUANCE OF SUCH DESIGNATED PREFERRED STOCK OR THE DECLARATION OF SUCH
DIVIDENDS ON REFUNDING CAPITAL STOCK THAT IS PREFERRED STOCK, AFTER GIVING
EFFECT TO SUCH ISSUANCE OR DECLARATION ON A PRO FORMA BASIS, THE BORROWER AND
THE RESTRICTED SUBSIDIARIES ON A CONSOLIDATED BASIS WOULD HAVE HAD A FIXED
CHARGE COVERAGE RATIO OF AT LEAST 2.00 TO 1.00;

 

(VII) REPURCHASES OF EQUITY INTERESTS DEEMED TO OCCUR UPON EXERCISE OF STOCK
OPTIONS OR WARRANTS IF SUCH EQUITY INTERESTS REPRESENT A PORTION OF THE EXERCISE
PRICE OF SUCH OPTIONS OR WARRANTS;

 

(VIII) THE DECLARATION AND PAYMENT OF DIVIDENDS ON THE BORROWER’S COMMON STOCK
FOLLOWING THE FIRST PUBLIC OFFERING OF THE BORROWER’S COMMON STOCK OR THE COMMON
STOCK OF ANY OF ITS DIRECT OR INDIRECT PARENT COMPANIES AFTER THE CLOSING DATE,
OF UP TO 6% PER ANNUM OF THE NET PROCEEDS RECEIVED BY OR CONTRIBUTED TO THE
BORROWER IN OR FROM ANY SUCH PUBLIC OFFERING, OTHER THAN PUBLIC OFFERINGS WITH
RESPECT TO THE BORROWER’S COMMON STOCK REGISTERED ON FORM S-4 OR FORM S-8 AND
OTHER THAN ANY PUBLIC SALE CONSTITUTING AN EXCLUDED CONTRIBUTION;

 

(IX) RESTRICTED PAYMENTS THAT ARE MADE WITH EXCLUDED CONTRIBUTIONS;

 

(X) THE DECLARATION AND PAYMENT OF DIVIDENDS BY THE BORROWER TO, OR THE MAKING
OF LOANS TO, ITS DIRECT PARENT COMPANY IN AMOUNTS REQUIRED FOR THE BORROWER’S
DIRECT OR INDIRECT PARENT COMPANIES TO PAY (A) FRANCHISE TAXES AND OTHER FEES,
TAXES AND EXPENSES REQUIRED TO MAINTAIN THEIR CORPORATE EXISTENCE, (B) FEDERAL,
STATE AND LOCAL INCOME TAXES, TO THE EXTENT SUCH INCOME TAXES ARE ATTRIBUTABLE
TO THE INCOME OF THE BORROWER AND THE RESTRICTED SUBSIDIARIES AND, TO THE EXTENT
OF THE AMOUNT ACTUALLY RECEIVED FROM ITS UNRESTRICTED SUBSIDIARIES, IN AMOUNTS
REQUIRED TO PAY SUCH TAXES TO THE EXTENT ATTRIBUTABLE TO THE INCOME OF SUCH
UNRESTRICTED SUBSIDIARIES, (C) CUSTOMARY SALARY, BONUS AND OTHER BENEFITS
PAYABLE TO OFFICERS AND EMPLOYEES OF ANY DIRECT OR INDIRECT PARENT COMPANY OF
THE BORROWER TO THE EXTENT SUCH SALARIES, BONUSES AND OTHER BENEFITS ARE
ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF THE BORROWER AND THE RESTRICTED
SUBSIDIARIES, (D) GENERAL CORPORATE OVERHEAD EXPENSES OF ANY DIRECT OR INDIRECT
PARENT COMPANY OF THE BORROWER TO THE EXTENT SUCH EXPENSES ARE ATTRIBUTABLE TO
THE OWNERSHIP OR OPERATION OF THE BORROWER AND THE RESTRICTED SUBSIDIARIES, AND
(E) REASONABLE FEES AND EXPENSES INCURRED IN CONNECTION WITH ANY UNSUCCESSFUL
DEBT OR EQUITY OFFERING BY SUCH DIRECT OR INDIRECT PARENT COMPANY OF THE
BORROWER;

 

(XI) ANY RESTRICTED PAYMENTS USED TO FUND THE TRANSACTIONS AND THE FEES AND
EXPENSES RELATED THERETO, INCLUDING THOSE OWED TO AFFILIATES, IN EACH CASE TO
THE EXTENT PERMITTED UNDER SECTION 6.05;

 

(XII) THE REPURCHASE, REDEMPTION OR OTHER ACQUISITION OR RETIREMENT FOR VALUE OF
ANY SUBORDINATED INDEBTEDNESS PURSUANT TO PROVISIONS SIMILAR TO THOSE SET FORTH
IN SECTIONS 2.19 AND 2.20; PROVIDED THAT, PRIOR TO SUCH REPURCHASE, REDEMPTION
OR OTHER ACQUISITION, THE BORROWER (OR A THIRD PARTY TO THE EXTENT PERMITTED BY
THIS AGREEMENT) SHALL HAVE MADE A CHANGE OF CONTROL OFFER OR ASSET SALE OFFER,
AS THE CASE MAY BE, WITH RESPECT TO THE OUTSTANDING LOANS AND SHALL HAVE

 

79

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

 

REPAID ALL SUCH LOANS VALIDLY TENDERED FOR PREPAYMENT AND NOT WITHDRAWN IN
CONNECTION WITH SUCH CHANGE OF CONTROL OFFER OR ASSET SALE OFFER;

 

(XIII) INVESTMENTS IN UNRESTRICTED SUBSIDIARIES HAVING AN AGGREGATE FAIR MARKET
VALUE, TAKEN TOGETHER WITH ALL OTHER INVESTMENTS MADE PURSUANT TO THIS
CLAUSE (XIII) THAT ARE AT THE TIME OUTSTANDING, WITHOUT GIVING EFFECT TO THE
SALE OF AN UNRESTRICTED SUBSIDIARY TO THE EXTENT THE PROCEEDS OF SUCH SALE DO
NOT CONSIST OF CASH OR MARKETABLE SECURITIES, NOT TO EXCEED THE GREATER OF
(X) $75,000,000 AND (Y) 1.00% OF TOTAL ASSETS AT THE TIME OF SUCH INVESTMENT
(WITH THE FAIR MARKET VALUE OF EACH INVESTMENT BEING MEASURED AT THE TIME SUCH
INVESTMENT IS MADE AND WITHOUT GIVING EFFECT TO SUBSEQUENT CHANGES IN VALUE);

 

(XIV) DISTRIBUTIONS OR PAYMENTS OF RECEIVABLES FEES;

 

(XV) THE DISTRIBUTION, AS A DIVIDEND OR OTHERWISE (AND THE DECLARATION OF SUCH
DIVIDEND), OF SHARES OF CAPITAL STOCK OF, OR INDEBTEDNESS OWED TO THE BORROWER
OR A RESTRICTED SUBSIDIARY BY, ANY UNRESTRICTED SUBSIDIARY (OTHER THAN KATE
SPADE); AND

 

(XVI) OTHER RESTRICTED PAYMENTS IN AN AMOUNT WHICH, WHEN TAKEN TOGETHER WITH ALL
OTHER RESTRICTED PAYMENTS MADE PURSUANT TO THIS CLAUSE (XVI), DOES NOT EXCEED
$75,000,000;

 

provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (xv) and (xvi) of this paragraph (b),
no Default shall have occurred and be continuing or would occur as a consequence
thereof.

 

(C)  NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE BORROWER WILL NOT, AND
WILL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, DIRECTLY OR INDIRECTLY, MAKE ANY
(I) RESTRICTED PAYMENT COVERED IN CLAUSES (W) THROUGH (Y) OF THE DEFINITION OF
RESTRICTED PAYMENTS SET FORTH IN PARAGRAPH (A) OF THIS SECTION 6.04 TO THE
HOLDERS OF EQUITY INTERESTS OF THE BORROWER OR ANY OF ITS DIRECT OR INDIRECT
PARENT COMPANIES (WHICH SHALL INCLUDE THE SPONSORS, THE CO-INVESTORS AND THEIR
RESPECTIVE AFFILIATES) OTHER THAN TO THE BORROWER AND ITS RESTRICTED
SUBSIDIARIES, FUTURE, PRESENT OR FORMER EMPLOYEES, DIRECTORS, MANAGERS OR
CONSULTANTS OF THE BORROWER, ANY OF ITS SUBSIDIARIES OR ANY OF ITS DIRECT OR
INDIRECT PARENT COMPANIES WITH RESPECT TO EQUITY INTERESTS HELD BY THEM IN SUCH
CAPACITIES AND OTHER THAN A RESTRICTED PAYMENT MADE PURSUANT TO CLAUSE (X) OF
PARAGRAPH (B) OF THIS SECTION 6.04 OR (II)  INVESTMENT IN THE SPONSORS, THE
CO-INVESTORS, ANY PERMITTED HOLDERS WHO ARE MEMBERS OF A GROUP (WITHIN THE
MEANING OF SECTION 13(D)(3) OR SECTION 14(D)(2) OF THE EXCHANGE ACT OR ANY
SUCCESSOR PROVISION) WITH THE SPONSORS OR ANY CO-INVESTORS OR ANY PERSON OR
GROUP WHO BECOMES A PERMITTED HOLDER FOLLOWING A CHANGE OF CONTROL AS PROVIDED
FOR IN THE DEFINITION OF “PERMITTED HOLDERS” OR THEIR RESPECTIVE AFFILIATES
(OTHER THAN IN THE BORROWER AND ITS SUBSIDIARIES AND MEMBERS OF MANAGEMENT OF
THE BORROWER (OR ITS DIRECT PARENT)), IN EACH CASE DURING ANY PERIOD BEGINNING
ON THE DATE ON WHICH THE BORROWER MAKES AN ELECTION TO PAY INTEREST ON THE
SENIOR NOTES BY INCREASING THE PRINCIPAL AMOUNT OF THE OUTSTANDING SENIOR NOTES
OR BY ISSUING ADDITIONAL SENIOR NOTES PURSUANT TO THE SENIOR NOTES INDENTURE (OR
AN ELECTION UNDER ANY SIMILAR PROVISION SET FORTH IN ANY INSTRUMENT GOVERNING
ANY INDEBTEDNESS REFINANCING, REFUNDING, EXTENDING, RENEWING OR REPLACING THE
SENIOR NOTES) WITH RESPECT TO ANY INTEREST PERIOD RELATING THERETO AND ENDING ON
THE FIRST DATE AFTER SUCH INTEREST PERIOD ON WHICH THE BORROWER MAKES A PAYMENT
OF INTEREST IN CASH ON THE SENIOR NOTES PURSUANT TO THE SENIOR NOTES INDENTURE
(OR PURSUANT TO ANY SUCH OTHER INSTRUMENT) WITH RESPECT TO A SUBSEQUENT INTEREST
PERIOD RELATING THERETO ON THE SENIOR NOTES PURSUANT TO THE SENIOR NOTES
INDENTURE WITH RESPECT TO A SUBSEQUENT INTEREST PERIOD.

 

(D)  THE BORROWER SHALL NOT PERMIT ANY UNRESTRICTED SUBSIDIARY TO BECOME A
RESTRICTED SUBSIDIARY EXCEPT PURSUANT TO THE PENULTIMATE PARAGRAPH OF THE
DEFINITION OF “UNRESTRICTED SUBSIDIARY”.

 

80

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

 

FOR PURPOSES OF DESIGNATING ANY RESTRICTED SUBSIDIARY AS AN UNRESTRICTED
SUBSIDIARY, ALL OUTSTANDING INVESTMENTS BY THE BORROWER AND THE RESTRICTED
SUBSIDIARIES (EXCEPT TO THE EXTENT REPAID) IN THE SUBSIDIARY SO DESIGNATED SHALL
BE DEEMED TO BE RESTRICTED PAYMENTS IN AN AMOUNT DETERMINED AS SET FORTH IN THE
LAST SENTENCE OF THE DEFINITION OF “INVESTMENT”.  SUCH DESIGNATION SHALL BE
PERMITTED ONLY IF A RESTRICTED PAYMENT IN SUCH AMOUNT WOULD BE PERMITTED AT SUCH
TIME, WHETHER PURSUANT TO PARAGRAPH (A) OF THIS SECTION 6.04 OR UNDER
CLAUSES (IX), (XIII) OR (XVI) OF PARAGRAPH (B) OF THIS SECTION 6.04, OR PURSUANT
TO THE DEFINITION OF “PERMITTED INVESTMENTS”, AND IF SUCH SUBSIDIARY OTHERWISE
MEETS THE DEFINITION OF AN “UNRESTRICTED SUBSIDIARY”.

 

SECTION 6.05.  LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.  (A)  THE BORROWER
SHALL NOT, AND SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, MAKE ANY PAYMENT
TO, OR SELL, LEASE, TRANSFER OR OTHERWISE DISPOSE OF ANY OF ITS PROPERTIES OR
ASSETS TO, OR PURCHASE ANY PROPERTY OR ASSETS FROM, OR ENTER INTO OR MAKE OR
AMEND ANY TRANSACTION, CONTRACT, AGREEMENT, UNDERSTANDING, LOAN, ADVANCE OR
GUARANTEE WITH, OR FOR THE BENEFIT OF, ANY AFFILIATE OF THE BORROWER (EACH OF
THE FOREGOING, AN “AFFILIATE TRANSACTION”) INVOLVING AGGREGATE PAYMENTS OR
CONSIDERATION IN EXCESS OF $10,000,000, UNLESS (I) SUCH AFFILIATE TRANSACTION IS
ON TERMS THAT ARE NOT MATERIALLY LESS FAVORABLE TO THE BORROWER OR THE RELEVANT
RESTRICTED SUBSIDIARY THAN THOSE THAT WOULD HAVE BEEN OBTAINED IN A COMPARABLE
TRANSACTION BY THE BORROWER OR SUCH RESTRICTED SUBSIDIARY WITH AN UNRELATED
PERSON AND (II) THE BORROWER DELIVERS TO THE AGENT WITH RESPECT TO ANY AFFILIATE
TRANSACTION OR SERIES OF RELATED AFFILIATE TRANSACTIONS INVOLVING AGGREGATE
PAYMENTS OR CONSIDERATION IN EXCESS OF $30,000,000, A BOARD RESOLUTION ADOPTED
BY THE MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE BORROWER
APPROVING SUCH AFFILIATE TRANSACTION AND SET FORTH IN AN OFFICERS’ CERTIFICATE
CERTIFYING THAT SUCH AFFILIATE TRANSACTION COMPLIES WITH CLAUSE (I) ABOVE.

 

(B)  THE LIMITATIONS SET FORTH IN PARAGRAPH (A) OF THIS SECTION 6.05 SHALL NOT
APPLY TO:

 

(I) TRANSACTIONS BETWEEN OR AMONG THE BORROWER OR ANY OF THE RESTRICTED
SUBSIDIARIES;

 

(II) RESTRICTED PAYMENTS THAT ARE PERMITTED BY THE PROVISIONS OF SECTION 6.04
AND THE DEFINITION OF “PERMITTED INVESTMENTS”;

 

(III) THE PAYMENT OF MANAGEMENT, CONSULTING, MONITORING AND ADVISORY FEES AND
RELATED EXPENSES TO THE SPONSORS AND ANY TERMINATION OR OTHER FEE PAYABLE TO THE
SPONSORS UPON A CHANGE OF CONTROL OR INITIAL PUBLIC EQUITY OFFERING OF THE
BORROWER OR ANY DIRECT OR INDIRECT PARENT COMPANY THEREOF PURSUANT TO THE
MANAGEMENT SERVICES AGREEMENT AS IN EFFECT ON THE CLOSING DATE;

 

(IV) THE PAYMENT OF REASONABLE AND CUSTOMARY FEES PAID TO, AND INDEMNITIES
PROVIDED ON BEHALF OF, OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES OR CONSULTANTS
OF THE BORROWER, ANY OF ITS DIRECT OR INDIRECT PARENT COMPANIES OR ANY
RESTRICTED SUBSIDIARY;

 

(V) PAYMENTS BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO ANY OF THE SPONSORS
AND THE CO-INVESTORS FOR ANY FINANCIAL ADVISORY, FINANCING, UNDERWRITING OR
PLACEMENT SERVICES OR IN RESPECT OF OTHER INVESTMENT BANKING ACTIVITIES,
INCLUDING IN CONNECTION WITH ACQUISITIONS OR DIVESTITURES, WHICH PAYMENTS ARE
APPROVED BY A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE BORROWER
IN GOOD FAITH;

 

(VI) TRANSACTIONS IN WHICH THE BORROWER OR ANY RESTRICTED SUBSIDIARY, AS THE
CASE MAY BE, DELIVERS TO THE AGENT A LETTER FROM AN INDEPENDENT FINANCIAL
ADVISOR STATING THAT SUCH TRANSACTION IS FAIR TO THE BORROWER OR SUCH RESTRICTED
SUBSIDIARY FROM A FINANCIAL POINT OF VIEW OR MEETS THE REQUIREMENTS OF
CLAUSE (I) OF PARAGRAPH (A) OF THIS SECTION 6.05;

 

81

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

 

(VII) PAYMENTS OR LOANS (OR CANCELLATIONS OF LOANS) TO EMPLOYEES OR CONSULTANTS
OF THE BORROWER, ANY OF ITS DIRECT OR INDIRECT PARENT COMPANIES OR ANY
RESTRICTED SUBSIDIARY AND EMPLOYMENT AGREEMENTS, STOCK OPTION PLANS AND OTHER
COMPENSATORY ARRANGEMENTS WITH SUCH EMPLOYEES OR CONSULTANTS THAT ARE, IN EACH
CASE, APPROVED BY THE BORROWER IN GOOD FAITH;

 

(VIII) ANY AGREEMENT, INSTRUMENT OR ARRANGEMENT AS IN EFFECT AS OF THE CLOSING
DATE, OR ANY AMENDMENT THERETO (SO LONG AS ANY SUCH AMENDMENT IS NOT
DISADVANTAGEOUS TO THE LENDERS IN ANY MATERIAL RESPECT AS COMPARED TO THE
APPLICABLE AGREEMENT AS IN EFFECT ON THE CLOSING DATE AS REASONABLY DETERMINED
IN GOOD FAITH BY THE BORROWER);

 

(IX) THE EXISTENCE OF, OR THE PERFORMANCE BY THE BORROWER OR ANY OF THE
RESTRICTED SUBSIDIARIES OF ITS OBLIGATIONS UNDER THE TERMS OF, ANY STOCKHOLDERS
AGREEMENT OR ITS EQUIVALENT (INCLUDING ANY REGISTRATION RIGHTS AGREEMENT OR
PURCHASE AGREEMENT RELATED THERETO) TO WHICH IT IS A PARTY AS OF THE CLOSING
DATE AND ANY SIMILAR AGREEMENTS WHICH IT MAY ENTER INTO THEREAFTER; PROVIDED,
HOWEVER, THAT THE EXISTENCE OF, OR THE PERFORMANCE BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY OF OBLIGATIONS UNDER ANY FUTURE AMENDMENT TO ANY SUCH
EXISTING AGREEMENT OR UNDER ANY SIMILAR AGREEMENT ENTERED INTO AFTER THE CLOSING
DATE SHALL ONLY BE PERMITTED BY THIS CLAUSE (IX) TO THE EXTENT THAT THE TERMS OF
ANY SUCH EXISTING AGREEMENT TOGETHER WITH ALL AMENDMENTS THERETO, TAKEN AS A
WHOLE, OR NEW AGREEMENT ARE NOT OTHERWISE MORE DISADVANTAGEOUS TO THE LENDERS IN
ANY MATERIAL RESPECT THAN THE TERMS OF THE ORIGINAL AGREEMENT IN EFFECT ON THE
CLOSING DATE AS REASONABLY DETERMINED IN GOOD FAITH BY THE BORROWER;

 

(X) THE TRANSACTIONS, THE CREDIT CARD SALE AND THE PAYMENT OF ALL FEES AND
EXPENSES RELATED TO THE TRANSACTIONS AND THE CREDIT CARD SALE, IN EACH CASE AS
DISCLOSED IN THE OFFERING CIRCULAR RELATING TO THE NEW NOTES;

 

(XI) TRANSACTIONS WITH CUSTOMERS, CLIENTS, SUPPLIERS, OR PURCHASERS OR SELLERS
OF GOODS OR SERVICES, IN EACH CASE IN THE ORDINARY COURSE OF BUSINESS AND
OTHERWISE IN COMPLIANCE WITH THE TERMS OF THIS AGREEMENT THAT ARE FAIR TO THE
BORROWER AND THE RESTRICTED SUBSIDIARIES, IN THE REASONABLE DETERMINATION OF THE
BOARD OF DIRECTORS OR THE SENIOR MANAGEMENT OF THE BORROWER, OR ARE ON TERMS AT
LEAST AS FAVORABLE AS MIGHT REASONABLY HAVE BEEN OBTAINED AT SUCH TIME FROM AN
UNAFFILIATED PARTY;

 

(XII) THE ISSUANCE OF EQUITY INTERESTS (OTHER THAN DISQUALIFIED STOCK) OF THE
BORROWER TO ANY PERMITTED HOLDER OR TO ANY DIRECTOR, MANAGER, OFFICER, EMPLOYEE
OR CONSULTANT OF THE BORROWER OR ANY DIRECT OR INDIRECT PARENT COMPANY THEREOF;

 

(XIII) SALES OF ACCOUNTS RECEIVABLE, OR PARTICIPATIONS THEREIN, IN CONNECTION
WITH ANY RECEIVABLES FACILITY; AND

 

(XIV) INVESTMENTS BY THE SPONSORS AND THE CO-INVESTORS IN SECURITIES OF THE
BORROWER OR ANY OF ITS RESTRICTED SUBSIDIARIES SO LONG AS (A) THE INVESTMENT IS
BEING OFFERED GENERALLY TO OTHER INVESTORS ON THE SAME OR MORE FAVORABLE TERMS
AND (B) THE INVESTMENT CONSTITUTES LESS THAN 5.0% OF THE PROPOSED OR OUTSTANDING
ISSUE AMOUNT OF SUCH CLASS OF SECURITIES.

 

SECTION 6.06.  LIMITATIONS ON ASSET SALES.  (A)  THE BORROWER SHALL NOT, AND
SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, CAUSE, MAKE OR SUFFER TO EXIST AN
ASSET SALE OF ANY TERM LOAN FIRST LIEN COLLATERAL, UNLESS:

 

82

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

 

(I) THE BORROWER OR SUCH RESTRICTED SUBSIDIARY, AS THE CASE MAY BE, RECEIVES
CONSIDERATION AT THE TIME OF SUCH ASSET SALE AT LEAST EQUAL TO THE FAIR MARKET
VALUE (AS DETERMINED IN GOOD FAITH BY THE BORROWER) OF THE ASSETS SOLD OR
OTHERWISE DISPOSED OF;

 

(II) EXCEPT IN THE CASE OF A PERMITTED ASSET SWAP, AT LEAST 75% OF THE
CONSIDERATION THEREFOR RECEIVED BY THE BORROWER OR SUCH RESTRICTED SUBSIDIARY,
AS THE CASE MAY BE, IS IN THE FORM OF CASH OR CASH EQUIVALENTS (PROVIDED THAT
THE AMOUNT OF (A) ANY LIABILITIES (AS SHOWN ON THE BORROWER’S OR SUCH RESTRICTED
SUBSIDIARY’S MOST RECENT BALANCE SHEET OR IN THE NOTES THERETO) OF THE BORROWER
OR SUCH RESTRICTED SUBSIDIARY, OTHER THAN LIABILITIES THAT ARE BY THEIR TERMS
SUBORDINATED TO THE OBLIGATIONS, THAT ARE ASSUMED BY THE TRANSFEREE OF ANY SUCH
ASSETS (OR A THIRD PARTY ON BEHALF OF THE TRANSFEREE) AND FOR WHICH THE BORROWER
OR SUCH RESTRICTED SUBSIDIARY HAS BEEN VALIDLY RELEASED BY ALL CREDITORS IN
WRITING, (B) ANY SECURITIES, NOTES OR OTHER OBLIGATIONS OR ASSETS RECEIVED BY
THE BORROWER OR SUCH RESTRICTED SUBSIDIARY FROM SUCH TRANSFEREE THAT ARE
CONVERTED BY THE BORROWER OR SUCH RESTRICTED SUBSIDIARY INTO CASH (TO THE EXTENT
OF THE CASH RECEIVED) WITHIN 180 DAYS FOLLOWING THE CLOSING OF SUCH ASSET SALE
AND (C) ANY DESIGNATED NONCASH CONSIDERATION RECEIVED BY THE BORROWER OR SUCH
RESTRICTED SUBSIDIARY IN SUCH ASSET SALE HAVING AN AGGREGATE FAIR MARKET VALUE,
TAKEN TOGETHER WITH ALL OTHER DESIGNATED NONCASH CONSIDERATION RECEIVED PURSUANT
TO THIS CLAUSE (C) THAT IS AT THAT TIME OUTSTANDING, NOT TO EXCEED THE GREATER
OF (I) $125,000,000 AND (II) 1.75% OF TOTAL ASSETS AT THE TIME OF THE RECEIPT OF
SUCH DESIGNATED NONCASH CONSIDERATION, WITH THE FAIR MARKET VALUE OF EACH ITEM
OF DESIGNATED NONCASH CONSIDERATION BEING MEASURED AT THE TIME RECEIVED AND
WITHOUT GIVING EFFECT TO SUBSEQUENT CHANGES IN VALUE, SHALL BE DEEMED TO BE CASH
FOR PURPOSES OF THIS PROVISION AND FOR NO OTHER PURPOSE);

 

(III) AN AMOUNT EQUAL TO 100% OF THE NET PROCEEDS OF SUCH ASSET SALE (LESS, IN
THE CASE OF THE SALE OF CAPITAL STOCK OF A PERSON, THE AMOUNT ALLOCABLE TO THE
INVENTORY AND RELATED ASSETS OF SUCH PERSON, AS DETERMINED BY THE BORROWER IN
GOOD FAITH) IS PAID DIRECTLY BY THE PURCHASER THEREOF TO THE AGENT TO BE HELD IN
TRUST FOR APPLICATION IN ACCORDANCE WITH SECTION 2.20; AND

 

(B)  THE BORROWER SHALL NOT, AND SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO,
CAUSE, MAKE OR SUFFER TO EXIST AN ASSET SALE (OTHER THAN AN ASSET SALE OF TERM
LOAN FIRST LIEN COLLATERAL), UNLESS:

 

(I) THE BORROWER OR SUCH RESTRICTED SUBSIDIARY, AS THE CASE MAY BE, RECEIVES
CONSIDERATION AT THE TIME OF SUCH ASSET SALE AT LEAST EQUAL TO THE FAIR MARKET
VALUE (AS DETERMINED IN GOOD FAITH BY THE BORROWER) OF THE ASSETS SOLD OR
OTHERWISE DISPOSED OF;

 

(II) EXCEPT IN THE CASE OF A PERMITTED ASSET SWAP, AT LEAST 75% OF THE
CONSIDERATION THEREFOR RECEIVED BY THE BORROWER OR SUCH RESTRICTED SUBSIDIARY,
AS THE CASE MAY BE, IS IN THE FORM OF CASH OR CASH EQUIVALENTS (PROVIDED THAT
THE AMOUNT OF (A) ANY LIABILITIES (AS SHOWN ON THE BORROWER’S OR SUCH RESTRICTED
SUBSIDIARY’S MOST RECENT BALANCE SHEET OR IN THE NOTES THERETO) OF THE BORROWER
OR SUCH RESTRICTED SUBSIDIARY, OTHER THAN LIABILITIES THAT ARE BY THEIR TERMS
SUBORDINATED TO THE OBLIGATIONS, THAT ARE ASSUMED BY THE TRANSFEREE OF ANY SUCH
ASSETS (OR A THIRD PARTY ON BEHALF OF THE TRANSFEREE) AND FOR WHICH THE BORROWER
OR SUCH RESTRICTED SUBSIDIARY HAS BEEN VALIDLY RELEASED BY ALL CREDITORS IN
WRITING, (B) ANY SECURITIES, NOTES OR OTHER OBLIGATIONS OR ASSETS RECEIVED BY
THE BORROWER OR SUCH RESTRICTED SUBSIDIARY FROM SUCH TRANSFEREE THAT ARE
CONVERTED BY THE BORROWER OR SUCH RESTRICTED SUBSIDIARY INTO CASH (TO THE EXTENT
OF THE CASH RECEIVED) WITHIN 180 DAYS FOLLOWING THE CLOSING OF SUCH ASSET SALE
AND (C) ANY DESIGNATED NONCASH CONSIDERATION RECEIVED BY THE BORROWER OR SUCH
RESTRICTED SUBSIDIARY IN SUCH ASSET SALE HAVING AN AGGREGATE FAIR MARKET VALUE,
TAKEN TOGETHER WITH ALL OTHER DESIGNATED NONCASH CONSIDERATION RECEIVED PURSUANT
TO THIS CLAUSE (C) THAT IS AT THAT TIME OUTSTANDING, NOT TO EXCEED THE GREATER
OF (I) $125,000,000 AND (II) 1.75% OF TOTAL ASSETS AT THE TIME OF THE RECEIPT OF
SUCH DESIGNATED NONCASH CONSIDERATION, WITH THE FAIR MARKET VALUE OF EACH ITEM
OF DESIGNATED NONCASH

 

83

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

 

CONSIDERATION BEING MEASURED AT THE TIME RECEIVED AND WITHOUT GIVING EFFECT TO
SUBSEQUENT CHANGES IN VALUE, SHALL BE DEEMED TO BE CASH FOR PURPOSES OF THIS
PROVISION AND FOR NO OTHER PURPOSE); AND

 

(III) THE NET PROCEEDS OF SUCH ASSET SALE ARE APPLIED IN ACCORDANCE WITH
SECTION 2.20.

 

SECTION 6.07.  DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.  (A)  THE BORROWER SHALL NOT, AND SHALL NOT PERMIT ANY RESTRICTED
SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR TO, DIRECTLY OR INDIRECTLY, CREATE
OR OTHERWISE CAUSE OR SUFFER TO EXIST OR BECOME EFFECTIVE ANY CONSENSUAL
ENCUMBRANCE OR CONSENSUAL RESTRICTION ON THE ABILITY OF ANY SUCH RESTRICTED
SUBSIDIARY TO:

 

(I) (A) PAY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTIONS TO THE BORROWER OR ANY
RESTRICTED SUBSIDIARY ON ITS CAPITAL STOCK OR WITH RESPECT TO ANY OTHER INTEREST
OR PARTICIPATION IN, OR MEASURED BY, ITS PROFITS, OR (B) PAY ANY INDEBTEDNESS
OWED TO THE BORROWER OR ANY RESTRICTED SUBSIDIARY;

 

(II) MAKE LOANS OR ADVANCES TO THE BORROWER OR ANY RESTRICTED SUBSIDIARY; OR

 

(III) SELL, LEASE OR TRANSFER ANY OF ITS PROPERTIES OR ASSETS TO THE BORROWER OR
ANY RESTRICTED SUBSIDIARY.

 

(B)  THE LIMITATIONS SET FORTH IN PARAGRAPH (A) OF THIS SECTION 6.07 SHALL NOT
APPLY (IN EACH CASE) TO SUCH ENCUMBRANCES OR RESTRICTIONS EXISTING UNDER OR BY
REASON OF:

 

(I) CONTRACTUAL ENCUMBRANCES OR RESTRICTIONS IN EFFECT ON THE CLOSING DATE,
INCLUDING PURSUANT TO THE LOAN DOCUMENTS, THE SENIOR SECURED ASSET-BASED
REVOLVING CREDIT FACILITY AND THE RELATED DOCUMENTATION (INCLUDING SECURITY
DOCUMENTS AND INTERCREDITOR AGREEMENTS) AND HEDGING OBLIGATIONS, THE 2008 NOTES
AND THE 2028 DEBENTURES;

 

(II) THE NEW NOTE DOCUMENTS AND THE NEW NOTES AND THE SUBSIDIARY GUARANTEES OF
THE NEW NOTES ISSUED THEREUNDER, THE COLLATERAL DOCUMENTS, THE ABL SECURITY
DOCUMENTS AND THE INTERCREDITOR AGREEMENT;

 

(III) PURCHASE MONEY OBLIGATIONS FOR PROPERTY ACQUIRED IN THE ORDINARY COURSE OF
BUSINESS AND CAPITALIZED LEASE OBLIGATIONS THAT IMPOSE RESTRICTIONS OF THE
NATURE DISCUSSED IN CLAUSE (III) OF PARAGRAPH (A) OF THIS SECTION 6.07 ON THE
PROPERTY SO ACQUIRED;

 

(IV) APPLICABLE LAW OR ANY APPLICABLE RULE, REGULATION OR ORDER;

 

(V) ANY AGREEMENT OR OTHER INSTRUMENT OF A PERSON ACQUIRED BY THE BORROWER OR
ANY RESTRICTED SUBSIDIARY IN EXISTENCE AT THE TIME OF SUCH ACQUISITION (BUT NOT
CREATED IN CONNECTION THEREWITH OR IN CONTEMPLATION THEREOF), WHICH ENCUMBRANCE
OR RESTRICTION IS NOT APPLICABLE TO ANY PERSON, OR THE PROPERTIES OR ASSETS OF
ANY PERSON, OTHER THAN THE PERSON, OR THE PROPERTY OR ASSETS OF THE PERSON, SO
ACQUIRED;

 

84

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

 

(VI) CONTRACTS FOR THE SALE OF ASSETS, INCLUDING CUSTOMARY RESTRICTIONS WITH
RESPECT TO A SUBSIDIARY PURSUANT TO AN AGREEMENT THAT HAS BEEN ENTERED INTO FOR
THE SALE OR DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE CAPITAL STOCK OR
ASSETS OF SUCH SUBSIDIARY;

 

(VII) SECURED INDEBTEDNESS OTHERWISE PERMITTED TO BE INCURRED PURSUANT TO
SECTIONS 6.01 AND 6.02 THAT LIMIT THE RIGHT OF THE DEBTOR TO DISPOSE OF THE
ASSETS SECURING SUCH INDEBTEDNESS;

 

(VIII) RESTRICTIONS ON CASH OR OTHER DEPOSITS OR NET WORTH IMPOSED BY CUSTOMERS
UNDER CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS;

 

(IX) OTHER INDEBTEDNESS, DISQUALIFIED STOCK OR PREFERRED STOCK OF RESTRICTED
SUBSIDIARIES PERMITTED TO BE INCURRED AFTER THE CLOSING DATE PURSUANT TO
SECTION 6.01;

 

(X) CUSTOMARY PROVISIONS IN JOINT VENTURE AGREEMENTS AND OTHER SIMILAR
AGREEMENTS;

 

(XI) CUSTOMARY PROVISIONS CONTAINED IN LEASES AND OTHER AGREEMENTS ENTERED INTO
IN THE ORDINARY COURSE OF BUSINESS;

 

(XII) RESTRICTIONS CREATED IN CONNECTION WITH ANY RECEIVABLES FACILITY; PROVIDED
THAT IN THE CASE OF RECEIVABLES FACILITIES ESTABLISHED AFTER THE CLOSING DATE,
SUCH RESTRICTIONS ARE NECESSARY OR ADVISABLE, IN THE GOOD FAITH DETERMINATION OF
THE BORROWER, TO EFFECT SUCH RECEIVABLES FACILITY;

 

(XIII) RESTRICTIONS OR CONDITIONS CONTAINED IN ANY TRADING, NETTING, OPERATING,
CONSTRUCTION, SERVICE, SUPPLY, PURCHASE OR OTHER AGREEMENT TO WHICH THE BORROWER
OR ANY OF ITS RESTRICTED SUBSIDIARIES IS A PARTY ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS; PROVIDED THAT SUCH AGREEMENT PROHIBITS THE ENCUMBRANCE OF
SOLELY THE PROPERTY OR ASSETS OF THE BORROWER OR SUCH RESTRICTED SUBSIDIARY THAT
ARE THE SUBJECT OF SUCH AGREEMENT, THE PAYMENT RIGHTS ARISING THEREUNDER OR THE
PROCEEDS THEREOF AND DOES NOT EXTEND TO ANY OTHER ASSET OR PROPERTY OF THE
BORROWER OR SUCH RESTRICTED SUBSIDIARY OR THE ASSETS OR PROPERTY OF ANY OTHER
RESTRICTED SUBSIDIARY; AND

 

(XIV) ANY ENCUMBRANCES OR RESTRICTIONS OF THE TYPE REFERRED TO IN CLAUSES (I),
(II) AND (III) OF PARAGRAPH (A) OF THIS SECTION 6.07 IMPOSED BY ANY AMENDMENTS,
MODIFICATIONS, RESTATEMENTS, RENEWALS, INCREASES, SUPPLEMENTS, REFUNDINGS,
REPLACEMENTS OR REFINANCINGS OF THE CONTRACTS, INSTRUMENTS OR OBLIGATIONS
REFERRED TO IN CLAUSES (I) THROUGH (XIII) OF THIS PARAGRAPH (B); PROVIDED THAT
SUCH AMENDMENTS, MODIFICATIONS, RESTATEMENTS, RENEWALS, INCREASES, SUPPLEMENTS,
REFUNDINGS, REPLACEMENTS OR REFINANCINGS ARE, IN THE GOOD FAITH JUDGMENT OF THE
BORROWER, NOT MATERIALLY MORE RESTRICTIVE WITH RESPECT TO SUCH ENCUMBRANCE AND
OTHER RESTRICTIONS THAN THOSE PRIOR TO SUCH AMENDMENT, MODIFICATION,
RESTATEMENT, RENEWAL, INCREASE, SUPPLEMENT, REFUNDING, REPLACEMENT OR
REFINANCING; PROVIDED, FURTHER, THAT WITH RESPECT TO CONTRACTS, INSTRUMENTS OR
OBLIGATIONS EXISTING ON THE CLOSING DATE, ANY AMENDMENTS, MODIFICATIONS,
RESTATEMENTS, RENEWALS, INCREASES, SUPPLEMENTS, REFUNDINGS, REPLACEMENTS OR
REFINANCINGS ARE NOT MATERIALLY MORE RESTRICTIVE WITH RESPECT TO SUCH
ENCUMBRANCES AND OTHER RESTRICTIONS THAN THOSE CONTAINED IN SUCH CONTRACTS,
INSTRUMENTS OR OBLIGATIONS AS IN EFFECT ON THE CLOSING DATE.

 

SECTION 6.08.  LIMITATIONS ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES.  THE BORROWER WILL NOT PERMIT ANY OF ITS WHOLLY-OWNED SUBSIDIARIES
THAT ARE RESTRICTED SUBSIDIARIES (AND NON-WHOLLY-OWNED SUBSIDIARIES IF SUCH
NON-WHOLLY-OWNED SUBSIDIARIES GUARANTEE OTHER CAPITAL MARKETS DEBT SECURITIES),
OTHER THAN A SUBSIDIARY GUARANTOR OR A FOREIGN SUBSIDIARY, TO GUARANTEE THE
PAYMENT OF ANY INDEBTEDNESS OF THE BORROWER OR ANY OTHER SUBSIDIARY GUARANTOR
UNLESS:

 

85

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

 

(A) SUCH RESTRICTED SUBSIDIARY WITHIN THIRTY (30) DAYS EXECUTES AND DELIVERS A
JOINDER AGREEMENT PROVIDING FOR A LOAN GUARANTY BY SUCH RESTRICTED SUBSIDIARY,
EXCEPT THAT WITH RESPECT TO A GUARANTEE OF INDEBTEDNESS OF THE BORROWER OR ANY
SUBSIDIARY GUARANTOR, THAT IS BY ITS EXPRESS TERMS SUBORDINATED IN RIGHT OF
PAYMENT TO THE OBLIGATIONS OR THE LOAN GUARANTY OF SUCH RESTRICTED SUBSIDIARY,
ANY SUCH GUARANTEE BY SUCH RESTRICTED SUBSIDIARY WITH RESPECT TO SUCH
INDEBTEDNESS SHALL BE SUBORDINATED IN RIGHT OF PAYMENT TO SUCH LOAN GUARANTY
SUBSTANTIALLY TO THE SAME EXTENT AS SUCH INDEBTEDNESS IS SUBORDINATED TO THE
OBLIGATIONS;

 

(B) SUCH RESTRICTED SUBSIDIARY WAIVES AND WILL NOT IN ANY MANNER WHATSOEVER
CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF, ANY RIGHTS OF REIMBURSEMENT,
INDEMNITY OR SUBROGATION OR ANY OTHER RIGHTS AGAINST THE BORROWER OR ANY OTHER
RESTRICTED SUBSIDIARY AS A RESULT OF ANY PAYMENT BY SUCH RESTRICTED SUBSIDIARY
UNDER ITS LOAN GUARANTY; AND

 

(C) SUCH RESTRICTED SUBSIDIARY SHALL DELIVER TO THE AGENT AN OPINION OF COUNSEL
TO THE EFFECT THAT (I) SUCH LOAN GUARANTY HAS BEEN DULY EXECUTED AND AUTHORIZED
AND (II) SUCH LOAN GUARANTY CONSTITUTES A VALID, BINDING AND ENFORCEABLE
OBLIGATION OF SUCH RESTRICTED SUBSIDIARY, EXCEPT INSOFAR AS ENFORCEMENT THEREOF
MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY OR SIMILAR LAWS (INCLUDING ALL LAWS
RELATING TO FRAUDULENT TRANSFERS) AND EXCEPT INSOFAR AS ENFORCEMENT THEREOF IS
SUBJECT TO GENERAL PRINCIPLES OF EQUITY;

 

provided that this Section 6.08 shall not be applicable to any guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary.

 

SECTION 6.09.  LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS.  THE BORROWER
WILL NOT, AND WILL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, ENTER INTO ANY SALE
AND LEASE-BACK TRANSACTION WITH RESPECT TO ANY PROPERTY UNLESS:

 

(A) THE BORROWER OR SUCH RESTRICTED SUBSIDIARY WOULD BE ENTITLED TO (I) INCUR
INDEBTEDNESS IN AN AMOUNT EQUAL TO THE ATTRIBUTABLE DEBT WITH RESPECT TO SUCH
SALE AND LEASE-BACK TRANSACTION PURSUANT TO SECTION 6.01 AND (II) CREATE A LIEN
ON SUCH PROPERTY SECURING SUCH ATTRIBUTABLE DEBT WITHOUT SECURING THE
OBLIGATIONS PURSUANT TO SECTION 6.02;

 

(B) THE CONSIDERATION RECEIVED BY THE BORROWER OR ANY RESTRICTED SUBSIDIARY IN
CONNECTION WITH SUCH SALE AND LEASE-BACK TRANSACTION IS AT LEAST EQUAL TO THE
FAIR MARKET VALUE (AS DETERMINED IN GOOD FAITH BY THE BORROWER) OF SUCH
PROPERTY; AND

 

(C) THE BORROWER APPLIES THE PROCEEDS OF SUCH TRANSACTION IN COMPLIANCE WITH
SECTION 2.20.

 

SECTION 6.10.  AMENDMENTS TO SUBORDINATION PROVISIONS.  WITHOUT THE CONSENT OF
THE REQUIRED LENDERS, THE BORROWER WILL NOT AMEND, MODIFY OR ALTER THE SENIOR
SUBORDINATED NOTES INDENTURE IN ANY WAY TO:

 

(A) INCREASE THE RATE OF OR CHANGE THE TIME FOR PAYMENT OF INTEREST ON ANY
SENIOR SUBORDINATED NOTES;

 

(B) INCREASE THE PRINCIPAL OF, ADVANCE THE FINAL MATURITY DATE OF OR SHORTEN THE
WEIGHTED AVERAGE LIFE TO MATURITY OF ANY SENIOR SUBORDINATED NOTES;

 

86

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

 

(C) ALTER THE REDEMPTION PROVISIONS OR THE PRICE OR TERMS AT WHICH THE BORROWER
IS REQUIRED TO OFFER TO PURCHASE ANY SENIOR SUBORDINATED NOTES; OR

 

(D) AMEND THE PROVISIONS OF THE SENIOR SUBORDINATED NOTES INDENTURE THAT RELATE
TO SUBORDINATION.

 

SECTION 6.11.  OBLIGATIONS OF THE BORROWER AND THE RESTRICTED SUBSIDIARIES
RELATING TO KATE SPADE.  IN THE EVENT THAT KATE SPADE SELLS, CONVEYS, TRANSFERS
OR OTHERWISE DISPOSES OF, ALL OR SUBSTANTIALLY ALL OF ITS PROPERTIES OR ASSETS,
IN ONE OR MORE RELATED TRANSACTIONS, THE BORROWER SHALL, SUBJECT TO ITS
FIDUCIARY DUTIES TO THE HOLDERS OF MINORITY EQUITY INTERESTS IN KATE SPADE AND
SUBJECT TO ANY OTHER OBLIGATIONS IN THE ORGANIZATIONAL DOCUMENTS OF KATE SPADE
OR OTHER AGREEMENTS WITH KATE SPADE OR HOLDERS OF ITS EQUITY INTERESTS (IN EACH
CASE, AS IN EFFECT ON THE CLOSING DATE), EXERCISE ITS RIGHTS AND POWERS AS A
CONTROLLING HOLDER OF EQUITY INTERESTS IN KATE SPADE TO CAUSE KATE SPADE TO
DISTRIBUTE TO THE BORROWER ITS PRO RATA SHARE OF THE NET PROCEEDS OF SUCH SALE,
CONVEYANCE, TRANSFER OR OTHER DISPOSITION, THE BORROWER SHALL APPLY SUCH
PROCEEDS IN ACCORDANCE WITH SECTION 2.20 AND SUCH PROCEEDS WILL CONSTITUTE NET
PROCEEDS THEREUNDER.  IN ADDITION, THE BORROWER WILL, AND WILL CAUSE ITS
RESTRICTED SUBSIDIARIES TO, APPLY THE AMOUNT OF ANY OTHER EXTRAORDINARY
DISTRIBUTION IN ACCORDANCE WITH SECTION 2.20 AND SUCH AMOUNT WILL CONSTITUTE NET
PROCEEDS THEREUNDER.  FURTHERMORE, THE BORROWER, IN ITS CAPACITY AS A HOLDER OF
EQUITY INTERESTS IN KATE SPADE, WILL NOT, AND WILL CAUSE ITS RESTRICTED
SUBSIDIARIES NOT TO, WAIVE ANY OF ITS RIGHTS TO RECEIVE DIVIDENDS, DISTRIBUTIONS
OR OTHER PAYMENTS FROM KATE SPADE OR CONSENT TO AN AMENDMENT OF KATE SPADE’S
ORGANIZATIONAL DOCUMENTS OR OTHER AGREEMENTS THAT WOULD RESTRICT KATE SPADE’S
ABILITY TO MAKE ANY SUCH DISTRIBUTIONS.

 

SECTION 6.12.  IMPAIRMENT OF SECURITY INTEREST.  SUBJECT TO THE RIGHTS OF THE
HOLDERS OF PERMITTED LIENS OR PERMITTED COLLATERAL LIENS AND EXCEPT AS PERMITTED
BY THIS AGREEMENT OR THE LOAN DOCUMENTS, THE BORROWER SHALL NOT, AND SHALL NOT
PERMIT ANY OF ITS RESTRICTED SUBSIDIARIES TO, TAKE OR KNOWINGLY OR NEGLIGENTLY
OMIT TO TAKE, ANY ACTION WHICH ACTION OR OMISSION WOULD REASONABLY BE EXPECTED
TO HAVE THE RESULT OF MATERIALLY IMPAIRING THE SECURITY INTEREST WITH RESPECT TO
THE COLLATERAL FOR THE BENEFIT OF THE SECURED PARTIES.

 

SECTION 6.13.  BUSINESS OF BORROWER AND RESTRICTED SUBSIDIARIES.  THE BORROWER
WILL NOT, AND WILL NOT PERMIT ANY RESTRICTED SUBSIDIARY TO, ENGAGE TO ANY
MATERIAL EXTENT IN ANY MATERIAL LINE OF BUSINESS SUBSTANTIALLY DIFFERENT FROM
THOSE LINES OF BUSINESS CONDUCTED BY THE BORROWER AND THE RESTRICTED
SUBSIDIARIES ON THE DATE OF EXECUTION OF THIS AGREEMENT OR BUSINESSES REASONABLY
RELATED OR ANCILLARY THERETO.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

If any of the following events (“Events of Default”) shall occur:

 

(A) THE BORROWER SHALL FAIL TO PAY ANY PRINCIPAL OF ANY LOAN WHEN AND AS THE
SAME SHALL BECOME DUE AND PAYABLE, WHETHER AT THE DUE DATE THEREOF OR AT A DATE
FIXED FOR PREPAYMENT THEREOF OR BY ACCELERATION THEREOF OR OTHERWISE;

 

(B) THE BORROWER SHALL FAIL TO PAY ANY INTEREST ON ANY LOAN OR ANY FEE OR ANY
OTHER AMOUNT (OTHER THAN AN AMOUNT REFERRED TO IN CLAUSE (A) OF THIS ARTICLE)
PAYABLE UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, WHEN AND AS THE SAME
SHALL BECOME DUE AND PAYABLE, AND SUCH FAILURE SHALL CONTINUE UNREMEDIED FOR A
PERIOD OF THIRTY (30) DAYS;

 

87

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

 

(C) ANY REPRESENTATION OR WARRANTY MADE OR DEEMED MADE BY OR ON BEHALF OF ANY
LOAN PARTY HEREIN OR IN ANY OTHER LOAN DOCUMENT OR ANY AMENDMENT OR MODIFICATION
THEREOF OR WAIVER THEREUNDER, OR IN ANY REPORT OR OTHER CERTIFICATE, FINANCIAL
STATEMENT OR OTHER DOCUMENT FURNISHED PURSUANT TO OR IN CONNECTION WITH THIS
AGREEMENT OR ANY LOAN DOCUMENT, SHALL PROVE TO HAVE BEEN MATERIALLY INCORRECT
WHEN MADE OR DEEMED MADE;

 

(D) FAILURE BY HOLDINGS, THE BORROWER OR ANY SUBSIDIARY GUARANTOR FOR SIXTY (60)
DAYS AFTER RECEIPT OF WRITTEN NOTICE GIVEN BY THE AGENT OR THE REQUIRED LENDERS
TO COMPLY WITH ANY OF ITS OTHER AGREEMENTS IN THIS AGREEMENT OR ANY LOAN
DOCUMENT;

 

(E) (I) ANY LOAN PARTY SHALL FAIL TO MAKE ANY PAYMENT BEYOND THE APPLICABLE
GRACE PERIOD (WHETHER BY SCHEDULED MATURITY, REQUIRED PREPAYMENT, ACCELERATION,
DEMAND OR OTHERWISE) WITH RESPECT TO ANY MATERIAL INDEBTEDNESS, OR (II) ANY
EVENT OR CONDITION OCCURS (OTHER THAN WITH RESPECT TO MATERIAL INDEBTEDNESS
CONSTITUTING DERIVATIVE TRANSACTIONS, TERMINATION EVENTS OR EQUIVALENT EVENTS
PURSUANT TO THE TERMS OF THE RELATED HEDGE AGREEMENTS IN ACCORDANCE WITH THE
TERMS THEREOF AND NOT AS A RESULT OF ANY DEFAULT THEREUNDER BY ANY LOAN PARTY)
THAT RESULTS IN ANY MATERIAL INDEBTEDNESS BECOMING DUE PRIOR TO ITS SCHEDULED
MATURITY OR THAT ENABLES OR PERMITS (WITH THE GIVING OF NOTICE, IF REQUIRED) THE
HOLDER OR HOLDERS OF ANY SUCH MATERIAL INDEBTEDNESS OR ANY TRUSTEE OR AGENT ON
ITS OR THEIR BEHALF TO CAUSE ANY SUCH MATERIAL INDEBTEDNESS TO BECOME DUE, OR TO
REQUIRE THE PREPAYMENT, REPURCHASE, REDEMPTION OR DEFEASANCE THEREOF, PRIOR TO
ITS SCHEDULED MATURITY; PROVIDED THAT THIS PARAGRAPH (E) SHALL NOT APPLY TO
SECURED INDEBTEDNESS THAT BECOMES DUE AS A RESULT OF THE VOLUNTARY SALE OR
TRANSFER OF THE PROPERTY OR ASSETS SECURING SUCH INDEBTEDNESS IF SUCH SALE OR
TRANSFER IS PERMITTED HEREUNDER AND UNDER THE DOCUMENTS PROVIDING FOR SUCH
INDEBTEDNESS;

 

(F) AN INVOLUNTARY PROCEEDING SHALL BE COMMENCED OR AN INVOLUNTARY PETITION
SHALL BE FILED SEEKING (I) LIQUIDATION, REORGANIZATION OR OTHER RELIEF IN
RESPECT OF HOLDINGS, THE BORROWER OR ANY SIGNIFICANT SUBSIDIARY (OR ANY GROUP OF
SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) OR ITS
DEBTS, OR OF A SUBSTANTIAL PART OF ITS ASSETS, UNDER ANY FEDERAL, STATE OR
FOREIGN BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR SIMILAR LAW NOW OR HEREAFTER IN
EFFECT OR (II) THE APPOINTMENT OF A RECEIVER, TRUSTEE, CUSTODIAN, SEQUESTRATOR,
CONSERVATOR OR SIMILAR OFFICIAL FOR HOLDINGS, THE BORROWER OR ANY SIGNIFICANT
SUBSIDIARY (OR ANY GROUP OF SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY) OR FOR A SUBSTANTIAL PART OF ITS ASSETS, AND, IN ANY
SUCH CASE OF CLAUSE (I) OR (II), SUCH PROCEEDING OR PETITION SHALL CONTINUE
UNDISMISSED AND UNSTAYED FOR SIXTY (60) DAYS OR AN ORDER OR DECREE APPROVING OR
ORDERING ANY OF THE FOREGOING SHALL BE ENTERED;

 

(G) HOLDINGS, THE BORROWER OR ANY SIGNIFICANT SUBSIDIARY (OR ANY GROUP OF
SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) SHALL
(I) VOLUNTARILY COMMENCE ANY PROCEEDING OR FILE ANY PETITION SEEKING
LIQUIDATION, REORGANIZATION OR OTHER RELIEF UNDER ANY FEDERAL, STATE OR FOREIGN
BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT,
(II) CONSENT TO THE INSTITUTION OF, OR FAIL TO CONTEST IN A TIMELY AND
APPROPRIATE MANNER, ANY PROCEEDING OR PETITION DESCRIBED IN CLAUSE (F) OF THIS
ARTICLE, (III) APPLY FOR OR CONSENT TO THE APPOINTMENT OF A RECEIVER, TRUSTEE,
CUSTODIAN, SEQUESTRATOR, CONSERVATOR OR SIMILAR OFFICIAL FOR HOLDINGS, THE
BORROWER OR ANY SIGNIFICANT SUBSIDIARY (OR ANY GROUP OF SUBSIDIARIES THAT
TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) OR FOR A SUBSTANTIAL PART OF
ITS ASSETS, (IV) FILE AN ANSWER ADMITTING THE MATERIAL ALLEGATIONS OF A PETITION
FILED AGAINST IT IN ANY SUCH PROCEEDING OR (V) MAKE A GENERAL ASSIGNMENT FOR THE
BENEFIT OF CREDITORS;

 

(H) FAILURE BY HOLDINGS, THE BORROWER OR ANY SIGNIFICANT SUBSIDIARY (OR ANY
GROUP OF SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY)
TO PAY FINAL JUDGMENTS AGGREGATING IN EXCESS OF $50,000,000, WHICH FINAL
JUDGMENTS REMAIN UNPAID, UNDISCHARGED AND

 

88

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

 

UNSTAYED FOR A PERIOD OF MORE THAN SIXTY (60) DAYS AFTER SUCH JUDGMENT BECOMES
FINAL, AND IN THE EVENT SUCH JUDGMENT IS COVERED BY INSURANCE, AN ENFORCEMENT
PROCEEDING HAS BEEN COMMENCED BY ANY CREDITOR UPON SUCH JUDGMENT OR DECREE WHICH
IS NOT PROMPTLY STAYED;

 

(I) THE LOAN GUARANTY OF ANY SIGNIFICANT SUBSIDIARY (OR ANY GROUP OF
SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) OR
HOLDINGS SHALL FOR ANY REASON CEASE TO BE IN FULL FORCE AND EFFECT OR BE
DECLARED NULL AND VOID OR ANY RESPONSIBLE OFFICER OF ANY SUBSIDIARY GUARANTOR
THAT IS A SIGNIFICANT SUBSIDIARY (OR THE RESPONSIBLE OFFICERS OF ANY GROUP OF
SUBSIDIARIES THAT TOGETHER WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) OR
HOLDINGS, AS THE CASE MAY BE, DENIES THAT IT HAS ANY FURTHER LIABILITY UNDER ITS
LOAN GUARANTY OR GIVES NOTICE TO SUCH EFFECT, OTHER THAN BY REASON OF THE
TERMINATION OF THIS AGREEMENT OR THE RELEASE OF ANY SUCH LOAN GUARANTY IN
ACCORDANCE WITH THIS AGREEMENT;

 

(J) UNLESS ALL OF THE COLLATERAL HAS BEEN RELEASED FROM THE LIENS IN ACCORDANCE
WITH THE PROVISIONS OF THE COLLATERAL DOCUMENTS, ANY COLLATERAL DOCUMENT SHALL
FOR ANY REASON CEASE TO BE IN FULL FORCE AND EFFECT OR THE ASSERTION BY
HOLDINGS, THE BORROWER OR ANY RESTRICTED SUBSIDIARY, IN ANY PLEADING IN ANY
COURT OF COMPETENT JURISDICTION, THAT ANY SECURITY INTEREST THEREUNDER IS
INVALID OR UNENFORCEABLE AND, IN THE CASE OF ANY SUCH RESTRICTED SUBSIDIARY, THE
FAILURE BY THE BORROWER TO CAUSE SUCH RESTRICTED SUBSIDIARY TO RESCIND SUCH
ASSERTIONS WITHIN THIRTY (30) DAYS AFTER THE BORROWER HAS ACTUAL KNOWLEDGE OF
SUCH ASSERTIONS; OR

 

(K) THE FAILURE BY HOLDINGS, THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO COMPLY
FOR SIXTY (60) DAYS AFTER RECEIPT OF WRITTEN NOTICE GIVEN BY THE AGENT OR THE
REQUIRED LENDERS WITH ITS OTHER AGREEMENTS CONTAINED IN THE COLLATERAL
DOCUMENTS, EXCEPT FOR A FAILURE THAT WOULD NOT MATERIALLY AFFECT THE VALUE OF
THE COLLATERAL, OR THE REMEDIES WITH RESPECT THERETO, IN EACH CASE TAKEN AS A
WHOLE,

 

then, and in every such event (other than an event with respect to any Loan
Party described in clause (f) or (g) of this Article), and at any time
thereafter during the continuance of such event, the Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take any of
the following actions, at the same or different times:  (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
provided that upon the occurrence of an event with respect to any Loan Party
described in clause (f) or (g) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, without further action of the Agent or any
Lender.  Upon the occurrence and the continuance of an Event of Default, the
Agent may, and at the request of the Required Lenders shall, exercise any rights
and remedies provided to the Agent under the Loan Documents or at law or equity,
including all remedies provided under the UCC.

 

In the event of any Event of Default specified in clause (e) of the preceding
paragraph of this Article, such Event of Default and all consequences thereof
(excluding any resulting payment default) shall be annulled, waived and
rescinded automatically and without any action by the Agent or the Lenders if,
within twenty (20) days after such Event of Default arose, (i) the Indebtedness
or guarantee that is the basis for such Event of Default has been discharged,
(ii) the holders thereof have rescinded or waived the

 

89

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

 

acceleration, notice or action (as the case may be) giving rise to such Event of
Default or (iii) the default that is the basis for such Event of Default has
been cured.

 

ARTICLE VIII

 

THE AGENT

 

Each of the Lenders hereby irrevocably appoints the Agent as its agent and
authorizes the Agent to take such actions on its behalf, including execution of
the other Loan Documents, and to exercise such powers as are delegated to the
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

 

The bank serving as the Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as though
it were not the Agent, and such bank and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the Loan
Parties or any subsidiary of a Loan Party or other Affiliate thereof as if it
were not the Agent hereunder.

 

The Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents.  Without limiting the generality of the foregoing,
(a) the Agent shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) the Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Agent is required to exercise in
writing as directed by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to any Loan Party or any of its
Subsidiaries that is communicated to or obtained by the bank serving as Agent or
any of its Affiliates in any capacity.  The Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or willful misconduct.  The Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Agent by the Borrower or a Lender, and the Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered
hereunder or in connection with any Loan Document, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
(v) the creation, perfection or priority of Liens on the Collateral or the
existence of the Collateral, or (vi) the satisfaction of any condition set forth
in Article IV or elsewhere in any Loan Document, other than to confirm receipt
of items expressly required to be delivered to the Agent.

 

The Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The Agent also may rely upon any statement made
to it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon.  The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be

 

90

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

 

liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

The Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Agent.  The Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties.  The exculpatory provisions
of the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Agent.

 

Subject to the appointment and acceptance of a successor Agent as provided in
this paragraph, the Agent may resign at any time by notifying the Lenders and
the Borrower.  Upon any such resignation, the Required Lenders shall have the
right, with the consent (not to be unreasonably withheld or delayed) of the
Borrower, to appoint a successor; provided that, during the existence and
continuation of an Event of Default, no consent of the Borrower shall be
required.  If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within thirty (30) days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a commercial
bank or an Affiliate of any such commercial bank reasonably acceptable to the
Borrower.  Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder.  The fees
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Agent’s resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or related agreement or any document
furnished hereunder or thereunder.

 

The co-arrangers, joint bookrunners, co-syndication agents and the documentation
agent shall not have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.  NOTICES.  (A)  EXCEPT IN THE CASE OF NOTICES AND OTHER
COMMUNICATIONS EXPRESSLY PERMITTED TO BE GIVEN BY TELEPHONE (AND SUBJECT TO
PARAGRAPH (B) BELOW), ALL NOTICES AND OTHER COMMUNICATIONS PROVIDED FOR HEREIN
SHALL BE IN WRITING AND SHALL BE DELIVERED BY HAND OR OVERNIGHT COURIER SERVICE,
MAILED BY CERTIFIED OR REGISTERED MAIL OR SENT BY FACSIMILE, AS FOLLOWS:

 

(I) IF TO ANY LOAN PARTY, TO THE BORROWER AT:

 

91

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

 

One Marcus Square
1618 Main Street
Dallas, Texas 75201
Attention: General Counsel
Facsimile No: (214) 743-7611

 

(II) IF TO THE AGENT, TO CREDIT SUISSE AT:

 

Eleven Madison Avenue
New York, NY 10010
Attention: Agency Group
Facsimile No: (212) 325-8304

 

(III) IF TO ANY OTHER LENDER, TO IT AT ITS ADDRESS OR FACSIMILE NUMBER SET FORTH
IN ITS ADMINISTRATIVE QUESTIONNAIRE.

 

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent and when receipt has been confirmed by telephone, provided that if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient.

 

(B)  NOTICES AND OTHER COMMUNICATIONS TO THE LENDERS HEREUNDER MAY BE DELIVERED
OR FURNISHED BY ELECTRONIC COMMUNICATIONS (INCLUDING E-MAIL AND INTERNET OR
INTRANET WEBSITES) PURSUANT TO PROCEDURES APPROVED BY THE AGENT; PROVIDED THAT
THE FOREGOING SHALL NOT APPLY TO NOTICES PURSUANT TO ARTICLE II OR TO COMPLIANCE
AND NO EVENT OF DEFAULT CERTIFICATES DELIVERED PURSUANT TO
SECTION 5.01(D) UNLESS OTHERWISE AGREED BY THE AGENT AND THE APPLICABLE LENDER. 
THE AGENT OR THE BORROWER (ON BEHALF OF THE LOAN PARTIES) MAY, IN ITS
DISCRETION, AGREE TO ACCEPT NOTICES AND OTHER COMMUNICATIONS TO IT HEREUNDER BY
ELECTRONIC COMMUNICATIONS PURSUANT TO PROCEDURES APPROVED BY IT; PROVIDED THAT
APPROVAL OF SUCH PROCEDURES MAY BE LIMITED TO PARTICULAR NOTICES OR
COMMUNICATIONS. ALL SUCH NOTICES AND OTHER COMMUNICATIONS (I) SENT TO AN E-MAIL
ADDRESS SHALL BE DEEMED RECEIVED UPON THE SENDER’S RECEIPT OF AN ACKNOWLEDGEMENT
FROM THE INTENDED RECIPIENT (SUCH AS BY THE “RETURN RECEIPT REQUESTED” FUNCTION,
AS AVAILABLE, RETURN E-MAIL OR OTHER WRITTEN ACKNOWLEDGEMENT), PROVIDED THAT IF
NOT GIVEN DURING THE NORMAL BUSINESS HOURS OF THE RECIPIENT, SUCH NOTICE OR
COMMUNICATION SHALL BE DEEMED TO HAVE BEEN GIVEN AT THE OPENING OF BUSINESS ON
THE NEXT BUSINESS DAY FOR THE RECIPIENT, AND (II) POSTED TO AN INTERNET OR
INTRANET WEBSITE SHALL BE DEEMED RECEIVED UPON THE DEEMED RECEIPT BY THE
INTENDED RECIPIENT AT ITS E-MAIL ADDRESS AS DESCRIBED IN THE FOREGOING
CLAUSE (B)(I) OF NOTIFICATION THAT SUCH NOTICE OR COMMUNICATION IS AVAILABLE AND
IDENTIFYING THE WEBSITE ADDRESS THEREFOR.

 

(C)  ANY PARTY HERETO MAY CHANGE ITS ADDRESS OR FACSIMILE NUMBER FOR NOTICES AND
OTHER COMMUNICATIONS HEREUNDER BY NOTICE TO THE OTHER PARTIES HERETO.

 

SECTION 9.02.  WAIVERS; AMENDMENTS.  (A)  NO FAILURE OR DELAY BY THE AGENT OR
ANY LENDER IN EXERCISING ANY RIGHT OR POWER HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE OF ANY SUCH RIGHT OR POWER, OR ANY ABANDONMENT OR DISCONTINUANCE OF
STEPS TO ENFORCE SUCH A RIGHT OR POWER, PRECLUDE ANY OTHER OR FURTHER EXERCISE
THEREOF OR THE EXERCISE OF ANY OTHER RIGHT OR POWER.  THE RIGHTS AND REMEDIES OF
THE AGENT AND THE LENDERS HEREUNDER AND UNDER ANY OTHER LOAN DOCUMENT ARE
CUMULATIVE AND ARE NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES THAT THEY WOULD
OTHERWISE HAVE.  NO WAIVER OF ANY PROVISION OF ANY LOAN DOCUMENT OR CONSENT TO
ANY DEPARTURE BY ANY LOAN PARTY THEREFROM SHALL IN ANY EVENT BE EFFECTIVE UNLESS
THE SAME SHALL BE PERMITTED BY PARAGRAPH (B) OF THIS SECTION, AND THEN SUCH
WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC

 

92

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

 

INSTANCE AND FOR THE PURPOSE FOR WHICH GIVEN.  WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, TO THE EXTENT PERMITTED BY LAW, THE MAKING OF A LOAN SHALL NOT
BE CONSTRUED AS A WAIVER OF ANY DEFAULT, REGARDLESS OF WHETHER THE AGENT OR ANY
LENDER MAY HAVE HAD NOTICE OR KNOWLEDGE OF SUCH DEFAULT AT THE TIME.

 

(B)  NEITHER THIS AGREEMENT NOR ANY OTHER LOAN DOCUMENT NOR ANY PROVISION HEREOF
OR THEREOF MAY BE WAIVED, AMENDED OR MODIFIED EXCEPT (I) IN THE CASE OF THIS
AGREEMENT, PURSUANT TO AN AGREEMENT OR AGREEMENTS IN WRITING ENTERED INTO BY THE
BORROWER AND THE REQUIRED LENDERS OR, (II) IN THE CASE OF ANY OTHER LOAN
DOCUMENT (OTHER THAN ANY SUCH AMENDMENT TO EFFECTUATE ANY MODIFICATION THERETO
EXPRESSLY CONTEMPLATED BY THE TERMS OF SUCH OTHER LOAN DOCUMENTS), PURSUANT TO
AN AGREEMENT OR AGREEMENTS IN WRITING ENTERED INTO BY THE AGENT AND THE LOAN
PARTY OR LOAN PARTIES THAT ARE PARTIES THERETO, WITH THE CONSENT OF THE REQUIRED
LENDERS; PROVIDED THAT NO SUCH AGREEMENT SHALL (A) INCREASE THE COMMITMENT OF
ANY LENDER WITHOUT THE WRITTEN CONSENT OF SUCH LENDER; IT BEING UNDERSTOOD THAT
A WAIVER OF ANY CONDITION PRECEDENT SET FORTH IN ARTICLE IV OR THE WAIVER OF ANY
DEFAULT OR MANDATORY PREPAYMENT SHALL NOT CONSTITUTE AN INCREASE OF ANY
COMMITMENT OF ANY LENDER, (B) REDUCE OR FORGIVE THE PRINCIPAL AMOUNT OF ANY LOAN
OR REDUCE THE RATE OF INTEREST THEREON, OR REDUCE OR FORGIVE ANY INTEREST OR
FEES (INCLUDING FEES SET FORTH IN SECTIONS 2.08, 2.19 AND 2.21) PAYABLE
HEREUNDER, WITHOUT THE WRITTEN CONSENT OF EACH LENDER DIRECTLY AFFECTED THEREBY,
(C) POSTPONE ANY SCHEDULED DATE OF PAYMENT OF THE PRINCIPAL AMOUNT OF ANY LOAN,
OR ANY DATE FOR THE PAYMENT OF ANY INTEREST, FEES OR OTHER OBLIGATIONS PAYABLE
HEREUNDER, OR REDUCE THE AMOUNT OF, WAIVE OR EXCUSE ANY SUCH PAYMENT, OR
POSTPONE THE SCHEDULED DATE OF EXPIRATION OF ANY COMMITMENT, WITHOUT THE WRITTEN
CONSENT OF EACH LENDER DIRECTLY AFFECTED THEREBY; PROVIDED THAT ONLY THE CONSENT
OF THE REQUIRED LENDERS SHALL BE NECESSARY TO AMEND THE PROVISIONS OF
SECTION 2.11(C) PROVIDING FOR THE DEFAULT RATE OF INTEREST, OR TO WAIVE ANY
OBLIGATIONS OF THE BORROWER TO PAY INTEREST AT SUCH DEFAULT RATE, (D) CHANGE
SECTION 2.16(B) OR (C) IN A MANNER THAT WOULD ALTER THE MANNER IN WHICH PAYMENTS
ARE SHARED, WITHOUT THE WRITTEN CONSENT OF EACH LENDER, (E) CHANGE ANY OF THE
PROVISIONS OF THIS SECTION OR THE DEFINITION OF “REQUIRED LENDERS” OR ANY OTHER
PROVISION OF ANY LOAN DOCUMENT SPECIFYING THE NUMBER OR PERCENTAGE OF LENDERS
REQUIRED TO WAIVE, AMEND OR MODIFY ANY RIGHTS THEREUNDER OR MAKE ANY
DETERMINATION OR GRANT ANY CONSENT THEREUNDER, WITHOUT THE WRITTEN CONSENT OF
EACH LENDER, (F) RELEASE ANY MATERIAL LOAN GUARANTOR FROM ITS OBLIGATION UNDER
ITS LOAN GUARANTY (EXCEPT AS OTHERWISE PERMITTED HEREIN OR IN THE OTHER LOAN
DOCUMENTS), WITHOUT THE WRITTEN CONSENT OF EACH LENDER, OR (G) EXCEPT AS
PROVIDED IN CLAUSES (C) AND (D) OF THIS SECTION OR IN ANY COLLATERAL DOCUMENT,
RELEASE ALL OR SUBSTANTIALLY ALL OF THE COLLATERAL, WITHOUT THE WRITTEN CONSENT
OF EACH LENDER; PROVIDED FURTHER THAT NO SUCH AGREEMENT SHALL AMEND, MODIFY OR
OTHERWISE AFFECT THE RIGHTS OR DUTIES OF THE AGENT HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF THE AGENT.  THE AGENT MAY ALSO AMEND THE COMMITMENT
SCHEDULE TO REFLECT ASSIGNMENTS ENTERED INTO PURSUANT TO SECTION 9.04.

 

(C)  THE LENDERS HEREBY IRREVOCABLY AGREE THAT THE LIENS GRANTED TO THE AGENT BY
THE LOAN PARTIES ON ANY COLLATERAL SHALL BE AUTOMATICALLY RELEASED (I) UPON THE
TERMINATION OF THE COMMITMENTS, PAYMENT AND SATISFACTION IN FULL IN CASH OF ALL
SECURED OBLIGATIONS (OTHER THAN UNLIQUIDATED OBLIGATIONS), AND THE CASH
COLLATERALIZATION OF ALL UNLIQUIDATED OBLIGATIONS IN A MANNER SATISFACTORY TO
THE AGENT, (II) UPON THE SALE OR OTHER DISPOSITION OF THE PROPERTY CONSTITUTING
SUCH COLLATERAL (INCLUDING AS PART OF OR IN CONNECTION WITH ANY OTHER SALE OR
OTHER DISPOSITION PERMITTED HEREUNDER) TO ANY PERSON OTHER THAN ANOTHER LOAN
PARTY, TO THE EXTENT SUCH SALE OR OTHER DISPOSITION IS MADE IN COMPLIANCE WITH
THE TERMS OF THIS AGREEMENT (AND THE AGENT MAY RELY CONCLUSIVELY ON A
CERTIFICATE TO THAT EFFECT PROVIDED TO IT BY ANY LOAN PARTY UPON ITS REASONABLE
REQUEST WITHOUT FURTHER INQUIRY), (III) TO THE EXTENT SUCH COLLATERAL IS
COMPRISED OF PROPERTY LEASED TO A LOAN PARTY, UPON TERMINATION OR EXPIRATION OF
SUCH LEASE, (IV) SUBJECT TO PARAGRAPH (B) OF THIS SECTION 9.02, IF THE RELEASE
OF SUCH LIEN IS APPROVED, AUTHORIZED OR RATIFIED IN WRITING BY THE REQUIRED
LENDERS, (V) TO THE EXTENT THE PROPERTY CONSTITUTING SUCH COLLATERAL IS OWNED BY
ANY LOAN GUARANTOR, UPON THE RELEASE OF SUCH GUARANTOR FROM ITS OBLIGATIONS
UNDER ITS LOAN GUARANTY IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT,
(VI) AS REQUIRED TO EFFECT ANY SALE OR OTHER DISPOSITION OF SUCH

 

93

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

 

COLLATERAL IN CONNECTION WITH ANY EXERCISE OF REMEDIES OF THE AGENT AND THE
LENDERS PURSUANT TO THE COLLATERAL DOCUMENTS OR (VII) AS REQUIRED PURSUANT TO
THE TERMS OF THE INTERCREDITOR AGREEMENT; PROVIDED THAT THE AGENT MAY, IN ITS
DISCRETION, RELEASE THE LIEN ON COLLATERAL VALUED IN THE AGGREGATE NOT IN EXCESS
OF $5,000,000 DURING EACH FISCAL YEAR WITHOUT CONSENT OF ANY LENDER.  ANY SUCH
RELEASE SHALL NOT IN ANY MANNER DISCHARGE, AFFECT, OR IMPAIR THE OBLIGATIONS OR
ANY LIENS (OTHER THAN THOSE EXPRESSLY BEING RELEASED) UPON (OR OBLIGATIONS OF
THE LOAN PARTIES IN RESPECT OF) ALL INTERESTS RETAINED BY THE LOAN PARTIES,
INCLUDING THE PROCEEDS OF ANY SALE, ALL OF WHICH SHALL CONTINUE TO CONSTITUTE
PART OF THE COLLATERAL TO THE EXTENT REQUIRED UNDER THE PROVISIONS OF THE LOAN
DOCUMENTS.

 

(D)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION 9.02,
GUARANTEES, COLLATERAL SECURITY DOCUMENTS AND RELATED DOCUMENTS EXECUTED BY
FOREIGN SUBSIDIARIES IN CONNECTION WITH THIS AGREEMENT MAY BE IN A FORM
REASONABLY DETERMINED BY THE AGENT AND MAY BE AMENDED AND WAIVED WITH THE
CONSENT OF THE AGENT AT THE REQUEST OF THE BORROWER WITHOUT THE NEED TO OBTAIN
THE CONSENT OF ANY OTHER LENDERS IF SUCH AMENDMENT OR WAIVER IS DELIVERED IN
ORDER (I) TO COMPLY WITH LOCAL LAW OR ADVICE OF LOCAL COUNSEL, (II) TO CURE
AMBIGUITIES OR DEFECTS OR (III) TO CAUSE SUCH GUARANTEE, COLLATERAL SECURITY
DOCUMENT OR OTHER DOCUMENT TO BE CONSISTENT WITH THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.

 

(E)  IF, IN CONNECTION WITH ANY PROPOSED AMENDMENT, WAIVER OR CONSENT REQUIRING
THE CONSENT OF “EACH LENDER” OR “EACH LENDER DIRECTLY AFFECTED THEREBY”, THE
CONSENT OF THE REQUIRED LENDERS IS OBTAINED, BUT THE CONSENT OF OTHER NECESSARY
LENDERS IS NOT OBTAINED (ANY SUCH LENDER WHOSE CONSENT IS NECESSARY BUT NOT
OBTAINED BEING REFERRED TO HEREIN AS A “NON-CONSENTING LENDER”), THEN THE
BORROWER MAY ELECT TO REPLACE A NON-CONSENTING LENDER AS A LENDER PARTY TO THIS
AGREEMENT, PROVIDED THAT, CONCURRENTLY WITH SUCH REPLACEMENT, (I) ANOTHER BANK
OR OTHER ENTITY WHICH IS REASONABLY SATISFACTORY TO THE BORROWER AND THE AGENT
SHALL AGREE, AS OF SUCH DATE, TO PURCHASE FOR CASH THE LOANS AND OTHER
OBLIGATIONS DUE TO THE NON-CONSENTING LENDER PURSUANT TO AN ASSIGNMENT AND
ASSUMPTION AND TO BECOME A LENDER FOR ALL PURPOSES UNDER THIS AGREEMENT AND TO
ASSUME ALL OBLIGATIONS OF THE NON-CONSENTING LENDER TO BE TERMINATED AS OF SUCH
DATE AND TO COMPLY WITH THE REQUIREMENTS OF CLAUSE (B) OF SECTION 9.04, (II) THE
REPLACEMENT LENDER SHALL PAY THE PROCESSING AND RECORDATION FEE REFERRED TO IN
SECTION 9.04(B)(II)(C), IF APPLICABLE IN ACCORDANCE WITH THE TERMS OF SUCH
SECTION, (III) THE REPLACEMENT LENDER SHALL GRANT ITS CONSENT WITH RESPECT TO
THE APPLICABLE PROPOSED AMENDMENT, WAIVER OR CONSENT AND (IV) THE BORROWER SHALL
PAY TO SUCH NON-CONSENTING LENDER IN SAME DAY FUNDS ON THE DAY OF SUCH
REPLACEMENT (1) ALL INTEREST, FEES AND OTHER AMOUNTS THEN ACCRUED BUT UNPAID TO
SUCH NON-CONSENTING LENDER BY THE BORROWER HEREUNDER TO AND INCLUDING THE DATE
OF TERMINATION, INCLUDING WITHOUT LIMITATION PAYMENTS DUE TO SUCH NON-CONSENTING
LENDER UNDER SECTIONS 2.13, 2.15 AND 2.21, AND (2) AN AMOUNT, IF ANY, EQUAL TO
THE PAYMENT WHICH WOULD HAVE BEEN DUE TO SUCH LENDER ON THE DAY OF SUCH
REPLACEMENT UNDER SECTION 2.14 HAD THE LOANS OF SUCH NON-CONSENTING LENDER BEEN
PREPAID ON SUCH DATE RATHER THAN SOLD TO THE REPLACEMENT LENDER.

 

SECTION 9.03.  EXPENSES; INDEMNITY; DAMAGE WAIVER.  (A)  THE BORROWER SHALL PAY
(I) ALL REASONABLE DOCUMENTED OUT-OF-POCKET EXPENSES INCURRED BY THE AGENT AND
ITS AFFILIATES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF
CRAVATH, SWAINE & MOORE LLP, COUNSEL FOR THE AGENT, IN CONNECTION WITH THE
SYNDICATION AND DISTRIBUTION (INCLUDING, WITHOUT LIMITATION, VIA THE INTERNET OR
THROUGH A SERVICE SUCH AS INTRALINKS) OF THE CREDIT FACILITIES PROVIDED FOR
HEREIN, THE PREPARATION OF THE LOAN DOCUMENTS AND RELATED DOCUMENTATION,
(II) ALL REASONABLE DOCUMENTED OUT-OF-POCKET EXPENSES INCURRED BY THE AGENT AND
ITS AFFILIATES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF
OUTSIDE LEGAL COUNSEL TO THE AGENT, IN CONNECTION WITH ANY AMENDMENTS,
MODIFICATIONS OR WAIVERS OF THE PROVISIONS OF ANY LOAN DOCUMENTS (WHETHER OR NOT
THE TRANSACTIONS CONTEMPLATED THEREBY SHALL BE CONSUMMATED), (III) ALL
REASONABLE DOCUMENTED OUT-OF-POCKET EXPENSES INCURRED BY THE AGENT OR THE
LENDERS, INCLUDING THE REASONABLE DOCUMENTED FEES, CHARGES AND DISBURSEMENTS OF
ANY COUNSEL FOR THE AGENT AND FOR ONE LAW FIRM RETAINED BY THE LENDERS, IN
CONNECTION WITH THE ENFORCEMENT, COLLECTION OR

 

94

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

 

PROTECTION OF ITS RIGHTS IN CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING ITS
RIGHTS UNDER THIS SECTION, OR IN CONNECTION WITH THE LOANS MADE HEREUNDER,
INCLUDING ALL SUCH REASONABLE DOCUMENTED OUT-OF-POCKET EXPENSES INCURRED DURING
ANY WORKOUT, RESTRUCTURING OR RELATED NEGOTIATIONS IN RESPECT OF SUCH LOANS, AND
(IV) SUBJECT TO ANY OTHER PROVISIONS OF THIS AGREEMENT, OF THE LOAN DOCUMENTS OR
OF ANY SEPARATE AGREEMENT ENTERED INTO BY THE BORROWER AND THE AGENT WITH
RESPECT THERETO, ALL REASONABLE DOCUMENTED OUT-OF-POCKET EXPENSES INCURRED BY
THE AGENT IN THE ADMINISTRATION OF THE LOAN DOCUMENTS.  EXPENSES REIMBURSABLE BY
THE BORROWER UNDER THIS SECTION INCLUDE, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SUBJECT TO ANY OTHER APPLICABLE PROVISION OF ANY LOAN DOCUMENT,
REASONABLE DOCUMENTED OUT-OF-POCKET COSTS AND EXPENSES INCURRED IN CONNECTION
WITH:

 

(I) LIEN AND TITLE SEARCHES AND TITLE INSURANCE; AND

 

(II) TAXES, FEES AND OTHER CHARGES FOR RECORDING THE MORTGAGES, FILING FINANCING
STATEMENTS AND CONTINUATIONS, AND OTHER ACTIONS TO PERFECT, PROTECT, AND
CONTINUE THE AGENT’S LIENS.

 

Other than to the extent required to be paid on the Closing Date, all amounts
due under this paragraph (a) shall be payable by the Borrower within ten
(10) Business Days of receipt of an invoice relating thereto and setting forth
such expenses in reasonable detail.

 

(B)  THE BORROWER SHALL INDEMNIFY THE AGENT AND EACH LENDER, AND EACH RELATED
PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING
THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED
BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS
A RESULT OF (I) THE EXECUTION OR DELIVERY OF THE LOAN DOCUMENTS OR ANY AGREEMENT
OR INSTRUMENT CONTEMPLATED THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF
THEIR RESPECTIVE OBLIGATIONS THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY ENVIRONMENTAL LIABILITY
RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES OR TO ANY PROPERTY
OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (III) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO (AND REGARDLESS OF
WHETHER SUCH MATTER IS INITIATED BY A THIRD PARTY OR BY THE BORROWER, ANY OTHER
LOAN PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES); PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, PENALTIES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A
COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

 

(C)  TO THE EXTENT THAT THE BORROWER FAILS TO PAY ANY AMOUNT REQUIRED TO BE PAID
BY IT TO THE AGENT UNDER PARAGRAPH (A) OR (B) OF THIS SECTION, EACH LENDER
SEVERALLY AGREES TO PAY TO THE AGENT SUCH LENDER’S APPLICABLE PERCENTAGE
(DETERMINED AS OF THE TIME THAT THE APPLICABLE UNREIMBURSED EXPENSE OR INDEMNITY
PAYMENT IS SOUGHT) OF SUCH UNPAID AMOUNT; PROVIDED THAT THE UNREIMBURSED EXPENSE
OR INDEMNIFIED LOSS, CLAIM, DAMAGE, PENALTY, LIABILITY OR RELATED EXPENSE, AS
THE CASE MAY BE, WAS INCURRED BY OR ASSERTED AGAINST THE AGENT IN ITS CAPACITY
AS SUCH.

 

(D)  TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY TO THIS AGREEMENT SHALL
ASSERT, AND EACH HEREBY WAIVES, ANY CLAIM AGAINST ANY OTHER PARTY HERETO OR ANY
RELATED PARTY THEREOF, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS, ANY LOAN OR THE
USE OF THE PROCEEDS THEREOF.

 

(E)  ALL AMOUNTS DUE UNDER THIS SECTION SHALL BE PAID PROMPTLY AFTER WRITTEN
DEMAND THEREFOR.

 

95

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

 

SECTION 9.04.  SUCCESSORS AND ASSIGNS.  (A)  THE PROVISIONS OF THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS PERMITTED HEREBY, EXCEPT THAT (I) THE BORROWER
MAY NOT ASSIGN OR OTHERWISE TRANSFER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE PRIOR WRITTEN CONSENT OF EACH LENDER (AND ANY ATTEMPTED ASSIGNMENT
OR TRANSFER BY THE BORROWER WITHOUT SUCH CONSENT SHALL BE NULL AND VOID) AND
(II) NO LENDER MAY ASSIGN OR OTHERWISE TRANSFER ITS RIGHTS OR OBLIGATIONS
HEREUNDER EXCEPT IN ACCORDANCE WITH THIS SECTION (ANY ATTEMPTED ASSIGNMENT OR
TRANSFER NOT COMPLYING WITH THE TERMS OF THIS SECTION SHALL BE NULL AND VOID). 
NOTHING IN THIS AGREEMENT, EXPRESSED OR IMPLIED, SHALL BE CONSTRUED TO CONFER
UPON ANY PERSON (OTHER THAN THE PARTIES HERETO, THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS PERMITTED HEREBY, PARTICIPANTS (TO THE EXTENT PROVIDED IN PARAGRAPH
(C) OF THIS SECTION) AND, TO THE EXTENT EXPRESSLY CONTEMPLATED HEREBY, THE
RELATED PARTIES OF EACH OF THE AGENT AND THE LENDERS) ANY LEGAL OR EQUITABLE
RIGHT, REMEDY OR CLAIM UNDER OR BY REASON OF THIS AGREEMENT.

 

(B)  (I) SUBJECT TO THE CONDITIONS SET FORTH IN PARAGRAPH (B)(II) BELOW, ANY
LENDER MAY ASSIGN TO ONE OR MORE ELIGIBLE ASSIGNEES ALL OR A PORTION OF ITS
RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING ALL OR A PORTION OF ITS
COMMITMENT OR THE LOANS AT THE TIME OWING TO IT) WITH THE PRIOR WRITTEN CONSENT
(SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD OR DELAYED) OF:

 

(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to another Lender, an Affiliate of a Lender, an Approved Fund or,
if an Event of Default specified in paragraphs (a), (b), (f) or (g) of
Article VII has occurred and is continuing, any other Eligible Assignee and
provided further that no consent of the Borrower shall be required for an
assignment during the primary syndication of the Loans to Persons identified by
the Agent to the Borrower on or prior to the Closing Date and reasonably
acceptable to the Borrower; and

 

(B) the Agent.

 

(ii) Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to another Lender, an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans, the amount of the Commitment or the
principal amount of Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Agent and determined on an aggregate
basis in the event of concurrent assignments to Related Funds (as defined
below)) shall not be less than $1,000,000 unless each of the Borrower and the
Agent otherwise consent, provided that no such consent of the Borrower shall be
required if an Event of Default specified in paragraphs (a), (b), (f) or (g) of
Article VII has occurred and is continuing;

 

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;

 

(C) the parties to each assignment shall execute and deliver to the Agent an
Assignment and Assumption via an electronic settlement system acceptable to the
Agent (or, if previously agreed with the Agent, manually), and shall pay to the
Agent a processing and recordation fee of $3,500 (which fee may be waived or
reduced in the sole discretion of the Agent and shall not be payable in the case
of any assignment by any Joint Lead Arranger or any of its Affiliates); provided
that only one such fee shall be payable in the case of concurrent assignments to
two or more Related Funds; and

 

96

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

 

(D)  the assignee, if it shall not be a Lender, shall deliver on or prior to the
effective date of such assignment, to the Agent (1) an Administrative
Questionnaire and (2) if applicable, an appropriate Internal Revenue Service
form (such as Form W-8BEN or W-8ECI or any successor form adopted by the
relevant United States taxing authority) as required by applicable law
supporting such assignee’s position that no withholding by any Borrower or the
Agent for United States income tax payable by such assignee in respect of
amounts received by it hereunder is required.

 

The term “Related Funds” shall mean with respect to any Lender that is an
Approved Fund, any other Approved Fund that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

 

(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03 with respect to facts and
circumstances occurring on or prior to the effective date of such assignment). 
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 9.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.

 

(iv) The Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, or principal amount of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). 
The entries in the Register shall be conclusive, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire and tax certifications required by
Section 9.04(b)(ii)(D)(2)(unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.04(a), 2.16(c) or
9.03(c), the Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon.  No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

 

(vi) By executing and delivering an Assignment and Assumption, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the

 

97

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

 

other parties hereto as follows:  (i) such assigning Lender warrants that it is
the legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim and that its Commitment, and the outstanding balances
of its Loans, in each case without giving effect to assignments thereof which
have not become effective, are as set forth in such Assignment and Assumption,
(ii) except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition of
the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is an Eligible Assignee,
legally authorized to enter into such Assignment and Assumption; (iv) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements referred to in Section 3.04(a) or
delivered pursuant to Section 5.01 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Assumption; (v) such assignee will independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent, by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.

 

(C)  (I)  ANY LENDER MAY, WITHOUT THE CONSENT OF THE BORROWER OR THE AGENT, SELL
PARTICIPATIONS TO ONE OR MORE BANKS OR OTHER ENTITIES (A “PARTICIPANT”) IN ALL
OR A PORTION OF SUCH LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT
(INCLUDING ALL OR A PORTION OF ITS COMMITMENT OR THE LOANS OWING TO IT);
PROVIDED THAT (A) SUCH LENDER’S OBLIGATIONS UNDER THIS AGREEMENT SHALL REMAIN
UNCHANGED, (B) SUCH LENDER SHALL REMAIN SOLELY RESPONSIBLE TO THE OTHER PARTIES
HERETO FOR THE PERFORMANCE OF SUCH OBLIGATIONS, (C) THE BORROWER, THE AGENT, AND
THE OTHER LENDERS SHALL CONTINUE TO DEAL SOLELY AND DIRECTLY WITH SUCH LENDER IN
CONNECTION WITH SUCH LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND
(D) NO SUCH PARTICIPANT SHALL BE A “CREDITOR” AS DEFINED IN REGULATION T OR A
“FOREIGN BRANCH OF A BROKER-DEALER” WITHIN THE MEANING OF REGULATION X.  ANY
AGREEMENT OR INSTRUMENT PURSUANT TO WHICH A LENDER SELLS SUCH A PARTICIPATION
SHALL PROVIDE THAT SUCH LENDER SHALL RETAIN THE SOLE RIGHT TO ENFORCE THIS
AGREEMENT AND TO APPROVE ANY AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION
OF THIS AGREEMENT; PROVIDED THAT SUCH AGREEMENT OR INSTRUMENT MAY PROVIDE THAT
SUCH LENDER WILL NOT, WITHOUT THE CONSENT OF THE PARTICIPANT, AGREE TO ANY
AMENDMENT, MODIFICATION OR WAIVER DESCRIBED IN THE FIRST PROVISO TO
SECTION 9.02(B) THAT AFFECTS SUCH PARTICIPANT.  SUBJECT TO PARAGRAPH (C)(II) OF
THIS SECTION, THE BORROWER AGREES THAT EACH PARTICIPANT SHALL BE ENTITLED TO THE
BENEFITS OF SECTIONS 2.13, 2.14 AND 2.15 TO THE SAME EXTENT AS IF IT WERE A
LENDER AND HAD ACQUIRED ITS INTEREST BY ASSIGNMENT PURSUANT TO PARAGRAPH (B) OF
THIS SECTION.  TO THE EXTENT PERMITTED BY LAW, EACH PARTICIPANT ALSO SHALL BE
ENTITLED TO THE BENEFITS OF SECTION 9.08 AS THOUGH IT WERE A LENDER, PROVIDED
SUCH PARTICIPANT AGREES TO BE SUBJECT TO SECTION 2.16(C) AS THOUGH IT WERE A
LENDER.

 

(ii)  A Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.15 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to

 

98

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

 

such Participant and such Participant agrees, for the benefit of the Borrower,
to comply with Section 2.15(e) as though it were a Lender.

 

(D)  ANY LENDER MAY AT ANY TIME PLEDGE OR ASSIGN A SECURITY INTEREST IN ALL OR
ANY PORTION OF ITS RIGHTS UNDER THIS AGREEMENT TO SECURE OBLIGATIONS OF SUCH
LENDER, INCLUDING WITHOUT LIMITATION ANY PLEDGE OR ASSIGNMENT TO SECURE
OBLIGATIONS TO A FEDERAL RESERVE BANK, AND THIS SECTION SHALL NOT APPLY TO ANY
SUCH PLEDGE OR ASSIGNMENT OF A SECURITY INTEREST; 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.

 

(E)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY LENDER (A
“GRANTING LENDER”) MAY GRANT TO A SPECIAL PURPOSE FUNDING VEHICLE (AN “SPC”),
IDENTIFIED AS SUCH IN WRITING FROM TIME TO TIME BY THE GRANTING LENDER TO THE
AGENT AND THE BORROWER, THE OPTION TO PROVIDE TO THE BORROWER ALL OR ANY PART OF
ANY LOAN THAT SUCH GRANTING LENDER WOULD OTHERWISE BE OBLIGATED TO MAKE TO THE
BORROWER PURSUANT TO THIS AGREEMENT; PROVIDED THAT (I) NOTHING HEREIN SHALL
CONSTITUTE A COMMITMENT BY ANY SPC TO MAKE ANY LOAN, (II) IF AN SPC ELECTS NOT
TO EXERCISE SUCH OPTION OR OTHERWISE FAILS TO PROVIDE ALL OR ANY PART OF SUCH
LOAN, THE GRANTING LENDER SHALL BE OBLIGATED TO MAKE SUCH LOAN PURSUANT TO THE
TERMS HEREOF AND (III) NO SPC SHALL BE A “CREDITOR” AS DEFINED IN REGULATION T
OR A “FOREIGN BRANCH OF A BROKER-DEALER” WITHIN THE MEANING OF REGULATION X. 
THE MAKING OF A LOAN BY AN SPC HEREUNDER SHALL UTILIZE THE COMMITMENT OF THE
GRANTING LENDER TO THE SAME EXTENT, AND AS IF, SUCH LOAN WERE MADE BY SUCH
GRANTING LENDER.  EACH PARTY HERETO HEREBY AGREES THAT (I) NEITHER THE GRANT TO
ANY SPC NOR THE EXERCISE BY ANY SPC OF SUCH OPTION SHALL INCREASE THE COSTS OR
EXPENSES OR OTHERWISE INCREASE OR CHANGE THE OBLIGATIONS OF THE BORROWER UNDER
THIS AGREEMENT (INCLUDING ITS OBLIGATIONS UNDER SECTION 2.13, 2.14 OR 2.15),
(II) NO SPC SHALL BE LIABLE FOR ANY INDEMNITY OR SIMILAR PAYMENT OBLIGATION
UNDER THIS AGREEMENT (ALL LIABILITY FOR WHICH SHALL REMAIN WITH THE GRANTING
LENDER) AND (III) THE GRANTING LENDER SHALL FOR ALL PURPOSES INCLUDING APPROVAL
OF ANY AMENDMENT, WAIVER OR OTHER MODIFICATION OF ANY PROVISION OF THE LOAN
DOCUMENTS, REMAIN THE LENDER OF RECORD HEREUNDER.  IN FURTHERANCE OF THE
FOREGOING, EACH PARTY HERETO HEREBY AGREES (WHICH AGREEMENT SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT) THAT, PRIOR TO THE DATE THAT IS ONE YEAR AND ONE
DAY AFTER THE PAYMENT IN FULL OF ALL OUTSTANDING COMMERCIAL PAPER OR OTHER
SENIOR INDEBTEDNESS OF ANY SPC, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER
PERSON IN INSTITUTING AGAINST, SUCH SPC ANY BANKRUPTCY, REORGANIZATION,
ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE THEREOF.  IN ADDITION, NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS SECTION 9.04, ANY SPC MAY (I) WITH NOTICE TO, BUT
WITHOUT THE PRIOR WRITTEN CONSENT OF, THE BORROWER AND THE AGENT AND WITHOUT
PAYING ANY PROCESSING FEE THEREFOR, ASSIGN ALL OR A PORTION OF ITS INTERESTS IN
ANY LOANS TO THE GRANTING LENDER OR TO ANY FINANCIAL INSTITUTIONS (CONSENTED TO
BY THE BORROWER AND AGENT) PROVIDING LIQUIDITY AND/OR CREDIT SUPPORT TO OR FOR
THE ACCOUNT OF SUCH SPC TO SUPPORT THE FUNDING OR MAINTENANCE OF LOANS AND
(II) DISCLOSE ON A CONFIDENTIAL BASIS ANY NON-PUBLIC INFORMATION RELATING TO ITS
LOANS TO ANY RATING AGENCY, COMMERCIAL PAPER DEALER OR PROVIDER OF ANY SURETY,
GUARANTEE OR CREDIT OR LIQUIDITY ENHANCEMENT TO SUCH SPC.

 

SECTION 9.05.  SURVIVAL.  ALL COVENANTS, AGREEMENTS, REPRESENTATIONS AND
WARRANTIES MADE BY THE LOAN PARTIES IN THE LOAN DOCUMENTS AND IN THE
CERTIFICATES OR OTHER INSTRUMENTS DELIVERED IN CONNECTION WITH OR PURSUANT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE CONSIDERED TO HAVE BEEN
RELIED UPON BY THE OTHER PARTIES HERETO AND SHALL SURVIVE THE EXECUTION AND
DELIVERY OF THE LOAN DOCUMENTS AND THE MAKING OF ANY LOANS, REGARDLESS OF ANY
INVESTIGATION MADE BY ANY SUCH OTHER PARTY OR ON ITS BEHALF AND NOTWITHSTANDING
THAT THE AGENT OR ANY LENDER MAY HAVE HAD NOTICE OR KNOWLEDGE OF ANY DEFAULT OR
INCORRECT REPRESENTATION OR WARRANTY AT THE TIME ANY CREDIT IS EXTENDED
HEREUNDER, AND SHALL CONTINUE IN FULL FORCE AND EFFECT AS LONG AS THE PRINCIPAL
OF OR ANY ACCRUED INTEREST ON ANY LOAN OR ANY FEE OR ANY OTHER AMOUNT PAYABLE
UNDER THIS AGREEMENT IS OUTSTANDING AND UNPAID AND SO LONG AS THE COMMITMENTS
HAVE NOT EXPIRED OR TERMINATED.  THE PROVISIONS OF SECTIONS 2.13, 2.14, 2.15 AND
9.03 AND

 

99

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

 

ARTICLE VIII SHALL SURVIVE AND REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, THE REPAYMENT OF THE
LOANS, THE EXPIRATION OR TERMINATION OF THE COMMITMENTS OR THE TERMINATION OF
THIS AGREEMENT OR ANY PROVISION HEREOF.

 

SECTION 9.06.  COUNTERPARTS; INTEGRATION; EFFECTIVENESS.  THIS AGREEMENT MAY BE
EXECUTED IN COUNTERPARTS (AND BY DIFFERENT PARTIES HERETO ON DIFFERENT
COUNTERPARTS), EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL, BUT ALL OF WHICH WHEN
TAKEN TOGETHER SHALL CONSTITUTE A SINGLE CONTRACT.  THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE FEE LETTER AND ANY SEPARATE LETTER AGREEMENTS WITH
RESPECT TO FEES PAYABLE TO THE AGENT CONSTITUTE THE ENTIRE CONTRACT AMONG THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL PREVIOUS
AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER
HEREOF.  EXCEPT AS PROVIDED IN ARTICLE IV, THIS AGREEMENT SHALL BECOME EFFECTIVE
WHEN IT SHALL HAVE BEEN EXECUTED BY THE AGENT AND WHEN THE AGENT SHALL HAVE
RECEIVED COUNTERPARTS HEREOF WHICH, WHEN TAKEN TOGETHER, BEAR THE SIGNATURES OF
EACH OF THE OTHER PARTIES HERETO, AND THEREAFTER SHALL BE BINDING UPON AND INURE
TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.  DELIVERY OF AN EXECUTED COUNTERPART OF A SIGNATURE PAGE OF THIS
AGREEMENT BY FACSIMILE SHALL BE EFFECTIVE AS DELIVERY OF A MANUALLY EXECUTED
COUNTERPART OF THIS AGREEMENT.

 

SECTION 9.07.  SEVERABILITY.  TO THE EXTENT PERMITTED BY LAW, ANY PROVISION OF
ANY LOAN DOCUMENT HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY
JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY WITHOUT AFFECTING THE VALIDITY,
LEGALITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS THEREOF; AND THE
INVALIDITY OF A PARTICULAR PROVISION IN A PARTICULAR JURISDICTION SHALL NOT
INVALIDATE SUCH PROVISION IN ANY OTHER JURISDICTION.

 

SECTION 9.08.  RIGHT OF SETOFF.  IF AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND
BE CONTINUING, EACH LENDER AND EACH OF ITS AFFILIATES IS HEREBY AUTHORIZED AT
ANY TIME AND FROM TIME TO TIME, TO THE FULLEST EXTENT PERMITTED BY LAW, TO SET
OFF AND APPLY ANY AND ALL DEPOSITS (GENERAL OR SPECIAL, TIME OR DEMAND,
PROVISIONAL OR FINAL) AT ANY TIME HELD AND OTHER OBLIGATIONS AT ANY TIME OWING
BY SUCH LENDER OR AFFILIATE TO OR FOR THE CREDIT OR THE ACCOUNT OF THE BORROWER
OR ANY LOAN GUARANTOR AGAINST ANY OF AND ALL THE SECURED OBLIGATIONS HELD BY
SUCH LENDER, IRRESPECTIVE OF WHETHER OR NOT SUCH LENDER SHALL HAVE MADE ANY
DEMAND UNDER THE LOAN DOCUMENTS AND ALTHOUGH SUCH OBLIGATIONS MAY BE UNMATURED. 
THE APPLICABLE LENDER SHALL NOTIFY THE BORROWER AND THE AGENT OF SUCH SET-OFF OR
APPLICATION, PROVIDED THAT ANY FAILURE TO GIVE OR ANY DELAY IN GIVING SUCH
NOTICE SHALL NOT AFFECT THE VALIDITY OF ANY SUCH SET-OFF OR APPLICATION UNDER
THIS SECTION.  THE RIGHTS OF EACH LENDER UNDER THIS SECTION ARE IN ADDITION TO
OTHER RIGHTS AND REMEDIES (INCLUDING OTHER RIGHTS OF SETOFF) WHICH SUCH LENDER
MAY HAVE. NOTWITHSTANDING THE FOREGOING, AT ANY TIME THAT ANY OF THE SECURED
OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER
SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR COUNTERCLAIM OR TAKE ANY
COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY
PROVISION OF THIS AGREEMENT OR ANY LOAN DOCUMENT UNLESS IT IS TAKEN WITH THE
CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF THIS AGREEMENT, IF SUCH
SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580A, 580B,
580D AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE
CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE
VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE AGENT PURSUANT
TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE OBLIGATIONS HEREUNDER,
AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING
SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND VOID.  THIS
PARAGRAPH SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

 

100

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

 

SECTION 9.09.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.  (A) 
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH
IN ANY OTHER LOAN DOCUMENT) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.

 

(B)  EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW
YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(C)  EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.

 

(D)  TO THE EXTENT PERMITTED BY LAW, EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES
THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO IT AT ITS ADDRESS FOR NOTICES AS PROVIDED FOR IN
SECTION 9.01.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT
THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  HEADINGS.  ARTICLE AND SECTION HEADINGS AND THE TABLE OF CONTENTS
USED HEREIN ARE FOR CONVENIENCE OF REFERENCE ONLY, ARE NOT PART OF THIS
AGREEMENT AND SHALL NOT AFFECT THE CONSTRUCTION OF, OR BE TAKEN INTO
CONSIDERATION IN INTERPRETING, THIS AGREEMENT.

 

SECTION 9.12.  CONFIDENTIALITY.  THE AGENT AND EACH LENDER AGREES (AND EACH
LENDER AGREES TO CAUSE ITS SPC, IF ANY) TO MAINTAIN THE CONFIDENTIALITY OF THE
INFORMATION (AS DEFINED BELOW), EXCEPT THAT INFORMATION MAY BE DISCLOSED (A) TO
ITS AND ITS AFFILIATES’ DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, INCLUDING
ACCOUNTANTS, LEGAL COUNSEL AND OTHER ADVISORS (IT BEING UNDERSTOOD THAT THE
PERSONS TO

 

101

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

 

WHOM SUCH DISCLOSURE IS MADE WILL BE INFORMED OF THE CONFIDENTIAL NATURE OF SUCH
INFORMATION AND INSTRUCTED TO KEEP SUCH INFORMATION CONFIDENTIAL), (B) TO THE
EXTENT REQUESTED BY ANY REGULATORY, GOVERNMENTAL OR ADMINISTRATIVE AUTHORITY,
(C) TO THE EXTENT REQUIRED BY LAW OR BY ANY SUBPOENA OR SIMILAR LEGAL PROCESS,
(D) TO ANY OTHER PARTY TO THIS AGREEMENT, (E) IN CONNECTION WITH THE EXERCISE OF
ANY REMEDIES HEREUNDER OR ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ENFORCEMENT OF RIGHTS HEREUNDER OR
THEREUNDER, (F) SUBJECT TO AN AGREEMENT CONTAINING PROVISIONS SUBSTANTIALLY THE
SAME AS THOSE OF THIS SECTION, TO (I) ANY ASSIGNEE OF OR PARTICIPANT IN, OR ANY
PROSPECTIVE ASSIGNEE OF OR PARTICIPANT IN, ANY OF ITS RIGHTS OR OBLIGATIONS
UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY SPC, (II) ANY PLEDGEE
REFERRED TO IN SECTION 9.04(D) OR (III) ANY ACTUAL OR PROSPECTIVE COUNTERPARTY
(OR ITS ADVISORS) TO ANY SWAP OR DERIVATIVE TRANSACTION RELATING TO THE LOAN
PARTIES AND THEIR OBLIGATIONS, (G) WITH THE CONSENT OF THE BORROWER OR (H) TO
THE EXTENT SUCH INFORMATION (I) BECOMES PUBLICLY AVAILABLE OTHER THAN AS A
RESULT OF A BREACH OF THIS SECTION OR (II) BECOMES AVAILABLE TO THE AGENT OR ANY
LENDER ON A NONCONFIDENTIAL BASIS FROM A SOURCE OTHER THAN THE BORROWER.  FOR
THE PURPOSES OF THIS SECTION, “INFORMATION” MEANS ALL INFORMATION RECEIVED FROM
ANY LOAN PARTY RELATING TO THE LOAN PARTIES OR THEIR BUSINESSES, THE SPONSORS OR
THE TRANSACTIONS OTHER THAN ANY SUCH INFORMATION THAT IS AVAILABLE TO THE AGENT
OR ANY LENDER ON A NONCONFIDENTIAL BASIS PRIOR TO DISCLOSURE BY ANY LOAN PARTY. 
ANY PERSON REQUIRED TO MAINTAIN THE CONFIDENTIALITY OF INFORMATION AS PROVIDED
IN THIS SECTION SHALL BE CONSIDERED TO HAVE COMPLIED WITH ITS OBLIGATION TO DO
SO IF SUCH PERSON HAS EXERCISED THE SAME DEGREE OF CARE TO MAINTAIN THE
CONFIDENTIALITY OF SUCH INFORMATION AS SUCH PERSON WOULD ACCORD TO ITS OWN
CONFIDENTIAL INFORMATION.

 

SECTION 9.13.  SEVERAL OBLIGATIONS; NONRELIANCE; VIOLATION OF LAW.  THE
RESPECTIVE OBLIGATIONS OF THE LENDERS HEREUNDER ARE SEVERAL AND NOT JOINT AND
THE FAILURE OF ANY LENDER TO MAKE ANY LOAN OR PERFORM ANY OF ITS OBLIGATIONS
HEREUNDER SHALL NOT RELIEVE ANY OTHER LENDER FROM ANY OF ITS OBLIGATIONS
HEREUNDER. EACH LENDER HEREBY REPRESENTS THAT (A) IT IS NOT RELYING ON OR
LOOKING TO ANY MARGIN STOCK FOR THE REPAYMENT OF THE BORROWINGS PROVIDED FOR
HEREIN AND ACKNOWLEDGES THAT THE COLLATERAL SHALL NOT INCLUDE ANY MARGIN STOCK
AND (B) IT IS NOT AND WILL NOT BECOME A “CREDITOR” AS DEFINED IN REGULATION T OR
A “FOREIGN BRANCH OF A BROKER-DEALER” WITHIN THE MEANING OF REGULATION X. 
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, NO LENDER
SHALL BE OBLIGATED TO EXTEND CREDIT TO THE BORROWER IN VIOLATION OF ANY
REQUIREMENT OF LAW.

 

SECTION 9.14.  USA PATRIOT ACT.  EACH LENDER THAT IS SUBJECT TO THE REQUIREMENTS
OF THE USA PATRIOT ACT HEREBY NOTIFIES THE BORROWER THAT PURSUANT TO THE
REQUIREMENTS OF THE USA PATRIOT 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 TO
IDENTIFY THE BORROWER IN ACCORDANCE WITH THE USA PATRIOT ACT.

 

SECTION 9.15.  DISCLOSURE.  EACH LOAN PARTY AND EACH LENDER HEREBY ACKNOWLEDGES
AND AGREES THAT THE AGENT AND/OR ITS AFFILIATES FROM TIME TO TIME MAY HOLD
INVESTMENTS IN, MAKE OTHER LOANS TO OR HAVE OTHER RELATIONSHIPS WITH ANY OF THE
LOAN PARTIES AND THEIR RESPECTIVE AFFILIATES. IN ADDITION, EACH LOAN PARTY AND
EACH LENDER HEREBY ACKNOWLEDGES THAT (I) THE AGENT OR ITS AFFILIATE MAY BE A
LENDER UNDER THE SENIOR SECURED ASSET-BASED REVOLVING CREDIT FACILITY AND
(II) AN AFFILIATE OF THE AGENT WILL BE AN INITIAL PURCHASER OF THE NEW NOTES.

 

SECTION 9.16.  APPOINTMENT FOR PERFECTION.  EACH LENDER HEREBY APPOINTS EACH
OTHER LENDER AS ITS AGENT FOR THE PURPOSE OF PERFECTING LIENS, FOR THE BENEFIT
OF THE AGENT AND THE LENDERS, IN ASSETS WHICH, IN ACCORDANCE WITH ARTICLE 9 OF
THE UCC OR ANY OTHER APPLICABLE LAW CAN BE PERFECTED ONLY BY POSSESSION.  SHOULD
ANY LENDER (OTHER THAN THE AGENT) OBTAIN POSSESSION OF ANY SUCH COLLATERAL, SUCH
LENDER SHALL NOTIFY THE AGENT THEREOF, AND, PROMPTLY UPON THE AGENT’S REQUEST
THEREFOR SHALL DELIVER SUCH COLLATERAL TO THE AGENT OR OTHERWISE DEAL WITH SUCH
COLLATERAL IN ACCORDANCE WITH THE AGENT’S INSTRUCTIONS.

 

102

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

 

SECTION 9.17.  INTEREST RATE LIMITATION.  NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IF AT ANY TIME THE INTEREST RATE APPLICABLE TO ANY LOAN, TOGETHER WITH
ALL FEES, CHARGES AND OTHER AMOUNTS WHICH ARE TREATED AS INTEREST ON SUCH LOAN
UNDER APPLICABLE LAW (COLLECTIVELY THE “CHARGES”), SHALL EXCEED THE MAXIMUM
LAWFUL RATE (THE “MAXIMUM RATE”) WHICH MAY BE CONTRACTED FOR, CHARGED, TAKEN,
RECEIVED OR RESERVED BY THE LENDER HOLDING SUCH LOAN IN ACCORDANCE WITH
APPLICABLE LAW, THE RATE OF INTEREST PAYABLE IN RESPECT OF SUCH LOAN HEREUNDER,
TOGETHER WITH ALL CHARGES PAYABLE IN RESPECT THEREOF, SHALL BE LIMITED TO THE
MAXIMUM RATE AND, TO THE EXTENT LAWFUL, THE INTEREST AND CHARGES THAT WOULD HAVE
BEEN PAYABLE IN RESPECT OF SUCH LOAN BUT WERE NOT PAYABLE AS A RESULT OF THE
OPERATION OF THIS SECTION SHALL BE CUMULATED AND THE INTEREST AND CHARGES
PAYABLE TO SUCH LENDER IN RESPECT OF OTHER LOANS OR PERIODS SHALL BE INCREASED
(BUT NOT ABOVE THE MAXIMUM RATE THEREFOR) UNTIL SUCH CUMULATED AMOUNT, TOGETHER
WITH INTEREST THEREON AT THE FEDERAL FUNDS EFFECTIVE RATE TO THE DATE OF
REPAYMENT, SHALL HAVE BEEN RECEIVED BY SUCH LENDER.

 

SECTION 9.18.  EFFECTIVENESS OF THE MERGER.  NEIMAN MARCUS SHALL HAVE NO RIGHTS
OR OBLIGATIONS HEREUNDER UNTIL THE CONSUMMATION OF THE MERGER AND ANY
REPRESENTATIONS AND WARRANTIES OF NEIMAN MARCUS HEREUNDER SHALL NOT BECOME
EFFECTIVE UNTIL SUCH TIME.  UPON CONSUMMATION OF THE MERGER, NEIMAN MARCUS
SUCCEED TO ALL THE RIGHTS AND OBLIGATIONS OF MERGER SUB AS THE BORROWER UNDER
THIS AGREEMENT AND ALL REPRESENTATIONS AND WARRANTIES OF NEIMAN MARCUS AS THE
BORROWER SHALL BECOME EFFECTIVE AS OF THE DATE HEREOF, WITHOUT ANY FURTHER
ACTION BY ANY PERSON.

 

SECTION 9.19.  INTERCREDITOR AGREEMENT.  REFERENCE IS MADE TO THE INTERCREDITOR
AGREEMENT.  EACH LENDER HEREUNDER (A) CONSENTS TO THE SUBORDINATION OF LIENS
PROVIDED FOR IN THE INTERCREDITOR AGREEMENT, (B) AGREES THAT IT WILL BE BOUND BY
AND WILL TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE INTERCREDITOR
AGREEMENT AND (C) AUTHORIZES AND INSTRUCTS THE AGENT TO ENTER INTO THE
INTERCREDITOR AGREEMENT AS TERM LOAN AGENT AND ON BEHALF OF SUCH LENDER.  THE
FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT TO THE LENDERS UNDER THIS
AGREEMENT TO EXTEND CREDIT AND SUCH LENDERS ARE INTENDED THIRD PARTY
BENEFICIARIES OF SUCH PROVISIONS AND THE PROVISIONS OF THE INTERCREDITOR
AGREEMENT.

 

ARTICLE X

 

LOAN GUARANTY

 

SECTION 10.01.  GUARANTY.  EACH LOAN GUARANTOR HEREBY AGREES THAT IT IS JOINTLY
AND SEVERALLY LIABLE FOR, AND, AS PRIMARY OBLIGOR AND NOT MERELY AS SURETY, AND
ABSOLUTELY AND UNCONDITIONALLY GUARANTEES TO THE LENDERS THE PROMPT PAYMENT WHEN
DUE, WHETHER AT STATED MATURITY, UPON ACCELERATION OR OTHERWISE, AND AT ALL
TIMES THEREAFTER, OF THE SECURED OBLIGATIONS (COLLECTIVELY THE “GUARANTEED
OBLIGATIONS”). EACH LOAN GUARANTOR FURTHER AGREES THAT THE GUARANTEED
OBLIGATIONS MAY BE EXTENDED OR RENEWED IN WHOLE OR IN PART WITHOUT NOTICE TO OR
FURTHER ASSENT FROM IT, AND THAT IT REMAINS BOUND UPON ITS GUARANTEE
NOTWITHSTANDING ANY SUCH EXTENSION OR RENEWAL.

 

SECTION 10.02.  GUARANTY OF PAYMENT.  THIS LOAN GUARANTY IS A GUARANTY OF
PAYMENT AND NOT OF COLLECTION. EACH LOAN GUARANTOR WAIVES ANY RIGHT TO REQUIRE
THE AGENT OR ANY LENDER TO SUE THE BORROWER, ANY LOAN GUARANTOR, ANY OTHER
GUARANTOR, OR ANY OTHER PERSON OBLIGATED FOR ALL OR ANY PART OF THE GUARANTEED
OBLIGATIONS (EACH, AN “OBLIGATED PARTY”), OR OTHERWISE TO ENFORCE ITS PAYMENT
AGAINST ANY COLLATERAL SECURING ALL OR ANY PART OF THE GUARANTEED OBLIGATIONS.

 

103

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

 

SECTION 10.03.  NO DISCHARGE OR DIMINISHMENT OF LOAN GUARANTY.  (A)  EXCEPT AS
OTHERWISE PROVIDED FOR HEREIN, THE OBLIGATIONS OF EACH LOAN GUARANTOR HEREUNDER
ARE UNCONDITIONAL AND ABSOLUTE AND NOT SUBJECT TO ANY REDUCTION, LIMITATION,
IMPAIRMENT OR TERMINATION FOR ANY REASON (OTHER THAN THE INDEFEASIBLE PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS), INCLUDING:  (I) ANY CLAIM OF
WAIVER, RELEASE, EXTENSION, RENEWAL, SETTLEMENT, SURRENDER, ALTERATION, OR
COMPROMISE OF ANY OF THE GUARANTEED OBLIGATIONS, BY OPERATION OF LAW OR
OTHERWISE; (II) ANY CHANGE IN THE CORPORATE EXISTENCE, STRUCTURE OR OWNERSHIP OF
THE BORROWER OR ANY OTHER GUARANTOR OF OR OTHER PERSON LIABLE FOR ANY OF THE
GUARANTEED OBLIGATIONS; (III) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR
OTHER SIMILAR PROCEEDING AFFECTING ANY OBLIGATED PARTY, OR THEIR ASSETS OR ANY
RESULTING RELEASE OR DISCHARGE OF ANY OBLIGATION OF ANY OBLIGATED PARTY; OR
(IV) THE EXISTENCE OF ANY CLAIM, SETOFF OR OTHER RIGHTS WHICH ANY LOAN GUARANTOR
MAY HAVE AT ANY TIME AGAINST ANY OBLIGATED PARTY, THE AGENT, ANY LENDER, OR ANY
OTHER PERSON, WHETHER IN CONNECTION HEREWITH OR IN ANY UNRELATED TRANSACTIONS.

 

(B)  THE OBLIGATIONS OF EACH LOAN GUARANTOR HEREUNDER ARE NOT SUBJECT TO ANY
DEFENSE OR SETOFF, COUNTERCLAIM, RECOUPMENT, OR TERMINATION WHATSOEVER BY REASON
OF THE INVALIDITY, ILLEGALITY, OR UNENFORCEABILITY OF ANY OF THE GUARANTEED
OBLIGATIONS OR OTHERWISE, OR ANY PROVISION OF APPLICABLE LAW OR REGULATION
PURPORTING TO PROHIBIT PAYMENT BY ANY OBLIGATED PARTY, OF THE GUARANTEED
OBLIGATIONS OR ANY PART THEREOF.

 

(C)  FURTHER, THE OBLIGATIONS OF ANY LOAN GUARANTOR HEREUNDER ARE NOT DISCHARGED
OR IMPAIRED OR OTHERWISE AFFECTED BY: (I) THE FAILURE OF THE AGENT OR ANY LENDER
TO ASSERT ANY CLAIM OR DEMAND OR TO ENFORCE ANY REMEDY WITH RESPECT TO ALL OR
ANY PART OF THE GUARANTEED OBLIGATIONS; (II) ANY WAIVER OR MODIFICATION OF OR
SUPPLEMENT TO ANY PROVISION OF ANY AGREEMENT RELATING TO THE GUARANTEED
OBLIGATIONS; (III) ANY RELEASE, NON-PERFECTION, OR INVALIDITY OF ANY INDIRECT OR
DIRECT SECURITY FOR THE OBLIGATIONS OF THE BORROWER FOR ALL OR ANY PART OF THE
GUARANTEED OBLIGATIONS OR ANY OBLIGATIONS OF ANY OTHER GUARANTOR OF OR OTHER
PERSON LIABLE FOR ANY OF THE GUARANTEED OBLIGATIONS; (IV) ANY ACTION OR FAILURE
TO ACT BY THE AGENT OR ANY LENDER WITH RESPECT TO ANY COLLATERAL SECURING ANY
PART OF THE GUARANTEED OBLIGATIONS; OR (V) ANY DEFAULT, FAILURE OR DELAY,
WILLFUL OR OTHERWISE, IN THE PAYMENT OR PERFORMANCE OF ANY OF THE GUARANTEED
OBLIGATIONS, OR ANY OTHER CIRCUMSTANCE, ACT, OMISSION OR DELAY THAT MIGHT IN ANY
MANNER OR TO ANY EXTENT VARY THE RISK OF SUCH LOAN GUARANTOR OR THAT WOULD
OTHERWISE OPERATE AS A DISCHARGE OF ANY LOAN GUARANTOR AS A MATTER OF LAW OR
EQUITY (OTHER THAN THE INDEFEASIBLE PAYMENT IN FULL IN CASH OF THE GUARANTEED
OBLIGATIONS).

 

SECTION 10.04.  DEFENSES WAIVED.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH LOAN GUARANTOR HEREBY WAIVES ANY DEFENSE BASED ON OR ARISING OUT OF
ANY DEFENSE OF THE BORROWER OR ANY LOAN GUARANTOR OR THE UNENFORCEABILITY OF ALL
OR ANY PART OF THE GUARANTEED OBLIGATIONS FROM ANY CAUSE, OR THE CESSATION FROM
ANY CAUSE OF THE LIABILITY OF THE BORROWER OR ANY LOAN GUARANTOR, OTHER THAN THE
INDEFEASIBLE PAYMENT IN FULL IN CASH OF THE GUARANTEED OBLIGATIONS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EACH LOAN GUARANTOR IRREVOCABLY WAIVES
ACCEPTANCE HEREOF, PRESENTMENT, DEMAND, PROTEST AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY NOTICE NOT PROVIDED FOR HEREIN, AS WELL AS ANY REQUIREMENT
THAT AT ANY TIME ANY ACTION BE TAKEN BY ANY PERSON AGAINST ANY OBLIGATED PARTY,
OR ANY OTHER PERSON.  THE AGENT MAY, AT ITS ELECTION, FORECLOSE ON ANY
COLLATERAL HELD BY IT BY ONE OR MORE JUDICIAL OR NONJUDICIAL SALES, ACCEPT AN
ASSIGNMENT OF ANY SUCH COLLATERAL IN LIEU OF FORECLOSURE OR OTHERWISE ACT OR
FAIL TO ACT WITH RESPECT TO ANY COLLATERAL SECURING ALL OR A PART OF THE
GUARANTEED OBLIGATIONS, COMPROMISE OR ADJUST ANY PART OF THE GUARANTEED
OBLIGATIONS, MAKE ANY OTHER ACCOMMODATION WITH ANY OBLIGATED PARTY OR EXERCISE
ANY OTHER RIGHT OR REMEDY AVAILABLE TO IT AGAINST ANY OBLIGATED PARTY, WITHOUT
AFFECTING OR IMPAIRING IN ANY WAY THE LIABILITY OF SUCH LOAN GUARANTOR UNDER
THIS LOAN GUARANTY EXCEPT TO THE EXTENT THE GUARANTEED OBLIGATIONS HAVE BEEN
FULLY AND INDEFEASIBLY PAID IN CASH.  TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH LOAN GUARANTOR WAIVES ANY DEFENSE ARISING OUT OF ANY SUCH
ELECTION EVEN THOUGH THAT ELECTION

 

104

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

 

MAY OPERATE, PURSUANT TO APPLICABLE LAW, TO IMPAIR OR EXTINGUISH ANY RIGHT OF
REIMBURSEMENT OR SUBROGATION OR OTHER RIGHT OR REMEDY OF ANY LOAN GUARANTOR
AGAINST ANY OBLIGATED PARTY OR ANY SECURITY.

 

SECTION 10.05.  RIGHTS OF SUBROGATION.  NO LOAN GUARANTOR WILL ASSERT ANY RIGHT,
CLAIM OR CAUSE OF ACTION, INCLUDING, WITHOUT LIMITATION, A CLAIM OF SUBROGATION,
CONTRIBUTION OR INDEMNIFICATION THAT IT HAS AGAINST ANY OBLIGATED PARTY, OR ANY
COLLATERAL, UNTIL THE LOAN PARTIES AND THE LOAN GUARANTORS HAVE FULLY PERFORMED
ALL THEIR OBLIGATIONS TO THE AGENT AND THE LENDERS.

 

SECTION 10.06.  REINSTATEMENT; STAY OF ACCELERATION.  IF AT ANY TIME ANY PAYMENT
OF ANY PORTION OF THE GUARANTEED OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE
RESTORED OR RETURNED UPON THE INSOLVENCY, BANKRUPTCY, OR REORGANIZATION OF THE
BORROWER OR OTHERWISE, EACH LOAN GUARANTOR’S OBLIGATIONS UNDER THIS LOAN
GUARANTY WITH RESPECT TO THAT PAYMENT SHALL BE REINSTATED AT SUCH TIME AS THOUGH
THE PAYMENT HAD NOT BEEN MADE. IF ACCELERATION OF THE TIME FOR PAYMENT OF ANY OF
THE GUARANTEED OBLIGATIONS IS STAYED UPON THE INSOLVENCY, BANKRUPTCY OR
REORGANIZATION OF THE BORROWER, ALL SUCH AMOUNTS OTHERWISE SUBJECT TO
ACCELERATION UNDER THE TERMS OF ANY AGREEMENT RELATING TO THE GUARANTEED
OBLIGATIONS SHALL NONETHELESS BE PAYABLE BY THE LOAN GUARANTORS FORTHWITH ON
DEMAND BY THE LENDER.

 

SECTION 10.07.  INFORMATION.  EACH LOAN 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 GUARANTEED OBLIGATIONS AND THE NATURE, SCOPE AND EXTENT OF THE RISKS THAT
EACH LOAN GUARANTOR ASSUMES AND INCURS UNDER THIS LOAN GUARANTY, AND AGREES THAT
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY DUTY TO ADVISE ANY LOAN
GUARANTOR OF INFORMATION KNOWN TO IT REGARDING THOSE CIRCUMSTANCES OR RISKS.

 

SECTION 10.08.  TAXES.  ALL PAYMENTS OF THE GUARANTEED OBLIGATIONS WILL BE MADE
BY EACH LOAN GUARANTOR FREE AND CLEAR OF AND WITHOUT DEDUCTION FOR ANY
INDEMNIFIED TAXES OR OTHER TAXES; PROVIDED THAT IF ANY LOAN GUARANTOR SHALL BE
REQUIRED TO DEDUCT ANY INDEMNIFIED TAXES OR OTHER TAXES FROM SUCH PAYMENTS, THEN
(I) THE SUM PAYABLE SHALL BE INCREASED AS NECESSARY SO THAT AFTER MAKING ALL
REQUIRED DEDUCTIONS (INCLUDING DEDUCTIONS APPLICABLE TO ADDITIONAL SUMS PAYABLE
UNDER THIS SECTION) THE AGENT OR LENDER (AS THE CASE MAY BE) RECEIVES AN AMOUNT
EQUAL TO THE SUM IT WOULD HAVE RECEIVED HAD NO SUCH DEDUCTIONS BEEN MADE,
(II) SUCH LOAN GUARANTOR SHALL MAKE SUCH DEDUCTIONS AND (III) SUCH LOAN
GUARANTOR SHALL PAY THE FULL AMOUNT DEDUCTED TO THE RELEVANT GOVERNMENTAL
AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW.

 

SECTION 10.09.  MAXIMUM LIABILITY.  THE PROVISIONS OF THIS LOAN GUARANTY ARE
SEVERABLE, AND IN ANY ACTION OR PROCEEDING INVOLVING ANY STATE CORPORATE LAW, OR
ANY STATE, FEDERAL OR FOREIGN BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER
LAW AFFECTING THE RIGHTS OF CREDITORS GENERALLY, IF THE OBLIGATIONS OF ANY LOAN
GUARANTOR UNDER THIS LOAN GUARANTY WOULD OTHERWISE BE HELD OR DETERMINED TO BE
AVOIDABLE, INVALID OR UNENFORCEABLE ON ACCOUNT OF THE AMOUNT OF SUCH LOAN
GUARANTOR’S LIABILITY UNDER THIS LOAN GUARANTY, THEN, NOTWITHSTANDING ANY OTHER
PROVISION OF THIS LOAN GUARANTY TO THE CONTRARY, THE AMOUNT OF SUCH LIABILITY
SHALL, WITHOUT ANY FURTHER ACTION BY THE LOAN GUARANTORS OR THE LENDERS, BE
AUTOMATICALLY LIMITED AND REDUCED TO THE HIGHEST AMOUNT THAT IS VALID AND
ENFORCEABLE AS DETERMINED IN SUCH ACTION OR PROCEEDING (SUCH HIGHEST AMOUNT
DETERMINED HEREUNDER BEING THE RELEVANT LOAN GUARANTOR’S “MAXIMUM LIABILITY”. 
THIS SECTION WITH RESPECT TO THE MAXIMUM LIABILITY OF EACH LOAN GUARANTOR IS
INTENDED SOLELY TO PRESERVE THE RIGHTS OF THE LENDERS TO THE MAXIMUM EXTENT NOT
SUBJECT TO AVOIDANCE UNDER APPLICABLE LAW, AND NO LOAN GUARANTOR NOR ANY OTHER
PERSON OR ENTITY SHALL HAVE ANY RIGHT OR CLAIM UNDER THIS SECTION WITH RESPECT
TO SUCH MAXIMUM LIABILITY, EXCEPT TO THE EXTENT NECESSARY SO THAT THE
OBLIGATIONS OF ANY LOAN GUARANTOR HEREUNDER SHALL NOT BE RENDERED VOIDABLE UNDER
APPLICABLE LAW. EACH LOAN GUARANTOR AGREES THAT THE GUARANTEED OBLIGATIONS MAY
AT ANY TIME AND FROM TIME TO TIME EXCEED THE MAXIMUM LIABILITY OF EACH LOAN
GUARANTOR WITHOUT IMPAIRING THIS LOAN GUARANTY OR AFFECTING THE

 

105

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

 

RIGHTS AND REMEDIES OF THE LENDERS HEREUNDER, PROVIDED THAT, NOTHING IN THIS
SENTENCE SHALL BE CONSTRUED TO INCREASE ANY LOAN GUARANTOR’S OBLIGATIONS
HEREUNDER BEYOND ITS MAXIMUM LIABILITY.

 

SECTION 10.10.  CONTRIBUTION.  IN THE EVENT ANY LOAN GUARANTOR (A “PAYING
GUARANTOR”) SHALL MAKE ANY PAYMENT OR PAYMENTS UNDER THIS LOAN GUARANTY OR SHALL
SUFFER ANY LOSS AS A RESULT OF ANY REALIZATION UPON ANY COLLATERAL GRANTED BY IT
TO SECURE ITS OBLIGATIONS UNDER THIS LOAN GUARANTY, EACH OTHER LOAN GUARANTOR
(EACH A “NON-PAYING GUARANTOR”) SHALL CONTRIBUTE TO SUCH PAYING GUARANTOR AN
AMOUNT EQUAL TO SUCH NON-PAYING GUARANTOR’S “GUARANTOR PERCENTAGE” OF SUCH
PAYMENT OR PAYMENTS MADE, OR LOSSES SUFFERED, BY SUCH PAYING GUARANTOR.  FOR
PURPOSES OF THIS ARTICLE X, EACH NON-PAYING GUARANTOR’S “GUARANTOR PERCENTAGE”
WITH RESPECT TO ANY SUCH PAYMENT OR LOSS BY A PAYING GUARANTOR SHALL BE
DETERMINED AS OF THE DATE ON WHICH SUCH PAYMENT OR LOSS WAS MADE BY REFERENCE TO
THE RATIO OF (I) SUCH NON-PAYING GUARANTOR’S MAXIMUM LIABILITY AS OF SUCH DATE
(WITHOUT GIVING EFFECT TO ANY RIGHT TO RECEIVE, OR OBLIGATION TO MAKE, ANY
CONTRIBUTION HEREUNDER) OR, IF SUCH NON-PAYING GUARANTOR’S MAXIMUM LIABILITY HAS
NOT BEEN DETERMINED, THE AGGREGATE AMOUNT OF ALL MONIES RECEIVED BY SUCH
NON-PAYING GUARANTOR FROM THE BORROWER AFTER THE DATE HEREOF (WHETHER BY LOAN,
CAPITAL INFUSION OR BY OTHER MEANS) TO (II) THE AGGREGATE MAXIMUM LIABILITY OF
ALL LOAN GUARANTORS HEREUNDER (INCLUDING SUCH PAYING GUARANTOR) AS OF SUCH DATE
(WITHOUT GIVING EFFECT TO ANY RIGHT TO RECEIVE, OR OBLIGATION TO MAKE, ANY
CONTRIBUTION HEREUNDER), OR TO THE EXTENT THAT A MAXIMUM LIABILITY HAS NOT BEEN
DETERMINED FOR ANY LOAN GUARANTOR, THE AGGREGATE AMOUNT OF ALL MONIES RECEIVED
BY SUCH LOAN GUARANTORS FROM THE BORROWER AFTER THE DATE HEREOF (WHETHER BY
LOAN, CAPITAL INFUSION OR BY OTHER MEANS).  NOTHING IN THIS PROVISION SHALL
AFFECT ANY LOAN GUARANTOR’S SEVERAL LIABILITY FOR THE ENTIRE AMOUNT OF THE
GUARANTEED OBLIGATIONS (UP TO SUCH LOAN GUARANTOR’S MAXIMUM LIABILITY).  EACH OF
THE LOAN GUARANTORS COVENANTS AND AGREES THAT ITS RIGHT TO RECEIVE ANY
CONTRIBUTION UNDER THIS LOAN GUARANTY FROM A NON-PAYING GUARANTOR SHALL BE
SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO THE PAYMENT IN FULL IN CASH OF THE
GUARANTEED OBLIGATIONS.  THIS PROVISION IS FOR THE BENEFIT OF BOTH THE AGENT,
THE LENDERS AND THE LOAN GUARANTORS AND MAY BE ENFORCED BY ANY ONE, OR MORE, OR
ALL OF THEM IN ACCORDANCE WITH THE TERMS HEREOF.

 

SECTION 10.11.  LIABILITY CUMULATIVE.  THE LIABILITY OF EACH LOAN PARTY AS A
LOAN GUARANTOR UNDER THIS ARTICLE X IS IN ADDITION TO AND SHALL BE CUMULATIVE
WITH ALL LIABILITIES OF EACH LOAN PARTY TO THE AGENT AND THE LENDERS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH SUCH LOAN PARTY IS A PARTY OR IN
RESPECT OF ANY OBLIGATIONS OR LIABILITIES OF THE OTHER LOAN PARTIES, WITHOUT ANY
LIMITATION AS TO AMOUNT, UNLESS THE INSTRUMENT OR AGREEMENT EVIDENCING OR
CREATING SUCH OTHER LIABILITY SPECIFICALLY PROVIDES TO THE CONTRARY.

 

SECTION 10.12.  RELEASE OF LOAN GUARANTORS.  NOTWITHSTANDING ANYTHING IN
SECTION 9.02(B) TO THE CONTRARY (I) A SUBSIDIARY GUARANTOR SHALL AUTOMATICALLY
BE RELEASED FROM ITS OBLIGATIONS HEREUNDER AND ITS LOAN GUARANTY SHALL BE
AUTOMATICALLY RELEASED UPON THE CONSUMMATION OF ANY TRANSACTION PERMITTED
HEREUNDER AS A RESULT OF WHICH SUCH SUBSIDIARY GUARANTOR CEASES TO BE A
SUBSIDIARY OF THE BORROWER AND (II) SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING (A) IF A LOAN GUARANTOR IS OR BECOMES AN IMMATERIAL
SUBSIDIARY, AND SUCH RELEASE WOULD NOT RESULT IN ANY IMMATERIAL SUBSIDIARY BEING
REQUIRED PURSUANT TO SECTION 5.11(E) TO BECOME A LOAN PARTY HEREUNDER (EXCEPT TO
THE EXTENT THAT ON AND AS OF THE DATE OF SUCH RELEASE, ONE OR MORE OTHER
IMMATERIAL SUBSIDIARIES BECOME LOAN GUARANTORS HEREUNDER AND THE PROVISIONS OF
SECTION 5.11(E) ARE SATISFIED UPON GIVING EFFECT TO ALL SUCH ADDITIONS AND
RELEASES), OR (B) A RESTRICTED SUBSIDIARY IS REDESIGNATED AS AN UNRESTRICTED
SUBSIDIARY IN ACCORDANCE WITH SECTION 6.04(D), THEN IN THE CASE OF EACH OF
CLAUSES (A) AND (B), SUCH SUBSIDIARY GUARANTOR SHALL BE AUTOMATICALLY RELEASED
FROM ITS OBLIGATIONS HEREUNDER AND ITS LOAN GUARANTY SHALL BE AUTOMATICALLY
RELEASED UPON NOTIFICATION THEREOF FROM THE BORROWER TO THE AGENT.  IN
CONNECTION WITH ANY SUCH RELEASE, THE AGENT SHALL EXECUTE AND DELIVER TO ANY
SUBSIDIARY GUARANTOR, AT SUCH SUBSIDIARY GUARANTOR’S EXPENSE, ALL DOCUMENTS THAT
SUCH SUBSIDIARY GUARANTOR SHALL REASONABLY

 

106

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

 

REQUEST TO EVIDENCE SUCH TERMINATION OR RELEASE.  ANY EXECUTION AND DELIVERY OF
DOCUMENTS PURSUANT TO THE PRECEDING SENTENCE OF THIS SECTION 10.12 SHALL BE
WITHOUT RECOURSE TO OR WARRANTY BY THE AGENT.

 

107

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

 

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

 

 

 

NEWTON ACQUISITION MERGER SUB, INC.,

 

 

 

 

By

 

 

 

/s/ Kewsong Lee

 

 

Name:

Kewsong Lee

 

 

Title:

Senior Vice President

 

 

 

 

NEWTON ACQUISITION, INC.,

 

 

 

 

By

 

 

 

/s/ Nelson A. Bangs

 

 

Name:

Nelson A. Bangs

 

 

Title:

Senior Vice President

 

 

 

and General Counsel

 

 

 

 

THE NEIMAN MARCUS GROUP, INC.,

 

 

 

 

By

 

 

 

/s/ Nelson A. Bangs

 

 

Name:

Nelson A. Bangs

 

 

Title:

Senior Vice President

 

 

 

and General Counsel

 

 

 

 

 

 

 

NEIMAN MARCUS SPECIAL EVENTS, INC.

NEMA BEVERAGE CORPORATION

NM FINANCIAL SERVICES, INC.

NM KITCHENS, INC.

BERGDORFGOODMAN.COM, LLC

BERGDORF GOODMAN, INC.

BERGDORF GRAPHICS, INC.

NEIMAN MARCUS HOLDINGS, INC.

NEMA BEVERAGE HOLDING CORPORATION

NEMA BEVERAGE PARENT CORPORATION

WORTH AVENUE LEASING COMPANY

NMGP, LLC,

 

 

 

 

By

 

 

 

/s/ Nelson A. Bangs

 

 

Name:

Nelson A. Bangs

 

 

Title:

Vice President

 

108

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

 

 

NM NEVADA TRUST,

 

 

 

 

By

 

 

 

/s/ Nelson A. Bangs

 

 

Name:

Nelson A. Bangs

 

 

Title:

Vice President

 

109

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

 

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually and as Agent,

 

 

 

 

By

 

 

 

/s/ Robert Hetu

 

 

Name:

Robert Hetu

 

 

Title:

Director

 

 

 

 

By

 

 

 

/s/ Vanessa Gomez

 

 

Name:

Vanessa Gomez

 

 

Title:

Vice President

 

110

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