EXHIBIT 10.9a

 

 

 

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Dated as of November 16, 2011

Among

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders

and

BANK OF AMERICA, N.A.

as the Administrative Agent

and

PSS WORLD MEDICAL, INC. AND CERTAIN OF ITS SUBSIDIARIES

as the Borrowers

and

CERTAIN OTHER SUBSIDIARIES OF PSS WORLD MEDICAL, INC.

as the Guarantors

and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Sole Arranger and Sole Book Runner

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

and

JPMORGAN CHASE BANK, N.A.,

as Co-Syndication Agents

 

 

 

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TABLE OF CONTENTS

 

Section

        Page  

ARTICLE 1 LOANS AND LETTERS OF CREDIT

     2      1.1   

CREDIT FACILITY

     2      1.2   

REVOLVING LOANS

     2      1.3   

LETTERS OF CREDIT

     8      1.4   

BANK PRODUCTS

     11   

ARTICLE 2 INTEREST AND FEES

     12      2.1   

INTEREST

     12      2.2   

CONTINUATION AND CONVERSION ELECTIONS

     12      2.3   

MAXIMUM INTEREST RATE

     13      2.4   

ARRANGEMENT, CLOSING AND ADMINISTRATIVE FEES

     14      2.5   

UNUSED LINE FEE

     14      2.6   

LETTER OF CREDIT FEES

     14   

ARTICLE 3 PAYMENTS AND PREPAYMENTS

     14      3.1   

REVOLVING LOANS

     14      3.2   

TERMINATION OF FACILITY; REDUCTION OF COMMITMENT

     15      3.3   

LIBOR LOAN PREPAYMENTS

     15      3.4   

PAYMENTS BY THE BORROWERS

     15      3.5   

PAYMENTS AS REVOLVING LOANS

     16      3.6   

POST DEFAULT ALLOCATION OF PAYMENTS

     16      3.7   

INDEMNITY FOR RETURNED PAYMENTS

     17      3.8   

AGENT’S AND LENDERS’ BOOKS AND RECORDS; MONTHLY STATEMENTS

     17      3.9   

BORROWERS’ AGENT

     17      3.10   

JOINT AND SEVERAL LIABILITY

     18      3.11   

OBLIGATIONS ABSOLUTE

     18      3.12   

WAIVER OF SURETYSHIP DEFENSES

     18      3.13   

CONTRIBUTION AND INDEMNIFICATION AMONG THE BORROWERS

     19   

ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY

     19      4.1   

TAXES

     19      4.2   

ILLEGALITY

     20      4.3   

INCREASED COSTS AND REDUCTION OF RETURN

     21      4.4   

FUNDING LOSSES

     21      4.5   

INABILITY TO DETERMINE RATES

     22      4.6   

CERTIFICATES OF LENDER

     22      4.7   

SURVIVAL

     22      4.8   

ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES

     22   

ARTICLE 5 COLLATERAL

     23      5.1   

GRANT OF SECURITY INTEREST

     23      5.2   

PERFECTION AND PROTECTION OF SECURITY INTEREST

     24      5.3   

COLLECTION OF PAYMENTS

     25      5.4   

RIGHT TO CURE

     26      5.5   

POWER OF ATTORNEY

     26      5.6   

THE AGENT’S AND THE SECURED PARTIES’ DUTIES AND LIABILITIES

     27      5.7   

GRANT OF LICENSE TO USE PROPRIETARY RIGHTS

     28   

 

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  5.8   

LIMITATION ON THE AGENT’S AND THE SECURED PARTIES’ DUTY IN RESPECT OF THE
COLLATERAL

     28    ARTICLE 6 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES      28
     6.1   

BOOKS AND RECORDS

     28      6.2   

FINANCIAL INFORMATION

     28      6.3   

NOTICES TO THE LENDERS

     31    ARTICLE 7 GENERAL WARRANTIES AND REPRESENTATIONS      33      7.1   

AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND THE LOAN
DOCUMENTS

     33      7.2   

VALIDITY AND PRIORITY OF SECURITY INTEREST

     34      7.3   

ORGANIZATION AND QUALIFICATION

     34      7.4   

CORPORATE NAME; PRIOR TRANSACTIONS

     34      7.5   

SUBSIDIARIES AND AFFILIATES

     34      7.6   

FINANCIAL STATEMENTS AND PROJECTIONS

     34      7.7   

CAPITALIZATION

     34      7.8   

SOLVENCY

     35      7.9   

DEBT

     35      7.10   

DISTRIBUTIONS

     35      7.11   

REAL ESTATE; LEASES

     35      7.12   

PROPRIETARY RIGHTS

     35      7.13   

TRADE NAMES

     35      7.14   

LITIGATION

     35      7.15   

LABOR DISPUTES

     35      7.16   

ENVIRONMENTAL LAWS

     36      7.17   

NO VIOLATION OF LAW

     37      7.18   

NO DEFAULT

     37      7.19   

ERISA COMPLIANCE

     37      7.20   

TAXES

     37      7.21   

REGULATED ENTITIES

     38      7.22   

USE OF PROCEEDS; MARGIN REGULATIONS

     38      7.23   

SENIOR CONVERTIBLE NOTES INDENTURE

     38      7.24   

NO MATERIAL ADVERSE CHANGE

     38      7.25   

FULL DISCLOSURE

     38      7.26   

MATERIAL AGREEMENTS

     38      7.27   

BANK ACCOUNTS

     38      7.28   

GOVERNMENTAL AUTHORIZATION

     38      7.29   

TAX SHELTER REGULATIONS

     38      7.30   

LOCATION OF COLLATERAL

     39      7.31   

JURISDICTION OF ORGANIZATION

     39      7.32   

TITLE TO, LIENS ON AND SALE AND USE OF COLLATERAL

     39      7.33   

ACCOUNTS

     39      7.34   

INVENTORY

     39      7.35   

DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER

     40      7.36   

PATENT, TRADEMARK AND COPYRIGHT COLLATERAL

     40    ARTICLE 8 AFFIRMATIVE AND NEGATIVE COVENANTS      40      8.1   

TAXES AND OTHER OBLIGATIONS

     40      8.2   

LEGAL EXISTENCE AND GOOD STANDING

     40      8.3   

COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES

     40   

 

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  8.4   

MAINTENANCE OF PROPERTY; INSPECTION OF PROPERTY

     41      8.5   

INSURANCE

     41      8.6   

INSURANCE AND CONDEMNATION PROCEEDS

     42      8.7   

ENVIRONMENTAL LAWS

     42      8.8   

COMPLIANCE WITH ERISA

     43      8.9   

MERGERS, CONSOLIDATIONS OR SALES

     43      8.10   

DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS

     44      8.11   

TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS

     44      8.12   

GUARANTIES

     44      8.13   

FUNDED DEBT

     44      8.14   

PREPAYMENT

     45      8.15   

TRANSACTIONS WITH AFFILIATES

     45      8.16   

INVESTMENT BANKING AND FINDER’S FEES

     46      8.17   

BUSINESS CONDUCTED

     46      8.18   

LIENS

     46      8.19   

SALE AND LEASEBACK TRANSACTIONS

     46      8.20   

NEW SUBSIDIARIES

     46      8.21   

FISCAL YEAR

     47      8.22   

RESERVED

     47      8.23   

FIXED CHARGE COVERAGE RATIO

     47      8.24   

RESERVED

     47      8.25   

USE OF PROCEEDS

     47      8.26   

LOCATION OF COLLATERAL

     47      8.27   

ACCOUNTS

     47      8.28   

INVENTORY

     48      8.29   

EQUIPMENT

     49      8.30   

PATENT, TRADEMARK AND COPYRIGHT COLLATERAL

     49      8.31   

LIMITATION ON LIENS ON THE COLLATERAL

     49      8.32   

FURTHER ASSURANCES

     50    ARTICLE 9 CONDITIONS OF LENDING      50      9.1   

CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE

     50      9.2   

CONDITIONS PRECEDENT TO EACH LOAN

     52    ARTICLE 10 DEFAULT; REMEDIES      53      10.1   

EVENTS OF DEFAULT

     53      10.2   

REMEDIES

     55    ARTICLE 11 TERM AND TERMINATION      57      11.1   

TERM AND TERMINATION

     57    ARTICLE 12 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS;
SUCCESSORS      58      12.1   

AMENDMENTS AND WAIVERS

     58      12.2   

ASSIGNMENTS; PARTICIPATIONS

     59    ARTICLE 13 THE AGENT      61      13.1   

APPOINTMENT AND AUTHORIZATION

     61      13.2   

DELEGATION OF DUTIES

     61      13.3   

LIABILITY OF THE AGENT

     61      13.4   

RELIANCE BY THE AGENT

     62   

 

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  13.5   

NOTICE OF DEFAULT

     62      13.6   

CREDIT DECISION

     62      13.7   

INDEMNIFICATION

     63      13.8   

AGENT IN INDIVIDUAL CAPACITY

     63      13.9   

SUCCESSOR AGENT

     63      13.10   

WITHHOLDING TAX

     64      13.11   

COLLATERAL MATTERS

     65      13.12   

RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS

     66      13.13   

AGENCY FOR PERFECTION

     66      13.14   

PAYMENTS BY THE AGENT TO THE LENDERS

     66      13.15   

SETTLEMENT

     67      13.16   

LETTERS OF CREDIT; INTRA-LENDER ISSUES

     67      13.17   

CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS

     68      13.18   

FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS

     69      13.19   

RELATION AMONG LENDERS

     69      13.20   

REMITTANCE OF PAYMENTS AND COLLECTIONS

     69      13.21   

BANK PRODUCT PROVIDERS

     70   

ARTICLE 14 SUBSIDIARY GUARANTIES

     70      14.1   

SUBSIDIARY GUARANTIES

     70      14.2   

OBLIGATIONS ABSOLUTE

     70      14.3   

WAIVER OF SURETYSHIP DEFENSES

     70      14.4   

CONTRIBUTION AND INDEMNIFICATION

     71      14.5   

SUBORDINATION OF INTERCOMPANY DEBT

     71   

ARTICLE 15 MISCELLANEOUS

     72      15.1   

NO WAIVERS; CUMULATIVE REMEDIES

     72      15.2   

SEVERABILITY

     72      15.3   

GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS

     72      15.4   

WAIVER OF JURY TRIAL

     73      15.5   

SURVIVAL OF REPRESENTATIONS AND WARRANTIES

     73      15.6   

OTHER SECURITY AND GUARANTIES

     73      15.7   

FEES AND EXPENSES

     73      15.8   

NOTICES

     74      15.9   

WAIVER OF NOTICES

     75      15.10   

BINDING EFFECT

     75      15.11   

INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWERS

     75      15.12   

LIMITATION OF LIABILITY

     75      15.13   

FINAL AGREEMENT

     76      15.14   

COUNTERPARTS

     76      15.15   

CAPTIONS

     76      14.16   

RIGHT OF SETOFF

     76      14.17   

CONFIDENTIALITY

     76      14.18   

PATRIOT ACT NOTICE

     77      14.19   

CONFLICTS WITH OTHER LOAN DOCUMENTS

     77      14.17   

INTEREST RATE DISCLOSURE

     77      14.21   

NO NOVATION

     77      14.17   

AMENDMENT AND RESTATEMENT

     77   

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEX A    -    DEFINED TERMS EXHIBIT A    -    FORM OF BORROWING BASE
CERTIFICATE EXHIBIT B    -    FORM OF NOTICE OF BORROWING EXHIBIT C    -    FORM
OF NOTICE OF CONTINUATION/CONVERSION EXHIBIT D    -    FORM OF ASSIGNMENT AND
ACCEPTANCE AGREEMENT EXHIBIT E    -    FORM OF NOTICE REGARDING BANK PRODUCT
OBLIGATIONS EXHIBIT F    -    FORM OF REVOLVING NOTE

 

SCHEDULE 1.1    -    LENDERS’ COMMITMENTS SCHEDULE 1.2    -    EXISTING
INVESTMENTS SCHEDULE 7.3    -    ORGANIZATION AND QUALIFICATIONS SCHEDULE 7.4   
-    CORPORATE NAME; PRIOR TRANSACTIONS SCHEDULE 7.5    -    SUBSIDIARIES AND
AFFILIATES SCHEDULE 7.7    -    CAPITALIZATION SCHEDULE 7.9    -    DEBT
SCHEDULE 7.11    -    REAL ESTATE; LEASES SCHEDULE 7.12    -    PROPRIETARY
RIGHTS SCHEDULE 7.13    -    TRADE NAMES SCHEDULE 7.14    -    LITIGATION
SCHEDULE 7.15    -    LABOR DISPUTES SCHEDULE 7.16    -    ENVIRONMENTAL LAWS
SCHEDULE 7.26    -    MATERIAL AGREEMENTS SCHEDULE 7.27    -    BANK ACCOUNTS
SCHEDULE 7.30    -    CHIEF EXECUTIVE OFFICE; LOCATIONS OF COLLATERAL; OTHER
PLACES OF BUSINESS

 

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SCHEDULE 7.31    -    JURISDICTION OF ORGANIZATION; ORGANIZATIONAL ID NUMBER   
SCHEDULE 7.36    -    PATENTS, TRADEMARKS AND COPYRIGHTS    SCHEDULE 8.15    -
   PERMITTED AFFILIATE TRANSACTIONS   

 

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SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

This Second Amended and Restated Credit and Security Agreement, dated as of
November 16, 2011 (this “Agreement”), among the financial institutions from time
to time parties hereto (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each individually
as a “Lender” and collectively as the “Lenders”), BANK OF AMERICA, N.A., as
agent for the Lenders (in its capacity as agent, the “Agent”), PSS WORLD
MEDICAL, INC., a Florida corporation (“PSS”), GULF SOUTH MEDICAL SUPPLY, INC., a
Delaware corporation (“Gulf South”), PHYSICIAN SALES & SERVICES LIMITED
PARTNERSHIP, a Florida limited partnership (“PSS LP”), WORLDMED SHARED SERVICES,
INC., a Florida corporation (“WorldMed”), and CASCADE MEDICAL SUPPLY, INC., a
Washington corporation (“Cascade”); THERATECH, INC., a Tennessee corporation
(“Theratech”), DS HOLDINGS, INC., a Delaware corporation (“DS Holdings”), DSRX,
INC., a California corporation (“DSRx”), DISPENSING SOLUTIONS ACQUISITION CORP.,
a California corporation (“DSAC”), DISPENSING SOLUTIONS, INC., a Delaware
corporation (“DSI”), POC MANAGEMENT GROUP, LLC, a California limited liability
company (“POC Management”), LINEAR HOLDINGS, LLC, a Delaware limited liability
company (“Linear Holdings”), LINEAR MEDICAL SOLUTIONS, LLC, a Delaware limited
liability company (“Linear Medical”), STAT RX USA, LLC, a Delaware limited
liability company (“Stat Rx”), SCRIP PAK, LLC, a Florida limited liability
company (“Scrip Pak”), CLAIMONE, LLC, a Delaware limited liability company
(“ClaimOne”), BOTTOMLINE MEDICAL SOLUTIONS, LLC, a Delaware limited liability
company (“BottomLine”); PSS, Gulf South, PSS LP, and WorldMed, are referred to
herein collectively as the “Existing Borrowers” and together with Cascade,
Theratech, DS Holdings, DSRx, DSAC, DSI, POC Management, Linear Holdings, Linear
Medical, Stat Rx, Scrip Pak, ClaimOne and BottomLine are referred to hereinafter
each individually as a “Borrower” and collectively as the “Borrowers”), and PSS
HOLDING, INC., a Florida corporation (“PSS Holding”), PSS SERVICE, INC., a
Florida corporation (“PSS Service”), PHYSICIAN SALES & SERVICE, INC., a Florida
corporation (“Physician Sales & Service”), THRIFTYMED, INC., a Florida
corporation (“ThriftyMed”), PROCLAIM, INC., a Tennessee corporation (“ProClaim”)
and ANCILLARY MANAGEMENT SOLUTIONS, INC., a Tennessee corporation (“AMS”); PSS
Holding, PSS Service, Physician Sales & Service, ThriftyMed, ProClaim and AMS
are referred to hereinafter each individually as a “Guarantor” and collectively
as the “Guarantors”).

W I T N E S S E T H:

WHEREAS, the Existing Borrowers, the Guarantors, Bank of America, N.A., as
agent, and the lenders party thereto, are parties to that certain Amended and
Restated Credit Agreement dated as of May 20, 2003 (as amended, the “Existing
Credit Agreement”); and

WHEREAS, the Existing Obligors and Bank of America, N.A., as agent, are parties
to that certain Amended and Restated Security Agreement dated as of May 20, 2003
(as amended, the “Existing Security Agreement” and, together with the Existing
Credit Agreement, collectively, the “Existing Agreements”); and

WHEREAS, the Borrowers, the Guarantors, the Agent and the Lenders desire to
amend and restate the Existing Agreements in order to provide the Borrowers a
credit facility on the terms set forth herein, which credit facility the
Borrowers will use for the purposes permitted hereunder; and

WHEREAS, in order to utilize the financial powers of the Borrowers in the most
efficient and economical manner, and in order to facilitate the financing of the
Borrowers’ working capital needs, the Lenders will, at the request of the
Borrowers, extend financial accommodations to the Borrowers based on the
combined borrowing base of the Borrowers in accordance with the provisions set
forth in this Agreement; and

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WHEREAS, the Borrowers’ and Guarantors’ business is a mutual and collective
enterprise and the Borrowers and Guarantors believe that the consolidation of
all loans and other financial accommodations under this Agreement will enhance
the aggregate borrowing powers of the Borrowers and Guarantors and facilitate
the administration of their loan relationship with the Agent and the Lenders,
all to the mutual advantage of the Borrowers and Guarantors; and

WHEREAS, each Borrower and Guarantor acknowledges that it will receive
substantial direct and indirect benefits by reason of the making of loans and
other financial accommodations to the Borrowers as provided in this Agreement,
by virtue of the Borrowers’ and Guarantors’ various inter-relationships as joint
guarantors or joint obligors and the beneficiaries thereof, as lessors and
lessees, as suppliers and customers, and as joint venturers; and

WHEREAS, the Agent’s and the Lenders’ willingness to extend financial
accommodations to the Borrowers, and to administer the Borrowers’ and
Guarantors’ collateral security therefor, on a combined basis as more fully set
forth in this Agreement, is done solely as an accommodation to the Borrowers and
Guarantors and at the Borrowers’ and Guarantors’ request and in furtherance of
the Borrowers’ and Guarantors’ mutual and collective enterprise; and

WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement; and all Annexes, Exhibits and
Schedules attached hereto are incorporated herein by reference.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Lenders, the Agent, the Borrowers and the
Guarantors hereby agree as follows.

ARTICLE 1

LOANS AND LETTERS OF CREDIT

1.1 Credit Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders agree to make available a revolving credit facility to
the Borrowers from time to time during the term of this Agreement of up to the
Maximum Revolver Amount. The credit facility shall be composed of a revolving
line of credit consisting of Revolving Loans and Letters of Credit. At the
request of any Lender, Borrowers shall deliver a Revolving Note to such Lender.

1.2 Revolving Loans.

(a) Amounts. Subject to the terms and conditions hereof, each Lender severally,
but not jointly, agrees, upon a Borrower’s request from time to time on any
Business Day, during the period from the Closing Date to the Termination Date,
to make revolving loans (the “Revolving Loans”) to the Borrowers in amounts not
to exceed such Lender’s Pro Rata Share of Availability, except for Swingline
Loans, Overadvances and Agent Advances. The Lenders, however, in their unanimous
discretion, may elect to make Revolving Loans or issue or arrange to have issued
Letters of Credit in excess of the Borrowing Base on one or more occasions, but
if they do so, neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Borrowing Base or to be obligated to exceed such
limits on any other occasion. If any Borrowing would exceed Availability after
giving effect to any Borrowing, the Lenders may refuse to make or may otherwise
restrict the making of Revolving Loans as the Lenders determine until such
excess has been eliminated, subject to the Agent’s authority, in its sole
discretion, to make Overadvances pursuant to the terms of Section 1.2(h) or
Agent Advances pursuant to the terms of Section 1.2(i).

 

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(b) Procedure for Borrowing.

(i) Each Borrowing of Revolving Loans shall be made upon a Borrower’s
irrevocable written notice delivered to the Agent in the form of a notice of
borrowing substantially in the form of Exhibit B (“Notice of Borrowing”), which
must be received by the Agent prior to (i) 12:00 noon (Atlanta, Georgia time)
three Business Days prior to the requested Funding Date in the case of LIBOR
Loans, and (ii) 11:00 a.m. (Atlanta, Georgia time) on the requested Funding Date
in the case of Base Rate Loans, specifying:

(A) the amount of the Borrowing, which in the case of a LIBOR Loan must equal or
exceed $1,000,000 (and increments of $500,000 in excess of such amount);

(B) the requested Funding Date, which must be a Business Day;

(C) whether the Loans requested are to be Base Rate Revolving Loans or LIBOR
Revolving Loans (and if not specified, it shall be deemed a request for a Base
Rate Revolving Loan); and

(D) the duration of the Interest Period for LIBOR Revolving Loans (and if not
specified, it shall be deemed a request for an Interest Period of one month);

provided, however, that with respect to the Revolving Loans to be made on the
Closing Date, such Borrowings will consist of Base Rate Revolving Loans only.

(ii) In lieu of delivering a Notice of Borrowing, a Borrower may give the Agent
telephonic notice of such request for advances to the Designated Account on or
before the deadline set forth above. The Agent at all times shall be entitled to
rely on such telephonic notice in making such Loans, regardless of whether any
written confirmation is received.

(iii) Whenever checks are presented to the Bank for payment against the
Designated Account or any other account of a Borrower maintained with the Bank
in an amount greater than the then available balance in such accounts, such
presentation shall be deemed to be a request for a Base Rate Revolving Loan on
the date of such presentation in an amount equal to the excess of such checks
over such available balances (less the amount of collections credited to the
Loan Account on such date), and such request shall be irrevocable.

(iv) At the election of the Required Lenders, the Borrowers shall have no right
to request a LIBOR Loan while a Default or Event of Default has occurred and is
continuing.

(c) Reliance upon Authority. Prior to the Closing Date, the Borrowers’ Agent
shall deliver to the Agent a notice setting forth the account of the Borrowers’
Agent (the “Designated Account”) to which the Agent is authorized to transfer
the proceeds of the Loans requested hereunder. The Borrowers’ Agent may
designate a replacement account from time to time by written notice to the
Agent. All such Designated Accounts must be reasonably satisfactory to the
Agent. The Agent is entitled to rely conclusively on any person’s request for
Loans on behalf of a Borrower, so long as the proceeds thereof are to be
transferred to the Designated Account. The Agent has no duty to verify the
identity of any individual representing himself or herself as a person
authorized by a Borrower to make such requests on its behalf.

(d) No Liability. The Agent shall not incur any liability to any Borrower as a
result of acting upon any notice referred to in Section 1.2 which the Agent
believes in good faith to have been given by an officer or other person duly
authorized by a Borrower to request Loans on its behalf. The crediting of Loans
to the Designated Account conclusively establishes the obligation of the
Borrowers to repay such Loans as provided herein.

 

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(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu
thereof) made pursuant to Section 1.2 shall be irrevocable. The Borrowers shall
be bound to borrow the funds requested therein in accordance therewith.

(f) Fundings by Lenders. Each Lender shall timely honor its Commitment by
funding its Pro Rata Share of each Borrowing of Revolver Loans that is properly
requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent
shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request
for a Borrowing) by 12:00 noon on the proposed funding date for Base Rate Loans
or by 3:00 p.m. at least two Business Days before any proposed funding of LIBOR
Loans. Each Lender shall fund to Agent such Lender’s Pro Rata Share of the
Borrowing to the account specified by Agent in immediately available funds not
later than 2:00 p.m. on the requested funding date, unless Agent’s notice is
received after the times provided above, in which case Lender shall fund its Pro
Rata Share by 11:00 a.m. on the next Business Day. Subject to its receipt of
such amounts from Lenders, Agent shall disburse the proceeds of the Revolving
Loans as directed by Borrower Agent; provided, however, that the amount of
Revolving Loans so made on any date shall not exceed Availability on such date.
Unless Agent shall have received (in sufficient time to act) written notice from
a Lender that it does not intend to fund its Pro Rata Share of a Borrowing,
Agent may assume that such Lender has deposited or promptly will deposit its
share with Agent, and Agent may disburse a corresponding amount to Borrowers. If
a Lender’s share of any Borrowing or of any settlement pursuant to
Section 1.2(k) is not received by Agent, then Borrowers agree to repay to Agent
on demand the amount of such share, together with interest thereon from the date
disbursed until repaid, at the rate applicable to the Borrowing.

(g) Swingline Loans. The Agent may, but shall not be obligated to, advance
Swingline Loans to Borrowers, up to an aggregate outstanding amount of
$30,000,000, unless the funding is specifically required to be made by all
Lenders hereunder. Each Swingline Loan shall constitute a Revolving Loan for all
purposes, except that payments thereon shall be made to Agent for its own
account. The obligation of Borrowers to repay Swingline Loans shall be evidenced
by the records of Agent and need not be evidenced by any promissory note.

(h) Overadvances. If the Aggregate Revolver Outstandings exceed the Borrowing
Base (“Overadvance”) at any time, the excess amount shall be payable by
Borrowers on demand by the Agent, but all such Revolving Loans shall
nevertheless constitute Obligations secured by the Collateral and entitled to
all benefits of the Loan Documents. The Agent may require Lenders to honor
requests for Overadvance Loans and to forbear from requiring Borrowers to cure
an Overadvance, at any time as long as (i) the Overadvance does not continue for
more than 30 consecutive days (and no Overadvance may exist for at least five
consecutive days thereafter before further Overadvance Loans are required), and
(ii) the Overadvance is not known by the Agent to exceed the lesser of
$20,000,000 and 10% of the Borrowing Base (provided that at no time shall such
Overadvances, together with the Agent Advances (as defined herein) outstanding
at such time, if any, exceed the lesser of $30,000,000 and 15% of the Borrowing
Base). In no event shall Overadvance Loans be required that would cause the
Aggregate Revolver Outstandings to exceed the Maximum Revolver Amount. Any
funding of an Overadvance Loan or sufferance of an Overadvance shall not
constitute a waiver by the Agent or Lenders of the Event of Default caused
thereby. Required Lenders may at any time revoke the Agent’s authority to make
Overadvances. In no event shall any Borrower or other Obligor be deemed a
beneficiary of this Section nor authorized to enforce any of its terms.

(i) Agent Advances. Subject to the limitations set forth below, the Agent is
authorized by the Borrowers and the Lenders, from time to time in the Agent’s
sole discretion, (i) after the occurrence of a Default or an Event of Default,
or (ii) at any time that any of the other conditions precedent

 

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set forth in Article 9 have not been satisfied, to make Base Rate Revolving
Loans to the Borrowers on behalf of the Lenders, in an aggregate amount
outstanding at any time not to exceed the lesser of $20,000,000 and 10% of the
Borrowing Base (provided that the Aggregate Revolver Outstandings (including
such Agent Advances) shall not exceed the Maximum Revolver Amount and provided
further that at no time shall such Agent Advances, together with the
Overadvances outstanding at such time, if any, exceed the lesser of $30,000,000
and 15% of the Borrowing Base)), which the Agent, in its reasonable business
judgment, deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations (including
through Base Rate Revolving Loans for the purpose of enabling the Borrowers to
meet payroll and associated tax obligations), or (C) to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement, including
costs, fees and expenses as described in Section 15.7 (any of such advances are
herein referred to as “Agent Advances”); provided, that the Required Lenders may
at any time revoke the Agent’s authorization to make Agent Advances. Any such
revocation must be in writing and shall become effective prospectively upon the
Agent’s receipt thereof. The Agent Advances shall be secured by the Agent’s
Liens in and to the Collateral and shall constitute Base Rate Revolving Loans
and Obligations hereunder.

(j) Revolver Increase. So long as no Default or Event of Default has occurred
and is continuing, the Borrowers may request that the Commitments be increased
by up to $100,000,000 in the aggregate and, upon such request, the Borrowers may
propose, and the Agent will use its commercially reasonable efforts to solicit,
additional financial institutions to become Lenders for purposes of this
Agreement or any existing Lender to increase its Commitment; provided, that
(i) each Lender which is a party to this Agreement prior to such increase shall
have the first option to participate in any such Commitment increase based on
its Pro Rata Share of the amount of the increase in the Commitments (or any such
greater amount in the event that one or more Lenders does not elect to fund its
respective Pro Rata Share of the amount of the increase in the Commitments),
thereby increasing its Commitment hereunder, but no Lender shall have the
obligation to do so; (ii) in the event that it becomes necessary to include a
new financial institution to fund all or any portion of the amount of the
increase in the Commitments, each such financial institution shall be an
Eligible Assignee and be reasonably acceptable to the Agent and the Borrowers,
and each such financial institution shall become a Lender hereunder and agree to
become party to, and shall assume and agree to be bound by, this Agreement,
subject to all terms and conditions hereof; (iii) no Lender shall have an
obligation to the Borrowers, the Agent or any other Lender to increase its
Commitment or its Pro Rata Share of the Commitments, and (iv) in no event shall
the addition of any Lender or Lenders or the increase in the Commitment of any
Lender under this Section 1.2(j) increase the Commitments (A) in any single
instance by less than $5,000,000 or (B) to an aggregate amount greater than
$400,000,000. Upon the addition of any Lender, or the increase in the Commitment
of any Lender, the Commitments set forth on Schedule 1.1 shall be amended by the
Agent to reflect such addition or such increase. Any new financial institution
added as a new Lender pursuant to this Section 1.2(j) shall be required to have
a Commitment of not less than $10,000,000. In connection with any Commitment
increase, the Borrowers shall pay (x) to any new Lender and any Lender
increasing its Commitment, all closing fees as may be agreed to by the Borrowers
and such Lenders and (y) to the Agent, for its own account, all of the Agent’s
reasonable costs and expenses relating thereto. If any requested increase in the
Commitments is agreed to in accordance with this Section 1.2(j), the Agent and
the Borrowers shall determine the effective date of such increase (the “Increase
Effective Date”). The Agent, with the consent and approval of the Borrowers,
shall promptly confirm in writing to the Lenders the final allocation of such
increase and the Increase Effective Date. Each new Lender, and each existing
Lender that has increased its Commitment, shall purchase Revolving Loans and
participations in outstanding Letters of Credit from each other Lender in an
amount such that, after such purchase or purchases, the amount of outstanding
Revolving Loans and outstanding Letters of Credit from each Lender shall equal
such Lender’s Pro Rata Share of the Commitments, as modified to give effect to
such increase, multiplied by the aggregate amount of outstanding Revolving Loans
and Letters of Credit from all Lenders. As a condition precedent to the
effectiveness of such increase, the Borrowers shall deliver to the Agent a
certificate dated as of the Increase Effective Date (in sufficient copies for
each Lender) signed by a

 

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Responsible Officer of the Borrowers’ Agent, including a certification that,
before and after giving effect to such increase, the representations and
warranties contained in Article 7 hereof are true and correct in all material
respects on and as of the Increase Effective Date (except to the extent any such
representation or warranty is stated to relate solely to an earlier date) and no
Default or Event of Default has occurred and is continuing. The Borrowers shall
prepay any Revolving Loans which are LIBOR Loans and which are outstanding on
the Increase Effective Date (and pay any and all costs and other required
payments in connection with such prepayment pursuant to Section 4.4 hereof) to
the extent necessary to keep the outstanding Revolving Loans and Letters of
Credit ratable with any revised Pro Rata Shares of the Commitments arising from
any non-ratable increase in the Commitments.

(k) Settlement.

(i) (A) Each Lender’s funded portion of the Revolving Loans is intended by the
Lenders to be equal at all times to such Lender’s Pro Rata Share of the
outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the
Bank, and the other Lenders agree (which agreement shall not be for the benefit
of or enforceable by any Obligor) that in order to facilitate the administration
of this Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, the Swingline Loans, the Overadvances and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:

(B) The Agent shall request settlement (“Settlement”) with the Lenders on at
least a weekly basis, or on a more frequent basis at Agent’s election, (1) on
behalf of the Bank, with respect to each outstanding Swingline Loan, (2) for
itself, with respect to each Overadvance, (3) for itself, with respect to each
Agent Advance, and (4) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
12:00 noon (Atlanta, Georgia time) on the date of such requested Settlement (the
“Settlement Date”). Each Lender (other than the Bank, in the case of Swingline
Loans, Agent, in the case of Overadvances, and the Agent, in the case of Agent
Advances) shall transfer the amount of such Lender’s Pro Rata Share of the
outstanding principal amount of the Swingline Loans, Overadvances and Agent
Advances with respect to each Settlement to the Agent, to Agent’s account, not
later than 2:00 p.m. (Atlanta, Georgia time), on the Settlement Date applicable
thereto. Settlements may occur during the continuation of a Default or an Event
of Default and whether or not the applicable conditions precedent set forth in
Article 9 have then been satisfied. Such amounts made available to the Agent
shall be applied against the amounts of the applicable Swingline Loan,
Overadvance or Agent Advance and, together with the portion of such Swingline
Loan, Overadvance or Agent Advance representing the Bank’s Pro Rata Share
thereof, shall constitute Revolving Loans of such Lenders. If any such amount is
not transferred to the Agent by any Lender on the Settlement Date applicable
thereto, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after the Settlement Date and thereafter at the Interest
Rate then applicable to the Revolving Loans (1) on behalf of the Bank, with
respect to each outstanding Swingline Loan, (2) for itself, with respect to each
Overadvance, and (3) for itself, with respect to each Agent Advance.

(C) Notwithstanding the foregoing, not more than one (1) Business Day after
demand is made by the Agent (whether before or after the occurrence of a Default
or an Event of Default and regardless of whether the Agent has requested a
Settlement with respect to a Swingline Loan, Overadvance or Agent Advance), each
other Lender (1) shall irrevocably and unconditionally purchase and receive from
the Bank or the Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such Swingline Loan, Overadvance or Agent Advance
equal to such Lender’s Pro Rata Share of such Swingline Loan, Overadvance or
Agent Advance, and (2) if Settlement has not previously occurred with respect to
such Swingline Loans or Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the purchase price of
such participation an amount equal to

 

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one-hundred percent (100%) of such Lender’s Pro Rata Share of such Swingline
Loan, Overadvances or Agent Advances. If such amount is not in fact made
available to the Agent by any Lender, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after such demand and
thereafter at the Interest Rate then applicable to Base Rate Revolving Loans.

(D) From and after the date, if any, on which any Lender purchases an undivided
interest and participation in any Swingline Loan, Overadvance or Agent Advance
pursuant to clause (C) above, the Agent shall promptly distribute to such Lender
such Lender’s Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Swingline Loan,
Overadvance or Agent Advance.

(E) Between Settlement Dates, the Agent, to the extent no Overadvances or Agent
Advances are outstanding, may pay over to the Bank any payments received by the
Agent, which in accordance with the terms of this Agreement would be applied to
the reduction of the Revolving Loans, for application to the Bank’s Revolving
Loans, including Swingline Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to the Bank’s Revolving Loans (other than to Swingline Loans, Overadvances or
Agent Advances in which such Lender has not yet funded its purchase of a
participation pursuant to clause (C) above), as provided for in the previous
sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be
applied to the outstanding Revolving Loans of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of such Settlement
Date, its Pro Rata Share of the Revolving Loans. During the period between
Settlement Dates, the Bank with respect to Swingline Loans, the Agent with
respect to Overadvances, the Agent with respect to Agent Advances, and each
Lender with respect to the Revolving Loans other than Swingline Loans,
Overadvances and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the actual average daily amount of
funds employed by the Bank, the Agent and the other Lenders.

(ii) Lenders’ Failure to Perform. All Revolving Loans (other than Swingline
Loans, Overadvances and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (A) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, (B) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation to
make any Revolving Loans hereunder, and (C) the obligations of each Lender
hereunder shall be several, not joint and several.

(iii) Defaulting Lenders.

(A) For purposes of determining Lenders’ obligations to fund or participate in
Loans or Letters of Credit, the Commitments and Loans of any Defaulting
Lender(s) shall be excluded from the calculation of Pro Rata Shares; provided,
however that no Lender will be required to fund or participate in Loans or
Letters of Credit if such funding or participation would cause such Lender’s
funded portion of the Revolving Loans to exceed its Commitment; provided,
further, however that no reallocation of Commitments will occur at a time when
the conditions precedent contained in Section 9.2 have not been satisfied at
such time.

A Defaulting Lender shall have no right to vote on any amendment, waiver or
other modification of a Loan Document, except as provided in Section 12.1(c).

 

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(B) Agent may, in its discretion, receive and retain any amounts payable to a
Defaulting Lender under the Loan Documents, and a Defaulting Lender shall be
deemed to have assigned to Agent such amounts until all Obligations owing to
Agent, non-Defaulting Lenders and other Lenders have been paid in full. Agent
may apply such amounts to the Defaulting Lender’s defaulted obligations, use the
funds to Cash Collateralize such Lender’s Fronting Exposure, or readvance the
amounts to Borrowers hereunder. A Lender shall not be entitled to receive any
fees accruing hereunder during the period in which it is a Defaulting Lender,
and the unfunded portion of its Commitment shall be disregarded for purposes of
calculating the unused line fee under Section 2.5. If any Letter of Credit
Obligations owing to a Defaulted Lender are reallocated to other Lenders, fees
attributable to such Letter of Credit Obligations under Section 2.6 shall be
paid to such Lenders. Agent shall be paid all fees attributable to Letter of
Credit Obligations that are not reallocated. This Section 1.2(k)(iii)(B) shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement. The terms of this Section 1.2(k)(iii)(B) shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by any Obligor of its duties and obligations hereunder.

(C) Borrowers, Agent and Letter of Credit Issuer may agree in writing that a
Lender is no longer a Defaulting Lender. At such time, Pro Rata Shares shall be
reallocated without exclusion of such Lender’s Commitments and Loans, and all
outstanding Revolving Loans, Letter of Credit Obligations and other exposures
under the Commitments shall be reallocated among Lenders and settled by Agent
(with appropriate payments by the reinstated Lender) in accordance with the
readjusted Pro Rata Shares. Unless expressly agreed by Borrowers, Agent and
Letter of Credit Issuer, no reinstatement of a Defaulting Lender shall
constitute a waiver or release of claims against such Lender by any Borrower,
the Agent or the Letter of Credit Issuer. The failure of any Lender to fund a
Loan, to make a payment in respect of Letter of Credit Obligations or otherwise
to perform its obligations hereunder shall not relieve any other Lender of its
obligations, and no Lender shall be responsible for default by another Lender.

1.3 Letters of Credit.

(a) Agreement to Issue or Cause To Issue. Subject to the terms and conditions of
this Agreement, the Agent agrees to cause the Letter of Credit Issuer to issue
for the account of the Borrowers one or more commercial/documentary and standby
letters of credit (each, a “Letter of Credit”) from time to time during the term
of this Agreement.

(b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to
issue or cause to be issued any Letter of Credit at any time if: (i) the maximum
face amount of the requested Letter of Credit is greater than the Unused Letter
of Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrowers in connection with the opening thereof would exceed Availability at
such time; or (iii) such Letter of Credit has an expiration date less than 30
days prior to the Stated Termination Date or more than 12 months from the date
of issuance for standby letters of credit and 180 days for documentary letters
of credit. With respect to any Letter of Credit which contains any “evergreen”
or automatic renewal provision, each Lender shall be deemed to have consented to
any such extension or renewal unless any such Lender shall have provided to the
Agent written notice that it declines to consent to any such extension or
renewal at least thirty (30) days prior to the date on which the Letter of
Credit Issuer is entitled to decline to extend or renew the Letter of Credit;
provided, that, no such extension or renewal shall cause the expiration date of
such Letter of Credit to extend beyond the 30th day prior to the Stated
Termination Date. If all of the requirements of this Section 1.3 are met and no
Default or Event of Default has occurred and is continuing, no Lender shall
decline to consent to any such extension or renewal.

 

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(c) Other Conditions. In addition to the conditions precedent contained in
Article 9, the obligation of the Agent to issue or to cause to be issued any
Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner reasonably satisfactory to the Agent:

(i) The Borrowers shall have delivered to the Letter of Credit Issuer, at such
times and in such manner as such Letter of Credit Issuer may prescribe, an
application in form and substance satisfactory to such Letter of Credit Issuer
and reasonably satisfactory to the Agent for the issuance of the Letter of
Credit and such other documents as may be required pursuant to the terms
thereof, and the form, terms and purpose of the proposed Letter of Credit shall
be reasonably satisfactory to the Agent and the Letter of Credit Issuer,
provided that such application and other documents shall not contain any
operating or financial covenants inconsistent with the terms of the other Loan
Documents (including any requirement for collateral other than the Agent’s
Liens) or any requirement for fronting fees other than fronting fees payable
under Section 2.6; and

(ii) As of the date of issuance, no order of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed Letter of Credit Issuer refrain from, the issuance of letters of
credit generally or the issuance of such Letters of Credit.

(d) Issuance of Letters of Credit.

(i) Request for Issuance. The Borrowers must notify the Agent of a requested
Letter of Credit at least three (3) Business Days prior to the proposed issuance
date. Such notice shall be irrevocable and must specify the original face amount
of the Letter of Credit requested, the Business Day of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the Business Day on which the requested Letter of
Credit is to expire, the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit. The Borrowers
shall attach to such notice the proposed form of the conditions for drawing
under the Letter of Credit.

(ii) Responsibilities of the Agent; Issuance. As of the Business Day immediately
preceding the requested issuance date of the Letter of Credit, the Agent shall
determine the amount of the applicable Unused Letter of Credit Subfacility,
Aggregate Revolver Outstandings and Availability. If (A) the face amount of the
requested Letter of Credit is less than the Unused Letter of Credit Subfacility,
(B) the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrowers in connection with the opening thereof would not
exceed Availability and (C) if a Defaulting Lender exists, such Lender or
Borrowers have entered into arrangements satisfactory to Agent and Letter of
Credit Issuer to eliminate any Fronting Exposure associated with such Lender,
the Agent shall cause the Letter of Credit Issuer to issue the requested Letter
of Credit on the requested issuance date so long as the other conditions hereof
are met.

(iii) No Extensions or Amendment. The Agent shall not be obligated to cause the
Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant
hereto unless the requirements of this Section 1.3 are met as though a new
Letter of Credit were being requested and issued.

(e) Payments Pursuant to Letters of Credit. The Borrowers agree to reimburse
immediately the Letter of Credit Issuer for any draw under any Letter of Credit,
and to pay the Letter of Credit Issuer the amount of all other charges and fees
payable to the Letter of Credit Issuer in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or other right
which any

 

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Borrower may have at any time against the Letter of Credit Issuer, the
beneficiary of any Letter of Credit or any other Person. Each drawing under any
Letter of Credit shall constitute a request by the Borrowers to the Agent for a
Borrowing of a Base Rate Revolving Loan in the amount of such drawing. The
Funding Date with respect to such borrowing shall be the date of such drawing.

(f) Indemnification; Exoneration; Power of Attorney.

(i) Indemnification. In addition to amounts payable as elsewhere provided in
this Section 1.3, the Borrowers agree to protect, indemnify, pay and save the
Secured Parties harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) which any Lender or the Agent (other than the Bank or any of
its affiliates in its capacity as Letter of Credit Issuer) may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit. The Borrowers’ obligations under this Section 1.3 shall survive
payment of all other Obligations.

(ii) Assumption of Risk by the Borrowers. As among the Borrowers, the Lenders
and the Agent, the Borrowers assume all risks of the acts and omissions of, or
misuse of any of the Letters of Credit by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, the
Lenders and the Agent shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even if it
should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to duly comply with
conditions required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
by mail, cable, telegraph, facsimile, email or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority; or (I) the Letter of Credit Issuer’s honor of a draw for
which the draw or any certificate fails to comply in any respect with the terms
of the Letter of Credit. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 1.3(f).

(iii) Exoneration. Without limiting the foregoing, no action or omission
whatsoever by the Agent or any Lender (excluding the Bank or any of its
affiliates in its capacity as a Letter of Credit Issuer) shall result in any
liability of the Agent or any Lender to any Borrower, or relieve the Borrowers
of any of their obligations hereunder to any such Person.

(iv) Rights Against Letter of Credit Issuer. Nothing contained in this
Agreement, including clauses (i) and (ii) of this Section 1.3(f), is intended to
limit the Borrowers’ rights, if any, with respect to the Letter of Credit Issuer
which arise as a result of the letter of credit application and related
documents executed by and between the Borrowers and the Letter of Credit Issuer.

(v) Account Party. The Borrowers hereby authorize and direct any Letter of
Credit Issuer with respect to any Letter of Credit to name the applicable
Borrower as the “Account Party” therein and to deliver to the Agent all
instruments, documents and other writings and property received by the Letter of
Credit Issuer pursuant to such Letter of Credit, and to accept and rely upon the
Agent’s instructions and agreements with respect to all matters arising in
connection with such Letter of Credit or the application therefor.

 

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(g) Supporting Letter of Credit; Cash Collateralization.

(i) If, notwithstanding the provisions of Section 1.3(b) and Section 11.1, any
Letter of Credit is outstanding upon the termination of this Agreement, then
upon such termination the Borrowers shall either (A) deposit with the Agent, for
the ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit then outstanding a standby letter of credit (a “Supporting Letter of
Credit”) in form and substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent in an amount equal to the greatest amount for which
such Letter of Credit may be drawn plus any fees and expenses associated with
such Letter of Credit, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the Lenders for
payments to be made by the Agent and the Lenders under such Letter of Credit and
any fees and expenses associated with such Letter of Credit or (B) Cash
Collateralize the stated amount of all outstanding Letters of Credit and pay to
Letter of Credit Issuer the amount of all other Letter of Credit Obligations.
Any such Supporting Letter of Credit shall be held by the Agent, for the ratable
benefit of the Agent and the Lenders, as security for, and to provide for the
payment of, the aggregate undrawn amount of such Letters of Credit remaining
outstanding.

(ii) If any Letter of Credit Obligations, whether or not then due or payable,
shall for any reason be outstanding at any time (a) that an Event of Default
exists, (b) that Availability is less than zero, or (c) within 20 Business Days
prior to the Stated Termination Date, then Borrowers shall, at Letter of Credit
Issuer’s or Agent’s request, Cash Collateralize the stated amount of all
outstanding Letters of Credit and pay to Letter of Credit Issuer the amount of
all other Letter of Credit Obligations. Borrowers shall, on demand by Letter of
Credit Issuer or Agent from time to time, Cash Collateralize the Fronting
Exposure of any Defaulting Lender. If Borrowers fail to provide any Cash
Collateral as required hereunder, Lenders may (and shall upon direction of
Agent) advance, as Revolving Loans, the amount of the Cash Collateral required
(whether or not the Commitments have terminated, an Overadvance exists or the
conditions in Article 9 are satisfied).

(h) Resignation of Letter of Credit Issuer. Letter of Credit Issuer may resign
at any time upon notice to the Agent and Borrowers. On the effective date of
such resignation, Letter of Credit Issuer shall have no further obligation to
issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall
continue to have all rights and obligations of a Letter of Credit Issuer
hereunder, including under Sections 1.3, 13.7 and 15.11, relating to any Letter
of Credit issued prior to such date. Agent shall promptly appoint a replacement
Letter of Credit Issuer, which, as long as no Default or Event of Default
exists, shall be reasonably acceptable to Borrowers.

1.4 Bank Products. The Obligors may request, and any Lender or any Lender’s
Affiliates may, in its sole and absolute discretion, arrange for the Obligors to
obtain from such Lender or such Lender’s Affiliates, Bank Products, although the
Obligors are not required to do so. If Bank Products are provided by an
Affiliate of a Lender, the Obligors agree to indemnify and hold such Lender
harmless from any and all costs and obligations now or hereafter incurred by
such Lender which arise from any indemnity given by such Lender to its
Affiliates related to such Bank Products; provided, however, nothing contained
herein is intended to limit the Obligors’ rights, if any, with respect to any
such Affiliate that provides Bank Products, to the extent such rights arise as a
result of the execution of documents by and between the Obligors and such
Affiliate which relate to Bank Products. The agreement contained in this Section
shall survive termination of this Agreement. The Obligors acknowledge and agree
that the obtaining of Bank Products from a Lender Bank or its Affiliates (a) is
in the sole and absolute discretion of such Lender Bank or its Affiliates, and
(b) is subject to all rules and regulations of such Lender Bank or its
Affiliates.

 

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ARTICLE 2

INTEREST AND FEES

2.1 Interest.

(a) Interest Rates. All outstanding Obligations shall bear interest on the
unpaid principal amount thereof (including, to the extent permitted by law, on
interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined by reference to the Base Rate or LIBOR plus the
Applicable Margins as set forth herein, but not to exceed the Maximum Rate (as
defined in Section 2.3). If at any time Loans are outstanding with respect to
which the Borrowers have not delivered to the Agent a notice specifying the
basis for determining the interest rate applicable thereto in accordance
herewith, those Loans shall bear interest at a rate determined by reference to
the Base Rate until notice to the contrary has been given to the Agent in
accordance with this Agreement and such notice has become effective. Except as
otherwise provided herein, the outstanding Obligations shall bear interest as
follows:

(i) For all Base Rate Loans and other Obligations (other than LIBOR Loans), at a
fluctuating per annum rate equal to the Base Rate plus the Applicable Margin;
and

(ii) For all LIBOR Loans, at a per annum rate equal to LIBOR plus the Applicable
Margin.

Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
on LIBOR Loans shall be computed on the basis of a year of 360 days and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365/366 day year). All interest charges on Base Rate Loans shall be
computed on the basis of a year of 365/366 days and actual days elapsed. The
Borrowers shall pay to the Agent, for the ratable benefit of the Lenders,
interest accrued on all Base Rate Loans in arrears on the first day of each
month hereafter and on the Termination Date. The Borrowers shall pay to the
Agent, for the ratable benefit of Lenders, interest on all LIBOR Loans in
arrears on each LIBOR Interest Payment Date.

(b) Default Rate. If any Default or Event of Default occurs and is continuing
and the Agent or the Required Lenders in their discretion so elect, then, while
any such Default or Event of Default is continuing, all of the Obligations shall
bear interest at the Default Rate applicable thereto.

2.2 Continuation and Conversion Elections.

(a) If no Default or Event of Default exists, the Borrowers may:

(i) elect, as of any Business Day, in the case of Base Rate Loans, to convert
any Base Rate Loan (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $500,000 in excess thereof) into LIBOR
Loans; or

(ii) elect, as of the last day of the applicable Interest Period, to continue
any LIBOR Loans having Interest Periods expiring on such day (or any part
thereof in an amount not less than $1,000,000, or that is in an integral
multiple of $500,000 in excess thereof);

provided, that if at any time the aggregate amount of LIBOR Loans in respect of
any Borrowing is reduced, by payment, prepayment, or conversion of part thereof
to be less than $1,000,000, such LIBOR Loans shall automatically convert into
Base Rate Loans; provided further that if the Notice of Continuation/Conversion
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.

 

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(b) The Borrowers shall deliver a notice of continuation/conversion (“Notice of
Continuation/Conversion”) to the Agent not later than 12:00 noon (Atlanta,
Georgia time) at least three (3) Business Days in advance of the
Continuation/Conversion Date, if the Loans are to be converted into or continued
as LIBOR Loans and specifying:

(i) the proposed Continuation/Conversion Date;

(ii) the aggregate amount of Loans to be converted or renewed;

(iii) the type of Loans resulting from the proposed conversion or continuation;
and

(iv) the duration of the requested Interest Period, provided, however, the
Borrowers may not select an Interest Period that ends after the Stated
Termination Date.

In lieu of delivering a Notice of Continuation/Conversion, a Borrower may give
the Agent telephonic notice of such request on or before the deadline set forth
above. The Agent at all times shall be entitled to rely on such telephonic
notice with respect to such continuation or conversion, regardless of whether
any written confirmation is received.

(c) If upon the expiration of the Interest Period applicable to any LIBOR Loan,
the Borrowers shall have failed to timely select a new Interest Period to be
applicable to such LIBOR Loan, or at the election of the Required Lenders if any
Default or Event of Default then exists, the Borrowers shall be deemed to have
elected to convert such LIBOR Loan into a Base Rate Loan effective as of the
expiration date of such Interest Period.

(d) The Agent will promptly notify each Lender of its receipt of a Notice of
Continuation/Conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.

(e) There may not be more than eight (8) different LIBOR Loans in effect
hereunder at any time.

2.3 Maximum Interest Rate. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the “Maximum Rate”). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this Section 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect, or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect, over (b) the amount of interest actually paid or accrued
under this Agreement. If a court of competent jurisdiction determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the Borrowers’ Agent
such excess.

 

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2.4 Fees. On the Closing Date, Borrowers shall pay to the Lead Arranger or
Agent, as applicable, the fees set forth in the Fee Letter.

2.5 Unused Line Fee. On the first day of each month, and on the Termination
Date, the Borrowers agree to pay to the Agent, for the account of the Lenders,
in accordance with their respective Pro Rata Shares, an unused line fee (the
“Unused Line Fee”) equal to one-quarter of one percent (0.25%) per annum times
the amount by which the Maximum Revolver Amount exceeded the sum of the average
daily amount of the Aggregate Revolver Outstandings during the immediately
preceding month or shorter period if calculated for the first month hereafter or
on the Termination Date. The Unused Line Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All principal payments
received by the Agent that constitute collected funds shall be deemed to reduce
the Aggregate Revolver Outstandings immediately upon receipt for purposes of
calculating the Unused Line Fee pursuant to this Section 2.5; provided, however,
that in the event a principal payment received by the Agent will not be credited
until the following Business Day in accordance with Section 3.4(a), the
Aggregate Revolver Outstandings shall be deemed to have been reduced on the day
such payment is actually credited.

2.6 Letter of Credit Fees. On the first day of each month and on the Termination
Date, the Borrowers agree to pay to the Agent, for the account of the Lenders,
in accordance with their respective Pro Rata Shares, a fee (the “Letter of
Credit Fee”) equal to the Applicable Margin in effect with respect to LIBOR
Loans, on a per annum basis, multiplied by the average daily undrawn amount of
Letters of Credit outstanding during the immediately preceding month. The Letter
of Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed. The Borrowers also agree to pay to the Agent, for the
benefit of the Letter of Credit Issuer, a fronting fee of one-quarter of one
percent (0.25%) of the face amount of each Letter of Credit upon the issuance
thereof, and to pay to the Letter of Credit Issuer all out-of-pocket costs, fees
and expenses incurred by the Letter of Credit Issuer in connection with the
application for, processing of, issuance of, or amendment to any Letter of
Credit.

ARTICLE 3

PAYMENTS AND PREPAYMENTS

3.1 Revolving Loans.

(a) The Borrowers shall repay the outstanding principal balance of the Revolving
Loans, plus all accrued but unpaid interest thereon, on the Termination Date.
The Borrowers may prepay the Revolving Loans at any time without penalty or
premium (provided that the foregoing shall not be construed to limit the
Borrowers’ obligations pursuant to Section 4.4) and reborrow the Revolving Loans
subject to the terms of this Agreement.

(b) In addition, and without limiting the generality of the foregoing, the
Borrowers shall immediately pay to the Agent, for the account of the Lenders,
the amount, without duplication, by which (a) the Aggregate Revolver
Outstandings exceeds (b) the lesser of (i) the Maximum Revolver Amount minus
Letter of Credit Reserves or (ii) the Borrowing Base minus without duplication,
Reserves, at any time.

(c) During a Dominion Trigger Period or while an Event of Default exists,
concurrently upon the issuance by any Obligor of any capital stock or similar
equity interests or the incurrence by any Obligor of any Funded Debt other than
Funded Debt permitted under Section 8.13, one hundred percent (100%) of the Net
Cash Proceeds received by such Obligor from such issuance or incurrence

 

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shall be paid within three (3) Business Days of receipt of the proceeds thereof
by such Obligor to the Agent as a mandatory payment of the Obligations (but
without any corresponding reduction in the amount of the Maximum Revolver
Amount). Nothing in this Section shall authorize any Obligor to incur any Funded
Debt except as expressly permitted by this Agreement or to issue any capital
stock or similar equity interests except to the extent not prohibited by this
Agreement.

(d) During a Dominion Trigger Period or while an Event of Default exists,
concurrently upon the receipt thereof one hundred percent (100%) of the Net Cash
Proceeds from the sale, transfer, assignment or other disposition, or casualty
or condemnation loss of any Collateral or other assets of any Obligor shall be
paid within three (3) Business Days of receipt thereof by the Obligor as a
mandatory payment of the Obligations (but without any corresponding reduction in
the amount of the Maximum Revolver Amount). Nothing in this Section shall
authorize any Obligor to sell, transfer, assign or otherwise dispose of any
Collateral except as expressly permitted by this Agreement.

3.2 Termination of Facility; Reduction of Commitment. The Borrowers may without
premium or penalty terminate this Agreement or reduce permanently a portion of
the Maximum Revolver Amount on a pro rata basis among the Lenders in accordance
with their respective Pro Rata Shares, upon at least ten (10) Business Days’
notice to the Agent and Lenders of their intent to terminate or reduce
permanently, as applicable, and at least three (3) Business Days’ notice to the
Agent and the Lenders of the actual termination or reduction date, as
applicable; provided, that with respect to any partial reduction of the Maximum
Revolver Amount (i) any such partial reduction be made in an amount not less
than $10,000,000 and in integral multiples of $1,000,000 in excess thereof,
(ii) the Maximum Revolver Amount may not be reduced to an amount below the then
outstanding Letter of Credit Obligations and (iii) after giving effect to any
partial reduction in the Maximum Revolver Amount, at least $150,000,000 of the
Maximum Revolver Amount shall remain in place. As of the date of cancellation or
reduction set forth in such notice, the Maximum Revolver Amount shall be
permanently canceled or reduced to the amount stated in the Borrowers’ Agent’s
notice for all purposes herein (provided that the foregoing shall not in any way
limit the rights of the Borrowers under Section 1.2(j) to increase the Maximum
Revolver Amount after any reduction of the Maximum Revolver Amount under this
Section 3.2), and the Borrowers shall (i) pay to the Agent for the account of
the Lenders the amount necessary to repay in full the principal amount of the
Revolving Loans and Swingline Loans or reduce the principal amount of the
Revolving Loans and Swingline Loans then outstanding to not more than the amount
of the Maximum Revolver Amount as so reduced, together with accrued interest on
the amount so prepaid and the Unused Line Fee accrued through the date of the
reduction with respect to the amount reduced, (ii) in the event of a
termination, cancel and return all outstanding Letters of Credit (or the
delivery to the Agent of Supporting Letters of Credit with respect thereto or
Cash Collateralize such Letters of Credit), (iii) pay in full in cash of all
reimbursable expenses and other Obligations and (iv) with respect to any LIBOR
Loans prepaid, payment of the amounts due under Section 4.4, if any.

3.3 LIBOR Loan Prepayments. In connection with any prepayment, if any LIBOR Loan
is prepaid or converted to a Base Rate Loan prior to the expiration date of the
Interest Period applicable thereto, the Borrowers shall pay to the Agent, for
the account of the Lenders, the amounts described in Section 4.4.

3.4 Payments by the Borrowers.

(a) All payments to be made by the Borrowers shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly provided herein, all
payments by the Borrowers shall be made to the Agent for the account of the
Lenders, at the account designated by the Agent, and shall be made in Dollars
and in immediately available funds, no later than 12:00 noon (Atlanta, Georgia
time) on the date specified herein. Any payment received by the Agent after such
time shall be deemed (for purposes of calculating interest only) to have been
received on the following Business Day and any applicable interest shall
continue to accrue.

 

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(b) Subject to the provisions set forth in the definition of “Interest Period”,
whenever any payment is due on a day other than a Business Day, such payment
shall be due on the following Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, as the case may
be.

3.5 Payments as Revolving Loans. At the election of the Agent, all payments of
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums, reimbursable expenses and other sums payable hereunder
may be paid from the proceeds of Revolving Loans made hereunder. The Borrowers
hereby irrevocably authorize the Agent to charge the Loan Account for the
purpose of paying all amounts from time to time due hereunder and agree that all
such amounts charged shall constitute Base Rate Revolving Loans (including
Swingline Loans and Agent Advances).

3.6 Post-Default Allocation of Payments. Notwithstanding anything herein to the
contrary, during an Event of Default, monies to be applied to the Obligations,
whether arising from payments by Obligors, realization on Collateral, setoff or
otherwise, shall be allocated as follows:

(a) first, to all fees, indemnification, costs and expenses, including
Extraordinary Expenses, owing to Agent;

(b) second, to all amounts owing to Agent on Swingline Loans, or on Agent
Advances or other Loans for which Agent has not been reimbursed by a Lender;

(c) third, to all amounts owing to Letter of Credit Issuer;

(d) fourth, to all Obligations constituting fees, expense reimbursements or
indemnification owing to Lenders (other than Secured Bank Product Obligations);

(e) fifth, to all Obligations constituting interest (other than Secured Bank
Product Obligations);

(f) sixth, to Cash Collateralization of Letter of Credit Obligations;

(g) seventh, to all Loans and Noticed Hedges (including Cash Collateralization
thereof) up to the amount of Reserves existing therefor;

(h) eighth, to all other Secured Bank Product Obligations (other than Noticed
Hedges that have been reserved under clause (g) above); and

(i) last, to all other Obligations.

Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations shall be the maximum Secured Bank Product Obligations
last reported to Agent. Agent shall have no obligation to calculate the amount
to be distributed with respect to any Secured Bank Product Obligations, and may
request a reasonably detailed calculation of such amount from the applicable
Secured Party. If a Secured Party fails to deliver such calculation within five
days following request by Agent, Agent may assume the amount to be distributed
is the maximum Secured Bank Product Obligations

 

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last reported to Agent. The allocations set forth in this Section are solely to
determine the rights and priorities of Agent and Secured Parties as among
themselves, and may be changed by agreement among them without the consent of
any Obligor. This Section is not for the benefit of or enforceable by any
Borrower.

3.7 Indemnity for Returned Payments. If, after receipt of any payment which is
applied to the payment of all or any part of the Obligations, any Secured Party
is for any reason compelled to surrender such payment or proceeds to any Person
because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by such Secured Party and the Borrowers shall
be liable to pay to Secured Parties, and hereby does indemnify the Secured
Parties and hold the Secured Parties harmless for, the amount of such payment or
proceeds surrendered. The provisions of this Section 3.7 shall be and remain
effective notwithstanding any contrary action which may have been taken by any
Secured Party in reliance upon such payment or application of proceeds, and any
such contrary action so taken shall be without prejudice to the Secured Parties’
rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable. The
provisions of this Section 3.7 shall survive the termination of this Agreement.

3.8 Agent’s and Lenders’ Books and Records; Monthly Statements. The Agent shall
record the principal amount of the Loans owing to each Lender, the undrawn face
amount of all outstanding Letters of Credit and the aggregate amount of unpaid
reimbursement obligations outstanding with respect to the Letters of Credit from
time to time on its books. In addition, each Lender may note the date and amount
of each payment or prepayment of principal of such Lender’s Loans in its books
and records. Failure by the Agent or any Lender to make such notation shall not
affect the obligations of the Borrowers with respect to the Loans or the Letters
of Credit. The Borrowers agree that the Agent’s and each Lender’s books and
records showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or proceeding
arising therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note or
other instrument. The Agent will provide to the Borrowers’ Agent a monthly
statement of Loans, payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and binding on the Borrowers
and an account stated (except for reversals and reapplications of payments made
as provided in Section 3.6 and corrections of errors discovered by the Agent),
unless the Borrowers notify the Agent in writing to the contrary within sixty
(60) days after such statement is rendered. In the event a timely written notice
of objections is given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.

3.9 Borrowers’ Agent. Each of the Borrowers other than PSS hereby appoints PSS,
and PSS shall act under this Agreement, as the agent, attorney-in-fact and legal
representative of such other Borrowers for all purposes, including requesting
Loans and receiving account statements and other notices and communications to
the Borrowers (or any of them) from the Agent or any Lender. The Agent, the
Letter of Credit Issuer and the Lenders may rely, and shall be fully protected
in relying, on any Notice of Borrowing, Notice of Conversion or Continuation,
request for a Letter of Credit, disbursement instruction, report, information or
any other notice or communication made or given by PSS, whether in its own name,
as Borrowers’ Agent, on behalf of any other Borrower or on behalf of the
“Borrowers”, and neither the Agent nor the Letter of Credit Issuer or any Lender
shall have any obligation to make any inquiry or request any confirmation from
or on behalf of any other Borrower as to the binding effect on it of any such
Notice, request, instruction, report, information, other notice or
communications, nor shall the joint and several character of the Borrowers’
obligations hereunder be affected, provided, that the provisions of this
Section 3.9 shall not be construed so as to preclude any Borrower from taking
actions permitted to be taken by a “Borrower” hereunder.

 

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3.10 Joint and Several Liability.

(a) Joint and Several Liability. All Loans made to the Borrowers and all of the
other Obligations of the Borrowers, including all interest, fees and expenses
with respect thereto and all indemnity and reimbursement obligations hereunder,
shall constitute one joint and several direct and general obligation of all of
the Borrowers. Notwithstanding anything to the contrary contained herein, each
of the Borrowers shall be jointly and severally, with each other Borrower,
directly and unconditionally, liable for all Obligations, it being understood
that the advances to each Borrower inure to the benefit of all Borrowers, and
that the Agent, the Letter of Credit Issuer and the Lenders are relying on the
joint and several liability of the Borrowers as co-makers in extending the Loans
hereunder and issuing Letters of Credit. Each Borrower hereby unconditionally
and irrevocably agrees that upon default in the payment when due (whether at
stated maturity, by acceleration or otherwise) of any principal of, or interest
on, any Obligation, it will forthwith pay the same, without notice or demand.

(b) No Reduction in Obligations. No payment or payments made by any of the
Borrowers or any other Person or received or collected by the Agent, the Letter
of Credit Issuer or any Lender from any of the Borrowers or any Person by virtue
of any action or proceeding or any setoff or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of each
Borrower under this Agreement, which shall remain liable for all remaining and
thereafter arising Obligations until the Obligations are paid in full and the
Commitments are terminated.

3.11 Obligations Absolute. Each Borrower agrees that the Obligations will be
paid strictly in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent, the Letter of Credit
Issuer or any Lender with respect thereto. All Obligations shall be conclusively
presumed to have been created in reliance hereon. The liabilities of each
Borrower under this Agreement shall be absolute and unconditional irrespective
of: (a) any lack of validity or enforceability of any Loan Document or any other
agreement or instrument relating thereto; (b) any change in the time, manner or
place of payments of, or in any other term of, all or any part of the
Obligations, or any other amendment or waiver thereof or any consent to
departure therefrom, including any increase in the Obligations resulting from
the extension of additional credit to any Borrower or otherwise; (c) any taking,
exchange, release or non-perfection of any Collateral, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Obligations; (d) any change, restructuring or termination of the
structure or existence of any Borrower or other Obligor; or (e) any other
circumstance which otherwise constitute a defense available to, or a discharge
of, any Borrower or other Obligor, other than the indefeasible payment in full
of the Obligations. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent, the Letter
of Credit Issuer or any Lender upon the insolvency, bankruptcy or reorganization
of any Borrower or other Obligor or otherwise, all as though such payment had
not been made.

3.12 Waiver of Suretyship Defenses. Each Borrower agrees that the joint and
several liability of the Borrowers provided for in Section 3.10 shall not be
impaired or affected by any modification, supplement, extension or amendment of
any contract of agreement to which the other Borrowers or Obligors may hereafter
agree (other than an agreement signed by the Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Agent or any Lender with respect
to any of the Obligations, nor by any other agreements or arrangements whatever
with the other Borrowers, the Obligors or with anyone else, each Borrower hereby
waiving all notice of such delay, extension, release, substitution, renewal,
compromise or other indulgence, and hereby consenting to be bound thereby as
fully and effectually as if it had expressly agreed thereto in advance. The
liability of each Borrower is direct and unconditional as to all of the
Obligations, and may be enforced without requiring the

 

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Agent or any Lender first to resort to any other right, remedy or security. Each
Borrower hereby expressly waives promptness, diligence, notice of acceptance and
any other notice (except to the extent expressly provided for herein or in
another Loan Document) with respect to any of the Obligations, this Agreement or
any other Loan Documents and any requirement that the Agent or any Lender
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Borrower, any Obligor or any
other Person or any collateral, including any rights any Borrower may otherwise
have under O.C.G.A. § 10-7-24 or any successor statute or any analogous statute
in any jurisdiction under the laws of which any Borrower is organized or in
which any Borrower conducts business.

3.13 Contribution and Indemnification among the Borrowers. Each Borrower is
obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to another Borrower hereunder or other Obligations incurred directly and
primarily by any other Borrower (an “Accommodation Payment”), then, to the
extent that such Borrower has not received the benefit of such repaid
Obligations (whether through an inter-company loan or otherwise), the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s
“Allocable Amount” (as defined below) and the denominator of which fraction is
the sum of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the “Allocable Amount” of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Borrower hereunder without (a) rendering such Borrower “insolvent”
within the meaning of Section 101(31) of Title 11 of the United States Code
entitled “Bankruptcy” (the “Bankruptcy Code”), Section 2 of the Uniform
Fraudulent Transfer Act (the “UFTA”), or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 4 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA. All rights
and claims of contribution, indemnification and reimbursement under this
Section 3.13 shall be subordinate in right of payment to the prior payment in
full of the Obligations.

ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY

4.1 Taxes.

(a) Except as provided in Section 4.1(f), any and all payments by the Borrowers
to each Secured Party under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrowers shall pay all Other Taxes.

(b) If the Borrowers fail to pay any Taxes or Other Taxes described in
Section 4.1(a) when due, the Borrowers shall indemnify and hold harmless each
Secured Party for the full amount of such Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 4.1) paid by any Lender or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within 30 days
after the date such Lender or the Agent makes written demand therefor and
provides documentation reasonably satisfactory to the Borrowers’ Agent of the
payment of such Taxes or Other Taxes.

 

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(c) If the Borrowers shall be required by law to deduct or withhold any Taxes or
Other Taxes from or in respect of any sum payable hereunder to any Lender or the
Agent, then, subject to Section 13.10:

(i) the sum payable shall be increased as necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section 4.1) such Lender or the
Agent, as the case may be, receives an amount equal on an after-tax basis to the
sum it would have received had no such deductions or withholdings been made;

(ii) the Borrowers shall make such deductions and withholdings; and

(iii) the Borrowers shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law.

(d) At the Agent’s request, within 30 days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.

(e) If the Borrowers are required to pay additional amounts to any Lender or the
Agent pursuant to subsection (c) of this Section 4.1, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its lending office so as to eliminate any such additional
payment by the Borrowers which may thereafter accrue, if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender.

(f) Notwithstanding anything else in this Agreement, the Borrowers shall not be
required to indemnify any Lender or to pay any increased amounts to any Lender,
in respect of any U.S. withholding taxes pursuant to this Section 4.1 or
otherwise to the extent that any obligation to withhold or deduct amounts with
respect to such U.S. withholding taxes existed (i) on the date such Lender (or
its successor or assign) became a party to this Agreement or (ii) if a Lender
after becoming a party to this Agreement changes the office to which payments
are made, on the date of such change. The foregoing sentence shall not in any
manner limit the Borrowers’ obligations with respect to Other Taxes.

4.2 Illegality.

(a) If any Lender determines that the introduction of any Requirement of Law, or
any change in any Requirement of Law, or in the interpretation or administration
of any Requirement of Law, has made it unlawful, or that any central bank or
other Governmental Authority has asserted that it is unlawful, for any Lender or
its applicable lending office to make LIBOR Loans, then, on notice thereof by
that Lender to the Borrowers’ Agent through the Agent, any obligation of that
Lender to make LIBOR Loans shall be suspended until that Lender notifies the
Agent and the Borrowers’ Agent that the circumstances giving rise to such
determination no longer exist. The affected Lender shall provide prompt notice
to the Agent and the Borrowers’ Agent of the cessation of such circumstances.

(b) If any Lender determines that it is unlawful to maintain any LIBOR Loan, the
Borrowers shall, upon the Borrowers’ Agent’s receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Loans of that Lender then outstanding, together with interest accrued thereon
and amounts required under Section 4.4, either on the last day of the Interest
Period thereof, if that Lender may lawfully continue to maintain such LIBOR
Loans to such day, or immediately, if that Lender may not lawfully continue to
maintain such LIBOR Loans. If the Borrowers are required to so prepay any LIBOR
Loans, then, concurrently with such prepayment, the Borrowers shall borrow from
the affected Lender, in the amount of such repayment, a Base Rate Loan.

 

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4.3 Increased Costs and Reduction of Return.

(a) If any Lender determines that due to either (i) the introduction of or any
change in the interpretation of any law or regulation, or (ii) the compliance by
that Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) (excluding any
costs resulting from reserve requirements taken into account in the definition
of LIBOR), there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining any LIBOR Loans, then the Borrowers shall
be liable for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.

(b) If any Lender shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender or
any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender’s or such
corporation’s or other entity’s policies with respect to capital adequacy and
such Lender’s desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender for such increase.

(c) 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 Borrowers shall not be required to
compensate a Lender pursuant to this Section for any increased costs or reduced
returns incurred more than 180 days prior to the date that such Lender notifies
the Borrowers’ Agent of the event giving rise to such increased costs or reduced
returns and of such Lender’s intention to claim compensation therefor; provided
further that, if the event giving rise to such increased costs or reduced
returns is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.

For purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the Basel III and all requests, guidelines or directives in
connection therewith are deemed to have gone into effect and adopted after the
date of this Agreement.

4.4 Funding Losses. The Borrowers shall reimburse each Lender and hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of:

(a) the failure of the Borrowers to make on a timely basis any payment of
principal of any LIBOR Loan;

(b) the failure of the Borrowers to borrow, continue or convert a Loan after any
Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Continuation/Conversion;

(c) the prepayment or other payment (including after acceleration thereof) of
any LIBOR Loans on a day that is not the last day of the relevant Interest
Period; or

(d) the assignment by a Lender (other than a Defaulting Lender) of a LIBOR Loan
prior to the end of its Interest Period pursuant to Section 12.1(c);

 

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including any loss of anticipated profits and loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR Loans
or from fees payable to terminate the deposits from which such funds were
obtained, but excluding any loss of profit or Applicable Margin. The Borrowers
shall also pay any customary administrative fees charged by any Lender in
connection with the foregoing. Lenders shall not be required to purchase Dollar
deposits in any interbank or offshore Dollar market to fund any LIBOR Loan, but
this Section shall apply as if each Lender had purchased such deposits.

4.5 Inability to Determine Rates. If the Agent determines that for any reason
adequate and reasonable means do not exist for determining LIBOR for any
requested Interest Period with respect to a proposed LIBOR Loan, or that LIBOR
for any requested Interest Period with respect to a proposed LIBOR Loan does not
adequately and fairly reflect the cost to the Lenders of funding such Loan, the
Agent will promptly so notify the Borrowers’ Agent and each Lender. Thereafter,
the obligation of the Lenders to make or maintain LIBOR Loans hereunder shall be
suspended until the Agent revokes such notice in writing. Upon receipt of such
notice, the Borrowers may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by any Borrower. If the Borrowers do not
revoke such Notice, the Lenders shall make, convert or continue the Loans, as
proposed by the Borrowers, in the amount specified in the applicable notice
submitted by the Borrowers, but such Loans shall be made, converted or continued
as Base Rate Loans instead of LIBOR Loans.

4.6 Certificates of Lender. If any Lender claims reimbursement or compensation
under this Article 4, the affected Lender shall determine the amount thereof and
shall deliver to the Borrowers’ Agent (with a copy to the Agent) a certificate
setting forth in reasonable detail the amount payable to the affected Lender,
and such certificate shall be conclusive and binding on the Borrowers in the
absence of manifest error.

4.7 Survival. The agreements and obligations of the Borrowers in this Article 4
shall survive the payment of all other Obligations and the termination of this
Agreement.

4.8 Assignment of Commitments Under Certain Circumstances. In the event (a) any
Lender requests compensation pursuant to Section 4.3 in an aggregate amount in
excess of $100,000, (b) any Lender delivers a notice described in Section 4.2,
or (c) the Borrowers are required to pay additional amounts to any Lender or any
Governmental Authority on account of any Lender pursuant to Section 4.1 in an
aggregate amount in excess of $100,000, the Borrowers may, at their sole expense
and effort (including with respect to the processing fee referred to in
Section 12.2(a)), upon notice to such Lender and the Agent, require such Lender
to transfer and assign, without recourse (in accordance with and subject to the
restrictions contained in Section 12.2), all of its interests, rights and
obligations under this Agreement to an Eligible Assignee that shall assume such
assigned obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (i) such assignment shall not conflict with any
law, rule or regulation or order of any court or other Governmental Authority
having jurisdiction, (ii) no Event of Default shall have occurred and be
continuing, (iii) the Borrowers or such assignee shall have paid to such Lender
in immediately available funds an amount equal to the sum of 100% of the
principal of and interest accrued to the date of such payment on the outstanding
Loans of such Lender, plus all fees and other amounts accrued for the account of
such Lender hereunder (including any amounts under Sections 4.1, 4.2 and 4.3),
(iv) such assignment is consummated within ninety (90) days after the date on
which the Borrowers’ right under this Section arises, and (v) such assignee is
reasonably acceptable to the Agent; provided further that if prior to any such
assignment the circumstances or event that resulted in such Lender’s request or
notice under Section 4.2 or 4.3 or demand for additional amounts under
Section 4.1, as the case may be, shall cease to exist or become inapplicable for
any reason, or if such Lender shall waive its rights in respect of such
circumstances or event under Section 4.1, 4.2 or 4.3, as the case may be, then
such Lender shall not thereafter be required to make such assignment hereunder.

 

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ARTICLE 5

COLLATERAL

5.1 Grant of Security Interest. As security for all Obligations, each Obligor
hereby grants to the Agent, for the benefit of the Agent and the Secured
Parties, a continuing security interest in, lien on, collateral assignment of
and right of set-off against, all of the following property and assets of such
Obligor, whether now owned or existing or hereafter acquired or arising,
regardless of where located:

(a) all Accounts;

(b) all Inventory;

(c) all contract rights;

(d) all Chattel Paper;

(e) all Documents;

(f) all Instruments;

(g) all Supporting Obligations;

(h) all General Intangibles;

(i) all Equipment;

(j) all Investment Property;

(k) all money, cash, cash equivalents, securities and other property of any kind
of each Obligor held directly or indirectly by the Agent or any Secured Party;

(l) all of each Obligor’s deposit accounts, credits, and balances with and other
claims against the Agent or any Secured Party or any of their Affiliates or any
other financial institution with which any Obligor maintains deposits, including
any Dominion Accounts;

(m) all of each Obligor’s commercial tort claims, including all commercial tort
claims with respect to which any Obligor provides the Agent with the written
notice described in Section 5.2(e) of this Agreement;

(n) all books, records and other property related to or referring to any of the
foregoing, including books, records, account ledgers, data processing records,
computer software and other property and General Intangibles at any time
evidencing or relating to any of the foregoing; and

(o) all accessions to, substitutions for and replacements, products and proceeds
of any of the foregoing, including, but not limited to, proceeds of any
insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing.

All of the foregoing, together with the Real Estate covered by the Mortgages,
all equity interests in any Subsidiary pledged to the Agent and all other
property of any Obligor in which the Agent or any Secured

 

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Party may at any time be granted a Lien as collateral for the Obligations (but
excluding the Excluded Collateral), is herein collectively referred to as the
“Collateral.” All of the Obligations shall be secured by all of the Collateral.

5.2 Perfection and Protection of Security Interest.

(a) The Obligors shall, at their expense, perform all steps requested by the
Agent in good faith at any time to perfect, maintain, protect, and enforce the
Agent’s Liens, including; (i) executing, delivering, and authorizing the Agent’s
filing and recording of the Mortgages, the Copyright Security Agreement, and the
Trademark Security Agreement and UCC financing or continuation statements, and
amendments thereof, in form and substance reasonably satisfactory to the Agent;
(ii) delivering to the Agent the originals of all Instruments, Documents,
tangible Chattel Paper, certificated Investment Property and all other
Collateral that the Agent reasonably determines it should have physical
possession in order to perfect and protect the Agent’s security interest
therein, duly pledged, endorsed or assigned to the Agent without restriction;
(iii) delivering to the Agent warehouse receipts covering any portion of the
Collateral located in warehouses and for which warehouse receipts are issued and
certificates of title covering Titled Collateral, together with duly executed
applications for the notation of the Agent’s Liens on such certificates of
title; (iv) when an Event of Default has and is continuing, transferring
Inventory to warehouses or other locations designated by the Agent; (v) placing
notations on the Obligors’ books of account to disclose the Agent’s security
interest; (vi) obtaining control agreements in form and substance reasonably
acceptable to the Agent from securities intermediaries with respect to financial
assets (including Investment Property) in the possession of securities
intermediaries and providing the Agent control of all electronic Chattel Paper
in such manner as the Agent may require; (vii) assigning and delivering to the
Agent all Supporting Obligations, including letters of credit on which any
Obligor is named beneficiary, with, to the extent practicable, the written
consent of the issuer thereof; and (viii) taking such other steps as are
reasonably deemed or desirable by the Agent to maintain and protect the Agent’s
Liens. To the extent permitted by applicable law, the Agent may file, without
any Obligor’s signature, one or more financing statements disclosing the Agent’s
Liens, and each Obligor hereby authorizes the Agent, at any time and from time
to time, to file financing statements and amendments that describe the
Collateral covered by such financing statements as “all assets”, “all personal
property” or words of similar effect in such jurisdictions as the Agent may deem
necessary or desirable in order to perfect the Agent’s Liens in the Collateral.
Each Obligor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.

(b) If any Collateral is at any time in the possession or control of any
warehouseman, bailee or any of any Obligor’s agents or processors, then the
Obligors shall (i) notify the Agent thereof and, if the Agent so requests, the
Obligors shall use commercially reasonable efforts to obtain a bailee or similar
letter acknowledged by such Person that notifies such Person of the Agent’s
security interest in such Collateral and instructs such Person to hold all such
Collateral for the Agent’s account subject to the Agent’s instructions, and
(ii) consents to the Agent’s filing of such UCC financing statements as the
Agent may reasonably deem necessary or appropriate to perfect Agent’s security
interest in such Collateral. At the request of the Agent at any time during the
continuance of an Event of Default, with respect to any Collateral located in
any operating facility of any Obligor that is leased by any Obligor, then the
Obligors shall use commercially reasonable efforts to obtain written landlord
lien waivers or subordinations, in form and substance reasonably satisfactory to
the Agent, that waive or subordinate all present and future Liens which the
owner or lessor of such premises may be entitled to assert against the
Collateral.

(c) From time to time, the Obligors shall, upon the Agent’s request, execute and
deliver confirmatory written instruments pledging the Collateral to the Agent,
for the ratable benefit of the Agent and the Lenders, but the Obligors’ failure
to do so shall not affect or limit any security interest or any other of the
Agent or any Lender in and to the Collateral with respect to any Obligor. So
long as this Agreement is in

 

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effect and until all Obligations have been fully satisfied, the Agent’s Liens
shall continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).

(d) The Obligors, at the Obligors’ expense, will grant to the Agent, Mortgages
in any owned Real Estate (whether owned by one or Obligors on the Closing Date
or acquired thereafter) as may be reasonably requested from time to time by the
Agent and/or the Required Lenders. All such Mortgages shall be granted pursuant
to documentation reasonably satisfactory in form and substance to the Agent and
shall constitute valid and enforceable Liens superior to and prior to the rights
of all third Persons and subject to no other Liens except for Permitted Liens.
Such Mortgages shall have been duly recorded or filed in such manner such and
places as are required by law to establish, perfect, preserve and protect the
Agent’s Liens required to be granted pursuant to such Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full by the Obligors. Furthermore, the Obligors shall cause to be delivered to
the Agent and the Lenders such opinions of counsel, title insurance policies,
flood zone determinations, flood insurance certificates and other related
documents as may be reasonably requested by the Agent. Each action required by
this Section 5.2(d) shall be completed promptly, but in no event later than 60
Business Days (it being understood that the Obligors shall deliver title
insurance commitments within 45 Business Days following such request, but the
Obligors shall have 90 Business Days to deliver title insurance policies with
respect to such commitments) after such action is requested in writing to be
taken by the Agent or the Required Lenders, as the case may be.

(e) The Obligors shall, together with each delivery of the certificate described
in Section 6.2(e), notify the Agent in writing and provide a reasonable
description and summary of any commercial tort claim in which any Obligor is a
plaintiff alleging damages in excess of $500,000 and, in connection therewith,
Agent may file such UCC financing and amendment statements as the Agent deems
necessary or desirable in order to perfect the Agent’s Liens therein, together
with a supplement to this Agreement in form and substance reasonably acceptable
to the Agent in order to subject such commercial tort claim to the terms and
conditions of this Agreement and cause such commercial tort claim to constitute
“Collateral” for all purposes under this Agreement and the other Loan Documents.

5.3 Deposit Accounts; Maintenance of Dominion Accounts; Proceeds of Collateral.

(a) Deposit Accounts. Schedule 7.27 sets forth all deposit accounts maintained
by the Obligors, including all Dominion Accounts. Each Obligor shall take all
actions necessary to establish the Agent’s control of each such deposit account
(other than an account exclusively used for payroll, payroll taxes or employee
benefits). Each Obligor shall be the sole account holder of each such deposit
account and shall not allow any other Person (other than the Agent) to have
control over a deposit account or any property deposited therein. Each Obligor
shall promptly notify the Agent of any opening or closing of a deposit account
and, with the consent of the Agent, will amend Schedule 7.27 to reflect same.

(b) Maintenance of Dominion Accounts. Obligors shall maintain Dominion Accounts
pursuant to lockbox or other arrangements acceptable to the Agent. Obligors
shall obtain a Deposit Account Control Agreement, in form and substance
acceptable to the Agent, from each lockbox service and Dominion Account bank,
establishing the Agent’s control over and Lien in the lockbox account or
Dominion Account, which may be exercised by the Agent during any Dominion
Trigger Period, requiring immediate deposit of all remittances received in the
lockbox to a Dominion Account, and waiving offset rights of such servicer or
bank, except for customary administrative charges; provided, however that with
respect to any deposit accounts acquired by Obligors in connection with a
Permitted Acquisition, Obligors shall have a period of 90 days following the
date of the closing of such Permitted Acquisition to either close such deposit
accounts or to deliver to Agent Deposit Account Control Agreements, in form and
substance acceptable to Agent, with respect to such deposit accounts including
any Dominion Account. If a Dominion Account is not maintained

 

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with the Bank, the Agent may, during any Dominion Trigger Period, require
immediate transfer of all funds in such account to a Dominion Account maintained
with the Bank. During a Dominion Trigger Period, the Agent shall have exclusive
control of all Dominion Accounts for withdrawal purposes. The Agent and the
Lenders assume no responsibility to Borrowers for any lockbox arrangement or
Dominion Account, including any claim of accord and satisfaction or release with
respect to any payment items accepted by any bank.

(c) Proceeds of Collateral. Obligors shall request in writing and otherwise take
all necessary steps to ensure that all payments on Accounts or otherwise
relating to Collateral are made directly to a deposit account that is subject to
a Deposit Account Control Agreement in form and substance acceptable to the
Agent (or a lockbox relating to a dominion account subject to a Deposit Account
Control Agreement in form and substance acceptable to the Agent). If any Obligor
or Subsidiary receives cash or other payment items with respect to any
Collateral, it shall hold the same in trust for the Agent and during any
Dominion Trigger Period shall promptly (not later than the next Business Day)
deposit the same into a Dominion Account.

5.4 Right to Cure. The Agent may, in its discretion, and shall, at the direction
of the Required Lenders, pay any amount or do any act required of any Obligor
hereunder or under any other Loan Document in order to preserve, protect,
maintain or enforce the Obligations, the Collateral or the Agent’s Liens
therein, and which such Obligor fails to pay or do, including payment of any
judgment against such Obligor, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord’s or bailee’s claim, and any other
Lien upon or with respect to the Collateral. All payments that the Agent makes
under this Section 5.4 and all out-of-pocket costs and documented expenses that
the Agent pays or incurs in connection with any action taken by it hereunder
shall be charged to the Obligors’ Loan Account as a Revolving Loan. Any payment
made or other action taken by the Agent under this Section 5.4 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.

5.5 Power of Attorney. Each Obligor hereby appoints the Agent and the Agent’s
designee as such Obligor’s attorney, with power: (a) effective during a Dominion
Trigger Period or upon the occurrence an Event of Default to endorse such
Obligor’s name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent’s or any Lender’s possession;
(b) effective during a Dominion Trigger Period or upon the occurrence of an
Event of Default to sign such Obligor’s name on any invoice, bill of lading,
warehouse receipt or other negotiable or non-negotiable Document constituting
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements and other public records and to file any
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default has occurred and is continuing, to notify the post office
authorities to change the address for delivery of such Obligor’s mail to an
address designated by the Agent and to receive, open and dispose of all mail
addressed to such Obligor; (d) to send requests for verification of Accounts to
customers or Account Debtors (it being understood that Agent shall conduct any
such communications with customers or Account Debtors in a manner consistent
with Agent’s customary practices); (e) upon the occurrence of an Event of
Default to complete in such Obligor’s name or the Agent’s name, any order, sale
or transaction, obtain the necessary Documents in connection therewith, and
collect the proceeds thereof; (f) effective during a Dominion Trigger Period or
upon the occurrence of an Event of Default, to clear Inventory through customs
in such Obligor’s name, the Agent’s name or the name of the Agent’s designee,
and to sign and deliver to customs officials powers of attorney in such
Obligor’s name for such purpose; and (g) upon the occurrence of an Event of
Default, to take any action required of any Obligor under this Agreement or any
other Loan Document. Each Obligor ratifies and approves all acts of such
attorney. None of the Lenders or the Agent nor their attorneys will be liable
for any acts or omissions or for any error of judgment or mistake of fact or law
except for their gross negligence or willful misconduct. This power, being
coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.

 

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5.6 The Agent’s and the Secured Parties’ Duties and Liabilities.

(a) The Obligors assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Agent or any Secured
Party to take any steps to perfect the Agent’s Liens or to collect or realize
upon the Collateral, nor shall loss of or damage to the Collateral release any
Obligor from any of the Obligations. Following the occurrence and during the
continuation of an Event of Default, the Agent may (but shall not be required
to), and at the direction of the Required Lenders shall, without consent from
any Obligor, but upon three (3) Business Days’ prior written notice to the
Borrowers, sue upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability (except to the extent otherwise required by applicable law) of any
Obligor for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Agent and/or any Lender and any Obligor.

(b) It is expressly agreed by each Obligor that, anything herein to the contrary
notwithstanding, such Obligor shall remain liable under each of its contracts
and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither the Agent nor
any Secured Party shall have any obligation or liability under any contract or
license by reason of or arising out of this Agreement or the granting herein of
a Lien thereon or the receipt by the Agent or any Secured Party of any payment
relating to any contract or license pursuant hereto. Neither the Agent nor any
Secured Party shall be required or obligated in any manner to or fulfill any of
the obligations of any Obligor under or pursuant to any contract or license, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any contract or license, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

(c) The Agent may at any time after an Event of Default shall have occurred and
be continuing, without prior notice to any Obligor, notify Account Debtors and
obligors in respect of Instruments and Chattel Paper that the Accounts and the
right, title and interest of the Obligors in under such Instruments and Chattel
Paper have been assigned to the Agent, and that payments shall be made directly
to the Agent, for itself and the benefit of the Secured Parties. Upon the
request of the Agent, the Obligors shall so notify Account Debtors and obligors
in respect of Instruments and Chattel Paper.

(d) The Agent may at any time in the Agent’s own name or in the name of any
Obligor communicate with Account Debtors, obligors in respect of Instruments and
obligors in respect of Chattel Paper to verify with such Persons, to the Agent’s
satisfaction, the existence, amount and terms of any such Accounts, Instruments
or Chattel Paper (it being understood that Agent shall conduct any such
communications with customers or Account Debtors in a manner consistent with
Agent’s customary practices). If an Event of Default shall have occurred and be
continuing, the Obligors, at their own expense, shall cause the independent
certified public accountants then engaged by the Obligors to prepare and deliver
to the Agent and each Lender at any and from time to time promptly upon the
Agent’s request the following reports with respect to the Obligors: (i) a
reconciliation of Accounts; (ii) an aging of all Accounts; (iii) trial balances;
and (iv) a test of such Accounts as the Agent may request. The Obligors, at
their own expense, shall deliver to the Agent the results of each physical
verification, if any, which the Obligors may in their discretion have made, or
caused any other Person to have made on its behalf of all or any portion of
their Inventory.

 

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5.7 Grant of License to Use Proprietary Rights. For the purpose of enabling the
Agent to exercise rights and remedies under Section 10.2 (including, without
limitation, the terms of Section 10.2 hereof, in order to take possession of,
hold, preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, pursuant to the terms hereof,
each Obligor hereby grants to the Agent, for the benefit of the Agent and the
Lenders, upon an Event of Default, an irrevocable, nonexclusive license without
payment of royalty or other compensation to any Obligor) to use, license or
sublicense any Proprietary Rights now owned or hereafter acquired by such
Obligor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

5.8 Limitation on the Agent’s and the Secured Parties’ Duty in Respect of
Collateral. The Agent and each Secured Party shall use reasonable care with
respect to the Collateral in its possession or under its control. Neither the
Agent nor any Lender shall have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
the Agent or such Lender, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.

ARTICLE 6

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

6.1 Books and Records. The Obligors shall maintain, at all times, correct and
complete books, records and accounts in which complete, correct and timely
entries are made of their transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 6.2(a). The Obligors shall, by means of appropriate entries,
reflect in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Obligors shall maintain
at all times books and records pertaining to the Collateral in such detail, form
and scope as the Agent shall reasonably require, including, but not limited to,
records of (a) all payments received and all credits and extensions granted with
respect to the Accounts, and (b) the return, rejection, repossession, stoppage
in transit, loss, damage, or destruction of any Inventory.

6.2 Financial Information. The Obligors shall promptly furnish to the Agent and
each Lender, the following:

(a) As soon as available, but in any event not later than ninety-five (95) days
after the close of each Fiscal Year, consolidated audited and consolidating
unaudited balance sheets, statements of operations, statements of cash flow and
changes in shareholders’ equity for the Obligors and their consolidated
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of the Obligors and their consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements performed on a
consolidated basis, accompanied by a report thereon unqualified in any respect
of independent certified public accountants selected by the Obligors and
reasonably satisfactory to the Agent (it being agreed that the furnishing by PSS
to the Agent and each Lender of its annual report on form 10-K for such Fiscal
Year, as filed with the United States Securities and Exchange Commission, will
satisfy the obligation under this Section 6.2(a) with respect to such Fiscal
Year). Upon the occurrence of an Event of Default, the Obligors hereby authorize
the Agent to communicate directly with their certified public accountants and,
by this provision, authorize those accountants to disclose to the Agent any and
all financial statements and other supporting financial documents and schedules
relating to any Obligor and to discuss directly with the Agent the finances and
affairs of any Obligor. The Obligors shall be entitled to have a representative
present during all such communications.

 

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(b) If Availability is less than 50.0% of the Maximum Revolver Amount, as soon
as available, but in any event not later than thirty (30) days after the end of
each month (other than any month ending as of the end of a fiscal quarter or
year), consolidated unaudited balance sheets of the Obligors and their
consolidated Subsidiaries as at the end of such month, and consolidated
unaudited statements of net income for the Obligors and their consolidated
Subsidiaries for such month and for the period from the beginning of the Fiscal
Year to the end of such month, all in reasonable detail, fairly presenting the
financial position and results of operations of the Obligors and their
consolidated Subsidiaries as at the date thereof and for such periods, and, in
each case, in comparable form, figures for the corresponding period in the prior
Fiscal Year and in the Obligors’ budget, and prepared in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 6.2(a). The Borrowers shall certify by a
certificate signed by a Designated Financial Officer that all such statements
have been prepared in accordance with GAAP and present fairly the Obligors’
financial position as at the dates thereof and its results of operations for the
periods then ended, subject to normal year-end adjustments.

(c) As soon as available, but in any event not later than fifty (50) days after
the end of each fiscal quarter, consolidated and consolidating unaudited balance
sheets of the Borrowers and their consolidated Subsidiaries as at the end of
such fiscal quarter, and consolidated and consolidating unaudited statements of
operations and statements of cash flow for the Borrowers and their consolidated
Subsidiaries for such fiscal quarter and for the period from the beginning of
the Fiscal Year to the end of such fiscal quarter, all in reasonable detail,
fairly presenting the financial position and results of operations of the
Borrowers and their consolidated Subsidiaries as at the date thereof and for
such periods, and, in each case, in comparable form, figures for the
corresponding period in the prior Fiscal Year and in the Borrowers’ budget, and
prepared in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 6.2(a). The Borrowers
shall certify by a certificate signed by a Designated Financial Officer that all
such statements have been prepared in accordance with GAAP and present fairly
the Borrowers’ financial position as at the dates thereof and its results of
operations for the periods then ended, subject to normal year-end adjustments
(it being agreed that the furnishing by PSS to the Agent and each Lender of its
quarterly report on form 10-Q for such quarter, as filed with the United States
Securities and Exchange Commission, will satisfy the obligation under this
Section 6.2(c) with respect to such fiscal quarter).

(d) With each of the audited Financial Statements delivered pursuant to
Section 6.2(a), a certificate (which certificate may be eliminated, narrowed in
scope or qualified to the extent required by generally applicable accounting
rules and guidelines) of the independent certified public accountants that
examined such statements to the effect that they have reviewed and are familiar
with this Agreement and, if a Covenant Trigger has occurred during the Fiscal
Year relating to such statements, that, in examining such Financial Statements,
they did not become aware of any fact or condition which then constituted a
Default or Event of Default with respect to a financial covenant, except for
those, if any, described in reasonable detail in such certificate.

(e) With each of the Financial Statements delivered pursuant to Sections 6.2(a),
(b) and (c), a certificate of a Designated Financial Officer of the Borrowers
setting forth in reasonable detail the calculation of the Fixed Charge Coverage
Ratio during the period covered in such Financial Statements and as at the end
thereof and, if the covenant set forth in Section 8.23 is being tested at the
time of the delivery of such Financial Statements, a certification that the
Obligors were in compliance with the covenant set forth in Section 8.23. With
each of the Financial Statements delivered pursuant to Sections 6.2(b) and (c),
a certificate of a Designated Financial Officer of the Borrowers containing an
update of any changes in the landlord with respect to leased Real Estate (or the
amount of rent payable with respect to leased Real Estate or

 

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delinquencies in the payment of rent with respect to leased Real Estate) or the
bank accounts listed on Schedule 7.27, and stating that, except as explained in
reasonable detail in such certificate, (i) all of the representations and
warranties of the Obligors contained in this Agreement and the other Loan
Documents are correct and complete in all material respects as at the date of
such certificate as if made at such time, except for those that speak as of a
particular date, (ii) each Obligor is, at the date of such certificate, in
compliance in all material respects with all of its respective covenants and
agreements in this Agreement and the other Loan Documents (including, without
limitation, a certification that no Obligor: has changed its legal name or
jurisdiction of organization; changed the names under which it sells Inventory
or creates Accounts; entered into any merger or acquisition; caused any
Collateral to be located in a location not previously disclosed to the Agent in
writing; formed any Subsidiary; or acquired any new material Proprietary Rights
or made a filing of an application for the registration of any patent, trademark
or copyright with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency), and (iii) no Default
or Event of Default then exists or existed during the period covered by the
Financial Statements for such month. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action the Obligors have taken or propose
to take with respect thereto.

(f) As soon as available, but in any event not later than sixty (60) days after
the close of each Fiscal Year, commencing with the fiscal year ending March 31,
2012, annual forecasts (to include forecasted consolidated and consolidating
balance sheets, statements of operations and statements of cash flow) for the
Obligors and their Subsidiaries as at the end of and for each month of such
Fiscal Year.

(g) If requested by the Agent, promptly after filing with the PBGC and the IRS,
a copy of each annual report or other filing filed with respect to each Plan of
any Obligor (other than any annual report or other filing that is the subject of
Section 6.3(l)).

(h) Promptly upon the filing thereof, copies of all reports, if any, to or other
documents filed by any Obligor or any Subsidiary with the Securities and
Exchange Commission under the Exchange Act, and all reports, notices, or
statements sent or received by any Obligor or any Subsidiary to or from the
holders of any equity interests of any Obligor (other than routine non-material
correspondence sent by shareholders of any Obligor to such Obligor) or any such
Subsidiary or of any Debt of any Obligor or any Subsidiary registered under the
Securities Act of 1933 or to or from the trustee under any indenture under which
the same is issued.

(i) As soon as available, but in any event not later than 15 days after any
Obligor’s receipt thereof, a copy of all management reports and management
letters prepared for such Obligor by any independent certified public
accountants of such Obligor.

(j) Promptly after their preparation, copies of any and all proxy statements,
financial statements, and reports which any Obligor makes available to its
shareholders.

(k) If requested by the Agent, promptly after filing with the IRS, a copy of
each tax return filed by any Obligor or by any Subsidiary.

(l) (i) No later than the 15th day of each month, an updated Borrowing Base
Certificate as of the last Business Day of the immediately preceding month,
together with all supporting information with respect thereto as described in
the following clause (ii), provided, however, that at any time Availability is
less than the greater of (i) 12.5% of the Maximum Revolver Amount and
(ii) $37,500,000, the Borrowers shall be required to deliver each Borrowing Base
Certificate no later than each Wednesday which Borrowing Base Certificate shall
be as of the prior Friday, together with all supporting information with respect
thereto as described in the following clause (ii); provided, further, however,
that the Borrowers shall

 

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be required to deliver such weekly Borrowing Base Certificates until the date
upon which (A) Average Availability for the prior 60 consecutive days has been
greater than or equal to the greater of (1) 12.5% of the Maximum Revolver Amount
and (2) $37,500,000 and (B) no Default or Event of Default has occurred or is
continuing.

(ii) In addition to the Borrowing Base, the Obligors shall provide the Agent
with the following documents at the following times in form satisfactory to the
Agent: (a) no later than the 15th day of each month, or more frequently if
requested by the Agent in good faith, a schedule of the Obligors’ Accounts
credits given, cash collected and other adjustments to Accounts since the last
such schedule and a Borrowing Base Certificate; (b) on a monthly basis, by the
15th day of the following month, or more frequently if requested by the Agent in
good faith, an aging of the Obligors’ Accounts, together with a reconciliation
to the corresponding Borrowing Base and to the Obligors’ general ledger; (c) on
a monthly basis by the 15th day of the month, or more frequently if requested by
the Agent in good faith, an aging of the Obligor’s accounts payable; (d) on a
monthly basis by the 15th day of the following month, or more frequently if
requested by the Agent in good faith, a detailed of Eligible Accounts and
Eligible Inventory; (e) on a monthly basis by the 15th day of the following
month, or more frequently if requested by the Agent in good faith, Inventory
reports by category and location, together with a reconciliation to the
corresponding Borrowing Base and to the Obligors’ general ledger; (f) upon
request, copies of invoices in connection with the Obligors’ Accounts, customer
statements, credit memos, remittance advices and reports, deposit slips,
shipping and delivery documents in connection with the Obligors’ Accounts and
for Inventory and Equipment acquired by the Obligors, purchase orders and
invoices; (g) upon request, a statement of the balance of all assets and
liabilities, however arising, which are due to a Obligor from, or which are due
from a Obligor to, or which otherwise arise from any transaction by a Obligor
with, any Affiliate of any Obligor; (h) such other reports as to the Collateral
of the Obligors as the Agent shall reasonably request from time to time; and
(i) with the delivery of each of the foregoing, a certificate of a Responsible
Officer or a Designated Financial Officer certifying as to the accuracy and
completeness of the foregoing. If any of the Obligors’ records or reports of the
Collateral are prepared by an accounting service or other agent, the Obligors
hereby authorize such service or agent to deliver such records, reports, and
related documents to the Agent, for distribution to the Lenders.

(m) Such additional information as the Agent and/or any Lender may from time to
time reasonably request regarding the financial and business affairs of any
Obligor or any Subsidiary; provided, however, that the Obligors shall not be
obligated to provide any information under this clause (m) that would vitiate
the attorney-client privilege, but in such event the Obligors will make
available to the Agent, promptly following the Agent’s request, copies of all
pleadings relating to the subject litigation.

6.3 Notices to the Lenders. The Obligors shall notify the Agent and the Lenders
in writing of the following matters at the following times:

(a) Immediately after becoming aware of any Default or Event of Default;

(b) Immediately after becoming aware of the assertion by the holder of any Debt
of any Obligor in a face amount in excess of $5,000,000 that a default exists
with respect thereto or that such Obligor is not in compliance with the terms
thereof, or the threat or commencement by such holder of any enforcement action
because of such asserted default or non-compliance;

(c) Promptly after becoming aware of any event or circumstance generally
affecting the Obligors’ industry which could reasonably be expected to have a
Materially Adverse Effect, and immediately after becoming aware of any other
event or circumstance which could reasonably be expected to have a Material
Adverse Effect (other than changes in general economic circumstances);

 

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(d) Promptly after becoming aware of any pending or threatened action, suit, or
proceeding, by any Person against any Obligor, or any pending or threatened
investigation by a Governmental Authority involving any Obligor, which could
reasonably be expected to have a Material Adverse Effect;

(e) Promptly after becoming aware of any pending or threatened strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting any
Obligor in a manner which could reasonably be expected to have a Material
Adverse Effect;

(f) Promptly after becoming aware of any violation of any law, statute,
regulation, or ordinance of a Governmental Authority affecting any Obligor which
could reasonably be expected to have a Material Adverse Effect;

(g) Promptly after receipt of any written notice of any violation by any Obligor
or any Subsidiary of any Environmental Law which could reasonably be expected to
have a Material Adverse Effect or that any Governmental Authority has asserted
in writing that any Obligor or any Subsidiary is not in compliance with any
Environmental Law or is investigating any Obligor’s or any Subsidiary’s
compliance therewith and such noncompliance could reasonably be expected to have
a Material Adverse Effect;

(h) Promptly after receipt of any written notice that any Obligor or any
Subsidiary is or may be liable to any Person as a result of the Release or
threatened Release of any Contaminant or that any Obligor or any Subsidiary is
subject to investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $5,000,000;

(i) Promptly after receipt of any written notice of the imposition of any
Environmental Lien against any property of any Obligor or any Subsidiary;

(j) Any change in any Obligor’s name, state of organization, locations of
Collateral, or form of organization, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto;

(k) Within ten (10) Business Days after any Obligor or any ERISA Affiliate knows
or has reason to know, that an ERISA Event or a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when
known, any action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto;

(l) Upon request, or, in the event that such filing reflects a significant
change with respect to the matters covered thereby, within ten (10) Business
Days after the filing thereof with the PBGC, the DOL or the IRS, as applicable,
copies of the following: (i) each annual report (form 5500 series), including
Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each
Plan, (ii) a copy of each funding waiver request filed with the PBGC, the DOL or
the IRS with respect to any Plan and all communications received by any Obligor
or any ERISA Affiliate from the PBGC, the DOL or the IRS with respect to such
request, (iii) a copy of each other filing or notice filed with the PBGC, the
DOL or the IRS, with respect to each Plan by any Obligor or any ERISA Affiliate,
and (iv) a copy of each favorable determination letter from the IRS regarding
the qualification of a Plan under Section 401(a) of the Code;

(m) Upon request, copies of each actuarial report for any Plan or Multi-employer
Plan and annual report for any Multi-employer Plan; and within ten (10) Business
Days after receipt thereof by any Obligor or any ERISA Affiliate, copies of the
following: (i) any notices of the PBGC’s intention to terminate a Plan or to
have a trustee appointed to administer such Plan; (ii) any unfavorable
determination letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Code; or (iii) any notice from a Multi-employer Plan
regarding the imposition of withdrawal liability;

 

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(n) Within ten (10) Business Days after the occurrence thereof: (i) any changes
in the benefits of any existing Plan which increase one or more Obligor’s annual
costs with respect thereto by an amount in excess of $1,000,000, or the
establishment of any new Plan or the commencement of contributions to any Plan
to which any Obligor or any ERISA Affiliate was not previously contributing; or
(ii) any failure by any Obligor or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment;

(o) Within ten (10) Business Days after any Obligor or any ERISA Affiliate knows
or has reason to know that any of the following events has or will occur: (i) a
Multi-employer Plan has been or will be terminated; (ii) the administrator or
plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan; or (iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan;

(p) Promptly after any Borrower has notified the Agent of any intention by such
Borrower to treat the Loans and/or Letters of Credit and related transactions as
being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form;
and

(o) Promptly, in reasonable detail, of any Lien (other than Permitted Liens and
other Liens permitted under Section 8.18) or claim made or asserted against any
of the Collateral.

Each notice given under this Section 6.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the applicable
Obligor, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.

ARTICLE 7

GENERAL WARRANTIES AND REPRESENTATIONS

Each Obligor warrants and represents to the Agent and the Lenders that except as
hereafter disclosed to and accepted by the Agent and the Required Lenders in
writing:

7.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents. Each Obligor has the power and authority to execute, deliver and
perform this Agreement and the other Loan Documents to which it is a party, to
incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. Each Obligor has taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by such Obligor and
constitute the legal, valid and binding obligations of such Obligor, enforceable
against it in accordance with their respective terms. Each Obligor’s execution,
delivery, and performance of this Agreement and the other Loan Documents to
which it is a party do not and will not conflict with, or constitute a violation
or breach of, or result in the imposition of any Lien upon the property of such
Obligor or any of its Subsidiaries, by reason of the terms of (a) any contract,
mortgage, lease, agreement, indenture, or instrument to which such Obligor is a
party or which is binding upon it, (b) any Requirement of Law applicable to such
Obligor or any of its Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws or the limited liability company or limited partnership
agreement of such Obligor or any of its Subsidiaries.

 

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7.2 Validity and Priority of Security Interest. 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 ratable benefit of the Agent and the Lenders, and
such Liens constitute perfected and continuing Liens on all the Collateral,
having priority over all other Liens on the Collateral, except for those Liens
identified in clauses (c), (d) and (e) of the definition of Permitted Liens and
as otherwise provided in the Security Agreement, securing all of the
Obligations, and enforceable against each Obligor and all third parties.

7.3 Organization and Qualification. Each Obligor (a) is duly organized or
incorporated and validly existing and in good standing under the laws of the
state of its organization or incorporation, (b) is qualified to do business and
is in good standing in the jurisdictions set forth on Schedule 7.3 (which are
the only jurisdictions on the Closing Date in which such qualification is
necessary in order for it to own or lease its property and conduct its business,
other than those jurisdictions in which the failure to qualify could not
reasonably be expected to have a Material Adverse Effect), and (c) has all
requisite power and authority to conduct its business and to own its property.

7.4 Corporate Name; Prior Transactions. Except as set forth on Schedule 7.4, no
Obligor has, during the five (5) years prior to the Closing Date, been known by
or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.

7.5 Subsidiaries and Affiliates. Schedule 7.5 sets forth a correct and complete
list as of the Closing Date of the name and relationship to PSS of each and all
of PSS’s Subsidiaries and other Affiliates. Each Subsidiary (a) is duly
incorporated or organized and validly existing in good standing under the laws
of its state of incorporation or organization set forth on Schedule 7.5, (b) is
qualified to do business and in good standing in each jurisdiction in which the
failure to so qualify or be in good standing could reasonably be expected to
have a Material Adverse Effect, and (c) has all requisite power and authority to
conduct its business and own its property.

7.6 Financial Statements and Projections.

(a) The Obligors have delivered to the Agent and the Lenders the audited balance
sheet and related statements of income, retained earnings, cash flows, and
changes in stockholders equity for the Obligors and their consolidated
Subsidiaries as of March 30, 2011, and for the Fiscal Year then ended,
accompanied by the report thereon of the Borrower’s independent certified public
accountants, KPMG LLP. The Obligors have also delivered to the Agent and the
Lenders the unaudited balance sheet and related statements of operations and
cash flows for the Obligors and their consolidated Subsidiaries as of August 26,
2011. All such financial statements have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the financial
position of the Obligors and their consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.

(b) The Latest Projections when submitted to the Lenders as required herein
represent the Obligors’ best estimate of the future financial performance of the
Obligors and their consolidated Subsidiaries for the periods set forth therein.
The Latest Projections have been prepared on the basis of the assumptions set
forth therein, which the Obligors believe are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time submitted to
the Lenders, it being understood that actual results may differ from
projections.

7.7 Capitalization. Schedule 7.7 sets forth, as of the Closing Date, the number
of authorized shares of capital stock or similar equity interests of each
Obligor, the number of such shares or other interests that are outstanding, and
the names of the record and beneficial owners of all such shares of the other
Obligors (other than PSS). All such issued and outstanding shares or other
interests are validly issued, fully paid and non-assessable.

 

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7.8 Solvency. Each Obligor is Solvent prior to and after giving effect to the
Borrowings to be made on the Closing Date, the issuance of any Letters of Credit
to be issued on the Closing Date, and the guaranty obligations to be incurred on
the Closing Date.

7.9 Debt. After giving effect to the making of the Loans to be made on the
Closing Date, the Obligors and their Subsidiaries have no Funded Debt, except
(a) the Obligations, (b) Funded Debt described on Schedule 7.9, and (c) other
Permitted Debt.

7.10 Reserved.

7.11 Real Estate; Leases. Schedule 7.11 sets forth, as of the Closing Date, a
correct and complete list of all Real Estate owned by any Obligor or any
Subsidiary, all leases and subleases of real or personal property held by any
Obligor as lessee or sublessee (other than leases of personal property as to
which an Obligor is lessee or sublessee for which the value of such personal
property in the aggregate is less than $1,000,000), and all leases and subleases
of real or personal property held by any Obligor as lessor, or sublessor. Each
of such leases and subleases is valid and enforceable in accordance with its
terms and is in full force and effect, and, to the Obligors’ knowledge, no
default by any party to any such lease or sublease exists, except in each case
where the failure could not reasonably be expected to have a Material Adverse
Effect. The applicable Obligor has good and marketable title in fee simple to
the Real Estate identified on Schedule 7.11 as owned by such Obligor, or valid
leasehold interests in all material Real Estate designated therein as “leased”
by such Obligor, and each Obligor has good, indefeasible, and merchantable title
to all of its other property reflected on the March 30, 2011 Financial
Statements delivered to the Agent and the Lenders, except as disposed of in the
ordinary course of business since the date thereof, free of all Liens except
Permitted Liens.

7.12 Proprietary Rights. Schedule 7.12 sets forth, as of the Closing Date, a
correct and complete list of all of each Obligor’s Proprietary Rights. None of
the Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 7.12 or as could not reasonably be
expected to have a Material Adverse Effect. To the best of the Obligors’
knowledge, none of the Proprietary Rights infringes on or conflicts with any
other Person’s property, and no other Person’s property infringes on or
conflicts with the Proprietary Rights, except, in each case, where such
infringement or conflict could not reasonably be expected to have a Material
Adverse Effect. The Proprietary Rights described on Schedule 7.12 constitute all
of the property of such type necessary to the current and anticipated (as of the
Closing Date) future conduct of the Obligors’ business.

7.13 Trade Names. All trade names or styles under which any Obligor or any
Subsidiary sells Inventory or creates Accounts, as of the Closing Date, or to
which instruments in payment of Accounts may be made payable, as of the Closing
Date, are listed on Schedule 7.13.

7.14 Litigation. Except as set forth on Schedule 7.14, there is no pending, or,
to the best of any Obligor’s knowledge, threatened, action, suit, proceeding, or
counterclaim by any Person, or, to the best of any Obligor’s knowledge,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.

7.15 Labor Disputes. Except as set forth on Schedule 7.15, as of the Closing
Date (a) there is no collective bargaining agreement or other labor contract
covering employees of any Obligor or any Subsidiary, (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement, (c) no union or other labor organization is seeking to
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recognized as, a collective bargaining unit of employees of any Obligor or any
Subsidiary or for any similar purpose, and (d) there is no pending or (to the
best of any Obligor’s knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or
affecting adversely any Obligor or any Subsidiary or their employees.

7.16 Environmental Laws. Except as set forth on Schedule 7.16 or as could not
reasonably be expected to have a Material Adverse Effect:

(a) The Obligors and their Subsidiaries have complied in all material respects
with all Environmental Laws and neither any Obligor nor any Subsidiary nor any
of their presently owned real property or presently conducted operations, nor
their previously owned real property or prior operations, is subject to any
enforcement order from or liability agreement with any Governmental Authority or
any settlement agreement with any private Person respecting (i) compliance with
any Environmental Law, or (ii) any potential liabilities and costs or remedial
action arising from the Release or threatened Release of a Contaminant.

(b) The Obligors and their Subsidiaries have obtained all permits necessary for
their current operations under Environmental Laws, and all such permits are in
good standing and the Obligors and their Subsidiaries are in compliance with all
material terms and conditions of such permits.

(c) Neither any Obligor nor any Subsidiary, nor, to the best of any Obligor’s
knowledge, any of the predecessors in interest of any Obligor or any Subsidiary,
has in violation of applicable law stored, treated or disposed of any hazardous
waste.

(d) Neither any Obligor nor any Subsidiary has received any summons, complaint,
order or similar written notice indicating that it is not currently in
compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.

(e) To the best of any Obligor’s knowledge, none of the present or past
operations of any Obligor or any Subsidiary is the subject of any investigation
by any Governmental Authority evaluating whether any remedial action is needed
to respond to a Release or threatened Release of a Contaminant.

(f) There is not now, nor, to the best of any Obligor’s knowledge, has there
ever been, on or in the Real Estate:

(i) any underground storage tanks or surface impoundments,

(ii) any asbestos-containing material, or

(iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical
transformers or other equipment.

(g) Neither any Obligor nor any Subsidiary has filed any notice under any
requirement of Environmental Law reporting a spill or accidental and unpermitted
Release or discharge of a Contaminant into the environment.

(h) Neither any Obligor nor any Subsidiary has entered into any negotiations or
settlement agreements with any Person (including the prior owner of its
property) imposing material obligations or liabilities on any Obligor or any
Subsidiary with respect to any remedial action in response to the Release of a
Contaminant or environmentally related claim.

 

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(i) None of the products manufactured, distributed or sold by any Obligor or any
Subsidiary contain asbestos containing material.

(j) No Environmental Lien has attached to any Real Estate.

7.17 No Violation of Law. Neither any Obligor nor any Subsidiary is in violation
of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.

7.18 No Default. Neither any Obligor nor any Subsidiary is in default with
respect to any note, indenture, loan agreement, mortgage, lease, deed, or other
agreement to which such Obligor or such Subsidiary is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.

7.19 ERISA Compliance.

(a) Each Plan is in compliance with the applicable provisions of ERISA, the Code
and other federal or state law, except for any non-compliance which could not
reasonably be expected to result in a Material Adverse Effect. Each actively
maintained Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS. Each terminating
Plan, which is intended to qualify under Section 401(a) of the Code and which is
currently maintained by the Obligors as a result of the stock purchase of its
sponsoring corporation by the Obligors, has received or is scheduled to receive
a favorable determination letter from the IRS. To the best knowledge of the
Obligors, nothing has occurred which would cause the loss of qualification under
Section 401(a) of the Code with respect to any such actively maintained or
terminating Plan. Each Obligor and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

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

(c) Except as could not reasonably be expected to result in a liability of the
Obligors in excess of $10,000,000, (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither any Obligor nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Obligor nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) neither any Obligor nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.

7.20 Taxes. Each Obligor and each Subsidiary has filed all federal and other tax
returns and reports required to be filed and has paid all federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon such Obligor or Subsidiary or its properties, income or assets
otherwise due and payable, unless such unpaid taxes and assessments would
constitute a Permitted Lien.

 

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7.21 Regulated Entities. Neither any Obligor, any Person controlling any
Obligor, nor any Subsidiary is an “Investment Company” within the meaning of the
Investment Company Act of 1940. No Obligor is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness or enter into any Guaranty.

7.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be
used solely to pay transaction fees and expenses incurred in connection with the
closing of this Agreement, for working capital purposes, general corporate
purposes and for expenditures for other lawful purposes of the Borrowers to the
extent such expenditures are not prohibited by this Agreement or any applicable
law. Neither any Obligor nor any Subsidiary is engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.

7.23 Senior Convertible Notes Indentures. Each Obligor party thereto is in
compliance with all terms and conditions of the Senior Convertible Notes
Indenture.

7.24 No Material Adverse Change. No Material Adverse Effect has occurred since
March 30, 2011. If a fact or circumstance disclosed in the Financial Statements
referred to in Section 7.6(a) or one of the Schedules hereto, or an action,
suit, proceeding or other matter disclosed in Schedule 7.14 or 7.16, should in
the future have a Material Adverse Effect, such Material Adverse Effect shall
constitute a change or event subject to this Section 7.24, notwithstanding any
such disclosure.

7.25 Full Disclosure. None of the representations or warranties made by any
Obligor or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Obligor or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of any Obligor to the Lenders prior to the Closing Date), when taken as a
whole with all statements contained in all such materials delivered by the
Obligors, contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.

7.26 Material Agreements. Schedule 7.26 hereto sets forth as of the Closing Date
all Material Agreements to which any Obligor or any Subsidiaries is a party or
is bound as of the date hereof.

7.27 Bank Accounts. Schedule 7.27 contains as of the Closing Date a complete and
accurate list of all bank accounts maintained by any Obligor with any bank or
other financial institution and a brief description of the purpose of each such
bank account.

7.28 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, any Obligor of this Agreement or any
other Loan Document, except for filings necessary to perfect the Agent’s Liens
and routine filings by PSS under the Exchange Act to comply with reporting
obligations thereunder.

7.29 Tax Shelter Regulations. The Borrowers do not intend to treat the Loans
and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In
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intention, it will promptly notify the Agent thereof. If any Borrower so
notifies the Agent, the Borrowers acknowledge that one or more of the Lenders
may treat its Loans and/or its interest in Swingline Loans and/or Agent Advances
and/or Letters of Credit as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will
maintain the lists and other records required by such Treasury Regulation.

7.30 Location of Collateral. Schedule 7.30 is a correct and complete list, as of
the Closing Date, of each Obligor’s chief executive office, the location of its
books and records, the locations of the Collateral, and the locations of all its
other places of business, in each case as of the date hereof and during the past
four months; and (ii) Schedule 7.30 correctly identifies as of the date hereof
any of such facilities and locations that are not owned by a Obligor and sets
forth (A) the names of the or sublessors of such facilities and locations,
(B) identifies any warehousemen, processors, agents or other bailees in
possession or control of any Collateral and the location of such Collateral, and
(C) the monthly rent payable with respect to each such facility.

7.31 Jurisdiction of Organization. Schedule 7.31 identifies (a) the jurisdiction
in which each Obligor is or organized, and (b) the organizational identification
number of each Obligor, if any, provided by such jurisdiction of incorporation
or organization.

7.32 Title To, Liens on and Sale and Use of Collateral. All of the Collateral is
and will continue to be owned by the Obligors free and clear of all Liens
whatsoever, except for Permitted Liens and Liens permitted by Section 8.18;
(b) the Agent’s Liens in the Collateral will not be subject to any Lien except
for those Liens identified in clauses (c), (d), (e) and (j) of the definition of
Permitted Liens and Liens permitted by Section 8.18(c) and Section 8.18(d); and
(c) the Obligors will use, store, and maintain the Collateral in compliance with
this Agreement.

7.33 Accounts. With respect to such Accounts constituting Eligible Accounts,
(i) each existing Account represents, and each future Account will represent, a
bona fide sale or lease delivery of goods by such Obligor, or rendition of
services by such Obligor, in the ordinary course of such Obligor’s business;
(ii) each existing Account is, and each future Account will be, for a liquidated
amount payable by the Account Debtor thereon on the terms set forth in the
invoice therefor or in the schedule thereof delivered to the Agent, without any
offset, deduction, defense, or counterclaim known to any Obligor, except those
disclosed to the Agent and the pursuant to this Agreement; (iii) no payment will
received with respect to any Account, and no credit, discount, or extension, or
agreement therefor will be granted on any Account, except as reported to the
Agent and the Lenders in Borrowing Base Certificates delivered in accordance
with this Agreement; (iv) each copy of an invoice delivered to the Agent by such
Obligor will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in any invoice representing a
sale of goods will have been delivered to the Account Debtor and all services of
such Obligor described in each invoice will have been performed. This
representation and warranty shall not be deemed to be false if, after inclusion
of any Account as an Eligible Account, the representations and warranties
relating thereto cease for any reason to be correct; provided, however, that
such Account shall immediately thereafter cease to constitute an Eligible
Account.

7.34 Inventory. All of the Inventory owned by each Obligor is and will be held
for sale or lease, or to be furnished in connection with the rendition of
services, in the ordinary course of such Obligor’s business, and all Eligible
Inventory is and will be fit for such purposes. The representations and
warranties with respect to Eligible Inventory in this Section 7.34 shall not be
deemed to be if, after inclusion of an item of Inventory as Eligible Inventory
the representations and warranties relating thereto shall cease to be correct
for any reason; provided, however, that such item of Inventory shall immediately
thereafter cease to constitute Eligible Inventory.

 

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7.35 Documents, Instruments, and Chattel Paper. All Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine. All goods evidenced by such Documents, Instruments, and Chattel Paper
are and will be owned by the Obligors, free and clear of all Liens other than
Permitted Liens and other Liens permitted Section 8.18.

7.36 Patent, Trademark and Copyright Collateral. On the date hereof, such
Obligor does not have any interest in, or title to, any registered Patent,
Trademark or Copyright except as set forth Schedule 7.36 hereto. This Agreement
is effective to create a valid and continuing Lien on and, upon filing of the
Copyright Security Agreement with the United States Copyright Office and the
filing of appropriate financing statements, perfected Liens in favor of the
Agent on such Obligor’s patents, trademarks and registered copyrights and such
perfected Liens are enforceable as such as against any and all creditors of and
purchasers from such Obligor. Upon filing of the Copyright Security Agreement
with the United States Copyright Office and filing of the Trademark Security
Agreement with the United States Patent and Trademark Office and the filing of
appropriate financing statements, all actions necessary or desirable to protect
and perfect the Agent’s Lien on such Obligor’s patents, trademarks or registered
copyrights shall have been duly taken.

ARTICLE 8

AFFIRMATIVE AND NEGATIVE COVENANTS

Each Obligor covenants to the Agent and each Lender that so long as any of the
Obligations remain outstanding or this Agreement is in effect:

8.1 Taxes and Other Obligations. Each Obligor shall, and shall cause each of its
Subsidiaries to, (a) file when due all tax returns and other reports which it is
required to file; (b) pay, or provide for the payment, when due, of all material
taxes, fees, assessments and other governmental charges against it or upon its
property, income and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
provide to the Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing; and (c) pay when due all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons; provided, however, so long as such Obligor has notified the Agent
in writing, neither such Obligor nor any of its Subsidiaries need pay any tax,
fee, assessment, or governmental charge (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) as to which such Obligor or its
Subsidiary, as the case may be, has established proper reserves as required
under GAAP, and (iii) the nonpayment of which does not result in the imposition
of a Lien (other than a Permitted Lien).

8.2 Legal Existence and Good Standing. Each Obligor shall, and shall cause each
of its Subsidiaries to, maintain its legal existence and its qualification and
good standing in all jurisdictions in which the failure to maintain such
existence and qualification or good standing could reasonably be expected to
have a Material Adverse Effect.

8.3 Compliance with Law and Agreements; Maintenance of Licenses. Each Obligor
shall comply, and shall cause each Subsidiary to comply, with all Applicable Law
of any Governmental Authority having jurisdiction over it or its business
(including the ERISA, Federal Fair Labor Standards Act, all Environmental Laws,
OSHA and Anti-Terrorism Laws and laws regarding collection and payment of Taxes
and maintain all approvals of Governmental Authorities necessary to the
ownership of its properties or conduct of its business), except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect. Each Obligor shall, and shall cause each of its Subsidiaries to, obtain
and maintain all licenses, permits, franchises, and governmental authorizations
necessary to own its property and to conduct its business as conducted on the
Closing Date, except where the failure to do so could not reasonably be expected

 

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to have a Material Adverse Effect. No Obligor shall modify, amend or alter its
certificate or articles of incorporation, or its limited liability company
operating agreement or limited partnership agreement, as applicable, other than
in a manner which does not adversely affect the rights of the Lenders or the
Agent.

8.4 Maintenance of Property; Inspection of Property.

(a) Each Obligor shall, and shall cause each of its Material Subsidiaries to,
maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted.

(b) Each Obligor shall permit representatives and independent contractors of the
Agent (at the expense of the Obligors) to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom and to discuss its affairs, finances and
accounts with its directors, officers and independent public accountants, at
such reasonable times during normal business hours and as soon as may be
reasonably desired, upon reasonable advance notice to the Borrowers’ Agent;
provided, however, (i) if no Event of Default exists, the Obligors shall not be
responsible for the expense of more than one (1) such inspection and audit per
calendar year (or two times per calendar year if Excess Availability is less
than the greater of (a) 40% of the Maximum Revolver Amount and (b) $75,000,000)
unless an Event of Default exists), (ii) when an Event of Default exists, the
Agent or any Lender may do any of the foregoing at the expense of the Obligors
at any time during normal business hours and without advance notice, and
(iii) the Obligors shall be entitled to have a representative present at all
such inspections, visits and discussions.

(c) The Borrowers shall cooperate with the Agent and its representatives and
independent contractors (such cooperation to include the Borrowers making their
books and records, Collateral and personnel available to the Agent and its
representatives and independent contractors) in order to enable the Agent to
obtain an Appraisal of the Borrowers’ Inventory (a) on or about the Closing Date
and (b) at such times thereafter as the Agent, in its sole discretion, may
request; provided that if Availability is less than the greater of (x) 50% of
the Maximum Revolver Amount and (y) $100,000,000, at least one Appraisal per
calendar year will be conducted; provided, further, that if Availability is less
than the greater of (x) 25% of the Maximum Revolver Amount and (y) $50,000,000,
at least two (2) Appraisals per calendar year will be conducted. The Agent shall
select any and all appraisers in its sole discretion. The Borrowers will not be
obligated to reimburse the Agent for its reasonable out-of-pocket costs and
expenses actually incurred in connection with such Appraisals unless an Event of
Default exists at the time of such Appraisal (in which case the Agent and its
representatives may do any of the foregoing at the expense of the Obligors at
any time during normal business hours and without advance notice); provided that
if Availability is less than the greater of (x) 50% of the Maximum Revolver
Amount and (y) $100,000,000, Borrowers shall be required to reimburse the Agent
for one (1) Appraisal per calendar year; provided, further, that if Availability
is less than the greater of (x) 25% of the Maximum Revolver Amount and
(y) $50,000,000, Borrowers shall be required to reimburse the Agent for two
(2) Appraisals per calendar year.

8.5 Insurance.

(a) Each Obligor shall maintain, and shall cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers having a rating of at
least A or better by Best Rating Guide, insurance against loss or damage by fire
with extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types and in such
amounts (with the amount of any such insurance on Inventory to be reasonably
satisfactory to the Agent) as is customary for Persons engaged in the same or
similar business, under policies reasonably acceptable to the Agent. Each
Obligor shall also maintain flood insurance (through its umbrella policy or

 

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otherwise) for its Inventory and Equipment which is, at any time, located in an
area that has been identified by the Director of the Federal Emergency
Management Agency as a Special Flood Hazard Area, provided that no such flood
insurance shall be required for locations designated as Flood Zone A5 by the
Federal Emergency Management Agency.

(b) Each Obligor shall cause the Agent, for the ratable benefit of the Agent and
the Lenders, to be named as secured party or mortgagee and sole loss payee or
additional insured, in a manner acceptable to the Agent. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than thirty (30) days’ prior written notice to the Agent in the event
of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Obligor or any of its Subsidiaries or
the owner of any Real Estate for purposes more hazardous than are permitted by
such policy. All premiums for such insurance shall be paid by the applicable
Obligor when due, and certificates of insurance and photocopies of the policies
shall be delivered to the Agent. If any Obligor fails to procure such insurance
or to pay the premiums therefor when due, the Agent may, and at the direction of
the Required Lenders shall, do so from the proceeds of Revolving Loans upon
three Business Days’ notice to the Borrowers’ Agent (no such notice to be
necessary in the case of the Obligors’ failure to pay premiums when due).

8.6 Insurance and Condemnation Proceeds. The Obligors shall promptly notify the
Agent and the Lenders of any loss, damage, or destruction to the Collateral,
whether or not covered by insurance, with a value in excess of $5,000,000. So
long as no Event of Default or Dominion Trigger Period exists, the Obligors may
collect all insurance and condemnation proceeds and deal with the applicable
insurers in good faith, provided that after the occurrence of (a) a Dominion
Trigger, all proceeds thereof shall be applied to the Obligations in accordance
with Section 3.1(d) or (b) an Event of Default, all proceeds thereof shall be
applied to the Obligations in accordance with Section 3.6. While an Event of
Default or Dominion Trigger Period exists, the Agent is hereby authorized to
collect all insurance and condemnation proceeds in respect of Collateral
directly and to apply or remit them, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, to the Obligations in accordance with Section 3.1(d) or Section 3.6, as
applicable.

8.7 Environmental Laws.

(a) Each Obligor shall, and shall cause each of its Subsidiaries to, conduct its
business in compliance with all Environmental Laws applicable to it, including
those relating to the generation, handling, use, storage, and disposal of any
Contaminant, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect. Each Obligor shall, and shall cause
each of its Subsidiaries to, take prompt and appropriate action to respond to
any non-compliance with Environmental Laws, except to the extent the failure to
do so could not reasonably be expected to have a Material Adverse Effect, and
shall regularly report to the Agent on such response.

(b) Without limiting the generality of the foregoing, each Obligor shall submit
to the Agent and the Lenders annually, commencing on the first Anniversary Date,
and on each Anniversary Date thereafter, an update of the status of each
environmental compliance or liability issue as to which notification was given
(or required to be given) pursuant to Section 6.3. In connection with the
foregoing, the Agent or any Lender may request copies of technical reports
prepared by any Obligor and its communications with any Governmental Authority
to determine whether such Obligor or any of its Subsidiaries is proceeding
reasonably to correct, cure or contest in good faith any alleged non-compliance
or environmental liability. In connection with any alleged noncompliance or
environmental liability which may result in liability in excess of $5,000,000,
each Obligor shall, at the Agent’s or the Required Lenders’ request and at no
cost or expense to the Agent or any Lender, (i) retain an independent
environmental engineer reasonably acceptable to the Agent to evaluate the site,
including tests if appropriate, where the non-compliance or alleged
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Environmental Laws has occurred and prepare and deliver to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for responding to
any environmental problems described therein, and an estimate of the costs
thereof, and (ii) provide to the Agent and the Lenders a supplemental report of
such engineer whenever the scope of the environmental problems, or the response
thereto or the estimated costs thereof, shall increase in any material respect.

(c) If the Agent has reasonable cause to believe that, as a result of
non-compliance with Environmental Laws, the Obligors may have liability in
excess of $5,000,000, the Agent may exercise its rights under this
Section 8.7(c). The Agent and its representatives will have the right at any
reasonable time to enter and visit the Real Estate and any other place where any
property of any Obligor is located for the purposes of observing the Real
Estate, taking and removing soil or groundwater samples, and conducting tests on
any part of the Real Estate. The Agent is under no duty, however, to visit or
observe the Real Estate or to conduct tests, and any such acts by the Agent will
be solely for the purposes of protecting the Agent’s Liens and preserving the
Agent’s and the Lenders’ rights under the Loan Documents. No site visit,
observation or testing by the Agent or any Lender will result in a waiver of any
default of any Obligor or impose any liability on the Agent or any Lender. In no
event will any site visit, observation or testing by the Agent be a
representation that hazardous substances are or are not present in, on or under
the Real Estate, or that there has been or will be compliance with any
Environmental Law. No Obligor nor any other party is entitled to rely on any
site visit, observation or testing by the Agent. The Agent and the Lenders owe
no duty of care to protect any Obligor or any other party against, or to inform
any Obligor or any other party of, any hazardous substances or any other adverse
condition affecting the Real Estate. The Agent may in its discretion disclose to
the Obligors or to any other party if so required by law any report or findings
made as a result of, or in connection with, any site visit, observation or
testing by the Agent, provided, however, that the Agent shall give the
Borrowers’ Agent reasonable advance written notice to the extent practicable of
any disclosure to be made by the Agent to any third party, which notice shall
include the basis for the conclusion that such disclosure is legally required.
The Obligors understand and agree that the Agent makes no warranty or
representation to any Obligor or any other party regarding the truth, accuracy
or completeness of any such report or findings that may be disclosed. The
Obligors also understand that depending on the results of any site visit,
observation or testing by the Agent and disclosed to any Obligor, the Obligors
may have a legal obligation to notify one or more environmental agencies of the
results, that such reporting requirements are site-specific, and are to be
evaluated by the Obligors without advice or assistance from the Agent. In each
instance, the Agent will give the Obligors reasonable notice before entering the
Real Estate or any other place the Agent is permitted to enter under this
Section 8.7(c). The Agent will make reasonable efforts to avoid interfering with
the Obligors’ use of the Real Estate or any other property in exercising any
rights provided hereunder. Notwithstanding anything to the contrary set forth
herein, the Agent shall secure from its representatives customary
indemnification, liability insurance and confidentiality protections.

8.8 Compliance with ERISA. Each Obligor shall, and shall cause each of its ERISA
Affiliates, except where the failure to do so could not reasonably by expected
to have a Material Adverse Effect, to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.

8.9 Mergers, Consolidations or Sales. Neither any Obligor nor any Subsidiary
shall enter into any Asset Dispositions or agree to enter into any Asset
Disposition except Permitted Asset Dispositions. During a Dominion Trigger
Period or upon the occurrence of an Event of Default, all proceeds of Asset
Dispositions shall be applied to the Obligations in accordance with
Section 3.1(d) or Section 3.6, as applicable.

 

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8.10 Distributions; Restricted Investments. Neither any Obligor nor any
Subsidiary shall (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except for Permitted Distributions, or
(b) make any Restricted Investment.

8.11 Reserved.

8.12 Guaranties. Neither any Obligor nor any Subsidiary shall make, issue, or
become liable on any Guaranty, except (a) Guaranties of the Obligations in favor
of the Agent, (b) any Guaranty in respect of Funded Debt otherwise permitted
under Section 8.13, (c) Guaranties by Foreign Subsidiaries of Funded Debt and
other obligations or liabilities of other Foreign Subsidiaries, and
(d) Guaranties by any Obligor of any obligation or liability of any other
Obligor that is not prohibited by this Agreement.

8.13 Funded Debt. Neither any Obligor nor any Subsidiary shall incur or maintain
any Funded Debt, other than, without duplication, the following (Funded Debt
permitted under this Section 8.13 is hereafter referred to as “Permitted Debt”):

(a) the Obligations;

(b) Funded Debt described on Schedule 7.9;

(c) Capital Leases of Equipment and purchase money secured Funded Debt incurred
to purchase or refinance the purchase of Equipment or other fixed assets,
provided that Liens securing the same attach only to the Equipment or other
fixed assets acquired by the incurrence of such Funded Debt;

(d) any Refinancing by an Obligor or any Subsidiary of Debt incurred in
accordance with this Section 8.13; provided that (i) the principal amount of
such Refinanced Debt is not increased (except to the extent of interest, fees,
expenses and premiums financed with such Refinancing), (ii) the Liens, if any,
securing such Refinanced Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refinanced, (iii) no Person that is not
an obligor or guarantor of such Debt shall become an obligor or guarantor of
such Refinanced Debt unless such Person is an Obligor hereunder; and (iv) the
terms of such refunding, renewal or extension, taken as a whole, are no less
favorable to the Obligors, the Agent or the Lenders than the original Debt;

(e) intercompany Funded Debt among the Borrowers and their Subsidiaries to the
extent the Investment represented thereby is permitted under Section 8.10 and
such Funded Debt is subordinated to the repayment of the Obligations at least to
the extent set forth in Section 14.5;

(f) Funded Debt incurred in connection with a Permitted Acquisition, to the
extent permitted under the definition of Permitted Acquisition that consists of
(i) Funded Debt existing prior to the consummation of the Permitted Acquisition
(and not incurred in contemplation thereof) that is permitted to be assumed by
the Obligors pursuant to clause (c) above or otherwise does not exceed, in the
aggregate, $25,000,000 and does not constitute a revolving credit facility,
(ii) Funded Debt that constitutes a term loan so long as (1) the terms thereof
are reasonably acceptable to the Agent and (2) prior to the making of such term
loan, the Agent and the holder of such term debt enter into an intercreditor and
lien subordination agreement reasonably acceptable to the Agent, and
(iii) Funded Debt acceptable to the Agent that is incurred in favor of the
seller in such Permitted Acquisition as a portion of the purchase price for such
Permitted Acquisition, including all Funded Debt under non-compete arrangements
entered into in connection with such Permitted Acquisition that is acceptable to
the Agent;

 

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(g) Guaranties and other recourse obligations of any Borrower to any Person that
provides financing (whether in the form of a loan or a lease transaction) to one
or more customers of Borrowers in order to enable such customers to pay all or a
portion of the purchase price for Inventory sold by one or more Borrowers to
such customers in the ordinary course of business;

(h) Funded Debt incurred pursuant to the Senior Convertible Notes and the Senior
Convertible Notes Indenture;

(i) so long as no Default or Event of Default has occurred and is continuing,
Funded Debt incurred in connection with the issuance of senior unsecured notes,
that is not secured by any Lien, in an aggregate amount outstanding at any time
not to exceed $300,000,000;

(j) so long as the Specified Payment Conditions are satisfied, Funded Debt that
is not secured by any Lien so long as (A) the documents evidencing such Funded
Debt contain no scheduled or mandatory prepayments of such Debt prior to the
Stated Termination Date (other than prepayments required pursuant to such
documents upon the occurrence of a Change of Control or an Asset Disposition),
(B) such Funded Debt does not mature prior to the Stated Termination Date and
(C) Borrowers have demonstrated pro forma compliance with all financial
covenants contained in the documents evidencing such Funded Debt.

(k) Guaranties permitted by Section 8.12;

(l) Funded Debt of Foreign Subsidiaries in an aggregate amount outstanding at
any time not to exceed the sum of (i) 85% of the accounts of such Foreign
Subsidiaries and (ii) 65% of the net book value of the inventory of such Foreign
Subsidiaries;

(m) Real Estate Financing, in an aggregate amount outstanding at any time not to
exceed $20,000,000;

(n) other Funded Debt, that is not secured by any Lien, in an aggregate amount
outstanding at any time not to exceed $5,000,000; and

(o) Funded Debt in an aggregate amount at any time not to exceed $120,000 in
respect of the letter of credit issued by USAmeriBank for the account of the
Obligors for so long as such letter of credit remains outstanding.

8.14 Prepayment. Neither any Obligor nor any Subsidiary shall voluntarily prepay
any Funded Debt, except: (a) the Obligations in accordance with the terms of
this Agreement; (b) in connection with Refinancings permitted under
Section 8.13(d); (c) intercompany Funded Debt, provided no such intercompany
Funded Debt will be prepaid to any non-Obligor if an Event of Default exists;
(d) non-cash conversions of all or part of the Funded Debt outstanding under the
Senior Convertible Notes into equity securities of PSS in accordance with the
terms of the Senior Convertible Notes Indenture; (e) prepayments of Funded Debt
assumed in any Permitted Acquisition up to $25,000,000 if the Payment Conditions
are satisfied at the time of such prepayment and after giving effect to such
prepayment; (f) Permitted SCN Redemptions; (g) Capital Leases; and (h) any other
prepayment of Funded Debt permitted under Section 8.13 made if the Payment
Conditions are satisfied at the time of such prepayment and after giving effect
to such prepayment.

8.15 Transactions with Affiliates. Except as set forth below, neither any
Obligor nor any Subsidiary shall, sell, transfer, distribute, or pay any money
or property, including, but not limited to, any fees or expenses of any nature
(including, but not limited to, any fees or expenses for management services),
to any Affiliate, or lend or advance money or property to any Affiliate, or
invest in (by capital contribution or otherwise) or purchase or repurchase any
stock or indebtedness, or any property, of any Affiliate, or become

 

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liable on any Guaranty of the indebtedness, dividends, or other obligations of
any Affiliate. Notwithstanding the foregoing, the following shall be permitted:
(a) transactions with Affiliates expressly permitted hereunder with respect to
Affiliates, (b) transactions set forth on Schedule 8.15, (c) compensation and
indemnity arrangements with officers, directors and employees in the ordinary
course of business, (d) transactions among Borrowers, (e) Permitted
Distributions, (f) transactions relating to the issuance of capital stock or
other equity interests of an Obligor to the extent otherwise permitted under
this Agreement and (g) while no Event of Default has occurred and is continuing,
the Obligors and their Subsidiaries may engage in transactions with Affiliates
in the ordinary course of business on terms no less favorable to the Obligors
and their Subsidiaries than would be obtained in a comparable arm’s-length
transaction with a third party who is not an Affiliate. The terms of all such
transactions shall be made available to the Agent upon request.

8.16 Investment Banking and Finder’s Fees. Neither any Obligor nor any
Subsidiary shall pay or agree to pay, or reimburse any other party with respect
to, any investment banking or similar or related fee, underwriter’s fee,
finder’s fee, or broker’s fee to any Person in connection with this Agreement,
other than under the Fee Letter. The Obligors shall defend and indemnify the
Agent and the Lenders against and hold them harmless from all claims of any
Person that any Obligor is obligated to pay for any such fees, and all costs and
expenses (including attorneys’ fees) incurred by the Agent and/or any Lender in
connection therewith.

8.17 Business Conducted. The Obligors shall not, and shall not permit any
Subsidiary to, engage, directly or indirectly, in any line of business other
than the businesses in which the Obligors and their Subsidiaries are engaged on
the Closing Date and businesses reasonably incidental or reasonably relating
thereto and reasonable extensions thereof.

8.18 Liens. Neither any Obligor nor any Subsidiary shall create, incur, assume,
or permit to exist any Lien on any property now owned or hereafter acquired by
any of them, except (a) Permitted Liens, (b) Liens, if any, in effect as of the
Closing Date described in Schedule 7.9 securing Debt described in Schedule 7.9,
(c) Liens securing Capital Leases and purchase money Debt permitted under
Section 8.13, (d) Liens securing Debt permitted under Section 8.13(f)(i) or
(ii), provided that such Liens do not cover or relate to any Inventory or
Accounts or any assets other than the assets acquired pursuant to such Permitted
Acquisition, (e) Liens securing Debt permitted under Section 8.13(l), provided
that such Liens cover only assets of the Foreign Subsidiaries who are obligated
on such Debt, (f) Liens securing liabilities, obligations and indebtedness of
any Obligor or any Subsidiaries in an aggregate amount outstanding at any time
not to exceed $20,000,000 so long as (i) if requested by Agent, the holder of
any such liability, obligation or indebtedness has entered into an intercreditor
and lien subordination agreement reasonably acceptable to the Agent and
(ii) such Liens do not cover or relate to any Inventory or Accounts, (g) Liens
securing Real Estate Financing permitted under Section 8.13(m), provided that
such Liens cover only Real Estate and (h) Liens in cash or Cash Equivalents in
favor of USAmeriBank in an aggregate amount at any time not to exceed $120,000
as security for the Obligors’ obligations with respect to the letter of credit
issued by USAmeriBank for the account of the Obligors for so long as such letter
of credit remains outstanding.

8.19 Sale and Leaseback Transactions. Neither any Obligor nor any Subsidiary
shall, directly or indirectly, enter into any arrangement with any Person
providing for such Obligor or such Subsidiary to lease or rent property that
such Obligor or such Subsidiary has sold or will sell or otherwise transfer to
such Person, other than sale and leaseback transactions where, after giving
effect thereto, Availability exceeds the greater of 15.0% of the Maximum
Revolver Amount or $45,000,000.

8.20 New Subsidiaries. Neither any Obligor nor any Subsidiary shall, directly or
indirectly, organize, create, acquire or permit to exist any Subsidiary unless
the Obligors have complied with the provisions of Section 8.32.

 

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8.21 Fiscal Year. The Obligors shall not change their Fiscal Year.

8.22 Reserved.

8.23 Fixed Charge Coverage Ratio. Upon the occurrence of a Covenant Trigger, the
Borrowers will demonstrate that Fixed Charge Coverage Ratio as of the most
recent fiscal month end for which Financial Statements have been (or were
required to be) delivered hereunder for the twelve fiscal months then ended and
as of each month end thereafter for the twelve months then ended was at least
1.00 to 1.00; provided, that following the occurrence of a Covenant Trigger, the
requirement to comply with the foregoing financial covenant will remain in
effect unless and until Borrowers have maintained Availability in an amount
greater than or equal to the greater of (a) 10% of the Maximum Revolver Amount
and (b) $30,000,000 for a period of 90 consecutive days following the Covenant
Trigger.

8.24 Reserved.

8.25 Use of Proceeds. The proceeds of the Loans shall be used solely to pay
transaction fees and expenses incurred in connection with the closing of this
Agreement, to finance ongoing working capital needs, for general corporate
purposes, and for expenditures for other lawful purposes of the Borrowers to the
extent such expenditures are not prohibited by this Agreement or any applicable
law. The Obligors shall not, and shall not suffer or permit any Subsidiary to,
use any portion of the Loan proceeds, directly or indirectly, (a) to purchase or
carry Margin Stock, (b) to repay or otherwise refinance Debt of any Obligor or
any other Person incurred to purchase or carry Margin Stock, (c) to extend
credit for the purpose of purchasing or carrying any Margin Stock, or (d) to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Exchange Act.

8.26 Location of Collateral. Each Obligor covenants and agrees that it will not
(i) maintain any Collateral (other than Inventory and Equipment in transit in
the ordinary course of business) at any location other than the current
locations of Collateral listed for such Obligor on Schedule 7.30, (ii) otherwise
change or add to any of such locations, or (iii) change the location of its
chief executive office from the location identified Schedule 7.30, unless, in
each case, it promptly gives the Agent prior written notice thereof and executes
any and all documents that the Agent reasonably requests in connection
therewith. The Obligors also agree to provide the Agent, together with each
delivery of the certificate described in Section 6.2(e), with written notice of
any change in the amount of rent payable with respect to any Real Estate leased
by any Obligor, or any change in the landlord with respect to such leased Real
Estate. Without limiting the foregoing, each Obligor represents that all of its
Inventory (other than Inventory in transit) is, and covenants that all of its
Inventory will be, located either (x) on premises owned by such Obligor; (y) on
premises leased by such Obligor, provided that (1) the Agent has received an
executed landlord waiver from the of such premises in form and substance to the
Agent, or (2) the Obligors shall have provided the Agent with the location of
such leased premises, the monthly rental payment with respect thereto and such
other information reasonably requested by the Agent in order to enable the Agent
to establish a Reserve with respect to such leased premises; or (z) in a
warehouse or with a bailee, provided that the Agent has received an executed
bailee letter from the applicable Person in form and substance satisfactory to
the Agent.

8.27 Accounts.

(a) If any Obligor becomes aware of any matter adversely affecting the
collectibility of any Account or the Account Debtor thereon involving an amount
greater than $500,000, including information regarding the Account Debtor’s
creditworthiness, such Obligor will promptly either: (i) so advise the Agent,
and the Agent shall determine whether or not to exclude such Account from
Eligible Accounts or (ii) unilaterally remove such Account from the Borrowing
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(b) No Obligor shall accept any note or other instrument (except a check or
other instrument for the immediate payment of money) with respect to any Account
during the existence of an Event of Default, or any Eligible Account at any
time, without the Agent’s written consent. If any Obligor accepts any such note
or instrument, it shall be considered as evidence of the Account and not payment
thereof and such Obligor will promptly deliver such instrument to the Agent,
endorsed by such Obligor to the Agent in a manner satisfactory in form and
substance to the Agent.

(c) The Obligors shall either: (i) notify the Agent promptly of all disputes and
claims in excess of $500,000 with any Account Debtor or (ii) remove the Account
of such Account Debtor from the Borrowing Base, and the Obligors agree to
settle, contest, or adjust such dispute or claim at no expense to the Agent or
any Lender. No discount, credit, allowance, extension or modification shall be
granted to any such Account Debtor without the Agent’s prior written consent,
except for discounts, credits, allowances, extensions and modifications made or
given in the ordinary course of the applicable Obligor’s business when no Event
of Default exists (unless such Account is removed from the Borrowing Base). The
Obligors shall send the Agent a copy of each credit memorandum in excess of
$500,000 as soon as issued, and the Obligors shall promptly report that credit
on Borrowing Base Certificates submitted by them. The Agent may at all times
when an Event of Default exists hereunder settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which the Agent or the
Required Lenders, as applicable, shall consider advisable and, in all cases, the
Agent will credit the Obligors’ Loan Account with the net amounts received by
the Agent in payment of any Accounts.

(d) If an Account Debtor returns any Inventory to any Obligor when no Event of
Default exists, then such Obligor shall promptly determine the reason for such
return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. The Obligors shall immediately report to the Agent any
return involving an amount in excess of $500,000 or remove such Inventory from
the Borrowing Base. In the event any Account Debtor returns Inventory to any
Obligor when an Event of Default exists, the Obligors, upon the of the Agent,
shall: (i) hold the returned Inventory in trust for the Agent; (ii) segregate
all returned Inventory from all of their other property; (iii) dispose of the
returned Inventory solely according to the Agent’s written instructions; and
(iv) not issue any credits or allowances with respect thereto without the
Agent’s prior written consent. All returned Inventory shall be subject to the
Agent’s Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such Inventory and such shall not be Eligible Inventory.

8.28 Inventory.

(a) No Obligor will, without prior written notice to the Agent, acquire or
accept any Inventory on consignment or approval that is included in the
Borrowing Base; provided that any Inventory acquired or accepted on consignment
or approval shall be segregated from all other property of the Obligors and
readily identifiable from all Collateral. Each Obligor agrees that Inventory
produced by such Obligor in the United States of America will be produced in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
rules, regulations and orders thereunder. The Obligors will conduct a physical
count of the Inventory at least once per Fiscal Year, and after and during the
continuation of an Event of Default, at such other times as the Agent requests.
The Obligors will maintain a perpetual inventory reporting system at all times.
The Obligors will not, without the Agent’s written consent, sell any Inventory
on a bill-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis (unless such Inventory is
excluded from the Borrowing Base and segregated from all other property of the
Obligors and readily identifiable from all Collateral), except that nothing
herein shall prevent any Obligor from accepting returns of Inventory as a
business accommodation to its customers in accordance with past practices, and
the Obligors shall comply with Section 8.27(d) with respect to such returns. No
returned Inventory shall constitute Eligible Inventory; provided, however, that
the Agent, in its discretion, may elect to permit returned Inventory which is in
readily condition to constitute Eligible Inventory if such Inventory

 

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would otherwise constitute Eligible Inventory. Nothing in this Agreement shall
preclude any Obligor from loaning Inventory to customers in the ordinary course
of business in connection with repair of goods sold by any Obligor (it being
understood that such Inventory on loan shall not constitute Eligible Inventory
and that the Obligors shall, upon the request of the Agent following an Event of
Default, promptly provide the Agent with such financing statements,
acknowledgments and other items which the Agent deems necessary to cause the
Agent to have a first-priority perfected security interest in such Inventory).

(b) In connection with all Inventory financed by Letters of Credit, the Obligors
will, at the Agent’s request, instruct all suppliers, carriers, forwarders,
customs brokers, warehouses or others receiving or holding cash, checks,
Inventory, Documents or Instruments in which the Agent holds a security interest
to deliver them to the Agent and/or subject to the Agent’s order, and if they
shall come into any Obligor’s possession, to deliver them, upon request, to the
Agent in their original form. The Obligors shall also, at the Agent’s request,
designate the Agent as the consignee on all bills of lading and other negotiable
and nonnegotiable documents.

8.29 Reserved.

8.30 Patent, Trademark and Copyright Collateral.

(a) The Obligors shall, together with each delivery of the certificate described
in Section 6.2(e) notify the Agent if any Obligor knows or has reason to know
that any application or registration relating to any material patent, trademark
or copyright of any Obligor (now or hereafter existing) may become abandoned or
dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any Obligor’s ownership of any patent, trademark
or copyright, its right to register the same, or to keep and maintain the same
that would have a Material Adverse Effect.

(b) The Obligors shall, together with each delivery of the certificate in
Section 6.2(e), notify the Agent of the filing by any Obligor of any application
for the registration of any patent, trademark or copyright with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency, and the Obligors shall execute and deliver any and all
agreements and other documents as the Agent may request to evidence the Agent’s
Lien on such patent, trademark or copyright, and the General Intangibles of such
Obligor relating thereto or represented thereby.

(c) The Obligors shall take all commercially reasonable actions necessary or
requested by the Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the patents,
trademarks and copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings, unless the Obligors
shall determine that such patent, trademark or copyright is not material to the
conduct of their business.

8.31 Limitation on Liens on Collateral. The Obligors will not create, permit or
suffer to exist, and will defend the Collateral against, and take such other
action as is necessary to remove, any Lien on the Collateral except Permitted
Liens and other Liens permitted under Section 8.18, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Obligors’
rights under the Collateral against the claims and demands of all Persons
whomsoever.

 

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8.32 New Material Subsidiaries and Foreign Subsidiaries.

(a) With respect to any new Material Subsidiary (other than any Foreign
Subsidiary) created or acquired after the Closing Date by any Obligor or any of
its domestic Subsidiaries, promptly (and in any event within sixty (60) Business
Days of the creation or acquisition of such Material Subsidiary): (i) execute
and deliver to the Agent such supplements or amendments to this Agreement or the
other Loan Documents as Agent in good faith deems necessary or advisable to
grant to the Agent, for the benefit of the Secured Parties, a perfected first
priority Lien in the equity interests of such new Material Subsidiary that is
owned by such Obligor or any of its domestic Subsidiaries, (ii) deliver to the
Agent any certificates representing such equity interests, together with an
undated stock or other applicable transfer powers, executed in blank and
delivered by a duly authorized officer of such Obligor or any such domestic
Subsidiary, (iii) cause such new Material Subsidiary to (A) become a Borrower
(or, if the Agent requires, a Guarantor) under this Agreement, (b) take such
actions as the Agent in good faith deems are necessary or appropriate to grant
to the Agent, for the benefit of the Secured Parties, a perfected first priority
Lien in the Collateral in which such new Material Subsidiary has an interest,
including the filing of UCC financing statements is such jurisdictions as may be
deemed necessary or appropriate by the Agent and (C) deliver to the Agent a
perfection certificate of such new Material Subsidiary in form and substance
reasonably satisfactory to the Agent, duly executed on behalf of such Material
Subsidiary and (iv) if requested by the Agent, deliver to the Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance substantially similar to the legal opinions delivered
pursuant to Section 9.1(e) and otherwise in form and substance, and from
counsel, reasonably satisfactory to the Agent.

(b) With respect to any new first-tier Foreign Subsidiary that constitutes a
Material Subsidiary created or acquired after the Closing Date by any Obligor or
any of its Subsidiaries, promptly (and in any event within sixty (60) Business
Days) after the creation or acquisition of such Foreign Subsidiary: (i) execute
and deliver to the Agent such supplements or amendments to this Agreement and
the other Loan Documents as the Agent in good faith deems necessary or
appropriate to grant to the Agent, for the benefit of the Secured Parties, a
perfected first priority Lien in the equity interests of such new Subsidiary
that is owned by any such Obligor (provided, that in each case such pledge shall
be limited to 66% of the outstanding voting equity interests of any Foreign
Subsidiary), and (ii) deliver to the Agent any certificates representing such
equity interests, together with undated stock or other applicable transfer
powers, executed in blank and delivered by a duly authorized officer of such
Obligor and take such other action as the Agent in good faith deems necessary or
appropriate to perfect the Agent’s security interest therein.

8.33 Further Assurances. The Obligors shall execute and deliver, or cause to be
executed and delivered, to the Agent and/or the Lenders such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, request in good faith to carry out the terms
and conditions of this Agreement and the other Loan Documents.

ARTICLE 9

CONDITIONS OF LENDING

9.1 Conditions Precedent to Making of Loans on the Closing Date. The obligation
of the Lenders to make the initial Revolving Loans on the Closing Date, and the
obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter
of Credit on the Closing Date, are subject to the following conditions precedent
having been satisfied in a manner satisfactory to the Agent and each Lender:

(a) This Agreement and the other Loan Documents shall have been executed by each
party thereto and the Obligors shall have performed and complied with all
covenants, agreements and conditions contained herein and the other Loan
Documents which are required to be performed or complied with by the Obligors
before or on such Closing Date. Notes shall have been executed by Borrowers and
delivered to each Lender that requests issuance of a Note.

 

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(b) Upon making the Revolving Loans (including such Revolving Loans made to
finance any amounts due under the Fee Letter or otherwise as reimbursement for
fees, costs and expenses then payable under this Agreement or any other Loan
Document) and with all obligations of the Obligors current in accordance with
historical practices, Availability shall be at least $150,000,000.

(c) All representations and warranties made hereunder and in the other Loan
Documents shall be true and correct as if made on such date.

(d) No Default or Event of Default shall have occurred and be continuing after
giving effect to the Loans to be made and the Letters of Credit to be issued on
the Closing Date.

(e) The Agent and the Lenders shall have received such opinions of counsel for
the Obligors as the Agent or any Lender shall request, each such opinion to be
in a form, scope, and substance satisfactory to the Agent, the Lenders, and
their respective counsel.

(f) The Agent shall have received:

(i) proper financing statements in appropriate form for filing under the UCC of
all jurisdictions that the Agent may deem necessary or desirable in order to
perfect the Agent’s Liens; and

(ii) duly executed UCC-3 Termination Statements and such other instruments, or
duly executed payoff letters obligating the secured parties thereunder to
provide such UCC-3 Termination Statements and instruments, in form and substance
satisfactory to the Agent, as shall be necessary to terminate and satisfy all
Liens on the Property of the Obligors except Permitted Liens.

(g) The Obligors shall have paid all fees and expenses of the Agent and the
Lenders and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent invoiced with
reasonably requested supporting information.

(h) The Agent shall have received evidence, in form, scope, and substance
reasonably satisfactory to the Agent, of all insurance coverage as required by
this Agreement and a lender’s loss payable endorsement naming Agent as lender’s
loss payee, in form, scope and substance satisfactory to the Agent.

(i) The Agent, the Arranger and the Lenders shall have had an opportunity, if
they so choose, to examine the books of account and other records and files of
the Obligors and to make copies thereof, and to conduct a pre-closing audit
which shall include, without limitation, verification of Accounts and the
Borrowing Base, and the results of such examination and audit shall have been
satisfactory to the Agent and the Lenders in all respects.

(j) All proceedings taken in connection with the execution of this Agreement,
all other Loan Documents and all documents and papers relating thereto shall be
satisfactory in form, scope, and substance to the Agent and the Lenders.

(k) Since Mach 30, 2011, no event has occurred and is continuing which has had
or could have a Material Adverse Effect.

(l) No Default or Event of Default exists under the Existing Credit Agreement.

(m) Agent and each Lender shall have received final credit approval.

 

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(n) The absence of any action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
instrumentality that in the opinion of the Agent and Lead Arranger (i) could
reasonably be expected to have a Material Adverse Effect or (ii) could
reasonably be expected to materially and adversely affect the transactions
contemplated by this Agreement.

(o) Borrowers shall have obtained consents and approvals from all Governmental
Authorities and other third parties that are necessary or appropriate in
connection with this Agreement and the transactions contemplated by this
Agreement, including any consent needed under the Senior Convertible Notes
Indenture, if any.

(p) Each of the Obligors is Solvent.

(q) Without limiting the generality of the items described above, the Obligors
and each other Person guarantying or securing payment of the Obligations shall
have delivered or caused to be delivered to the Agent (in form and substance
reasonably satisfactory to the Agent) the financial statements, instruments,
resolutions, documents, agreements, certificates, opinions and other items set
forth on the “Closing Checklist” delivered by the Agent (or its counsel) to PSS
(or its counsel) prior to the Closing Date.

The acceptance by any Borrower of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Obligors to the effect that all of the conditions precedent to the making of
such Loans or the issuance of such Letters of Credit have been satisfied, with
the same effect as delivery to the Agent and the Lenders of a certificate signed
by a Responsible Officer, dated the Closing Date, to such effect.

Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (x) all conditions
precedent in this Section 9.1 have been fulfilled to the satisfaction of such
Lender, (y) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 9.1, and (z) all documents sent to
such Lender for approval consent, or satisfaction were acceptable to such
Lender.

9.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make
each Loan, including the initial and all subsequent Revolving Loans, and the
obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter
of Credit, shall be subject to the further conditions precedent that on and as
of the date of any such extension of credit:

(a) The following statements shall be true, and the acceptance by any Obligor of
any extension of credit shall be deemed to be a statement to the effect set
forth in clauses (i), (ii), (iii) and (iv) with the same effect as the delivery
to the Agent and the Lenders of a certificate signed by a Responsible Officer,
dated the date of such extension of credit, stating that:

(i) The representations and warranties contained in this Agreement and the other
Loan Documents are correct in all material respects on and as of the date of
such extension of credit as though made on and as of such date, other than any
such representation or warranty which relates to a specified prior date and
except to the extent the Agent and the Lenders have been notified in writing by
the Obligors that any representation or warranty is not correct and the Required
Lenders have explicitly waived in writing compliance with such representation or
warranty;

 

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(ii) No Default or Event of Default has occurred and is continuing or would
result from such extension of credit;

(iii) No event has occurred and is continuing, or would result from such
extension of credit, which has had or would have a Material Adverse Effect; and

(iv) Each of the Obligors is Solvent.

(b) No such Borrowing shall exceed Availability; provided, however, that the
foregoing conditions precedent are not conditions to each Lender participating
in or reimbursing the Bank or the Agent for such Lenders’ Pro Rata Share of any
Swingline Loan or Agent Advance made in accordance with the provisions of
Sections 1.2(h) and (i).

ARTICLE 10

DEFAULT; REMEDIES

10.1 Events of Default. It shall constitute an event of default
(“Event of Default”) if any one or more of the following shall occur for any
reason:

(a) any failure by any Obligor to pay the principal of or interest or premium on
any of the Obligations or any fee or other amount owing hereunder or under any
of the Obligations when due, whether upon demand or otherwise and, in the case
of interest, such amount is not paid within three (3) Business Days of the due
date thereof;

(b) any representation or warranty made or deemed made by any Obligor or any
Subsidiary in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by any Obligor or any
Subsidiary at any time to the Agent or any Lender shall prove to be untrue in
any material respect as of the date on which made, deemed made, or furnished;

(c) (i) any default shall occur in the observance or performance of any of the
covenants and agreements contained in Sections 5.3, 8.2, 8.5, 8.9 through 8.32
of this Agreement; (ii) any default shall occur in the observance or performance
of any of the covenants and agreements contained in Sections 6.2 or 6.3 and such
default shall continue for five (5) Business Days or more (or, in the event of
the occurrence of any default in the observance or performance of the covenant
and agreement contained in Section 6.2(l) at a time when, pursuant to such
section, the Borrowing Base Certificates are being delivered weekly, such
default shall continue for two (2) days or more); or (iii) any default shall
occur in the observance or performance of any of the other covenants or
agreements contained in any other Section of this Agreement or any other Loan
Document, and such default shall continue for thirty (30) days or more;

(d) any default shall occur with respect to any Debt (other than the Obligations
but including, without limitation, the Debt under the Senior Convertible Notes)
of any Obligor or any Subsidiary in an outstanding principal amount which
exceeds $10,000,000, or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed by any
Obligor or any Subsidiary, and such default shall continue for more than the
period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate,
or to permit the holders of any such Debt to accelerate, the maturity of any
such Debt; or any such Debt shall be declared due and payable or be required to
be prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof; provided, however, in the case of Debt consisting
solely of obligations of an Obligor under a non-compete agreement, if such
Obligor defaults in the payment of such obligations in response to the
counter-party’s violation of its non-compete agreement, such default shall not
constitute an Event of Default under this clause (d) so long as such Obligor is
contesting in good faith any action or claim brought by such counter-party as a
result of such default;

 

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(e) any Obligor or any of its Material Subsidiaries shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency act or law, state
or federal, now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;

(f) an involuntary petition shall be filed or an action or proceeding otherwise
commenced seeking reorganization, arrangement, consolidation or readjustment of
the debts of any Obligor or any Material Subsidiary or for any other relief
under the federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, and such
petition or proceeding shall not be dismissed within sixty (60) days after the
filing or commencement thereof or an order of relief shall be entered with
respect thereto;

(g) a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee
or similar officer for any Obligor or any Material Subsidiary or for all or any
part of its property shall be appointed or a warrant of attachment, execution or
similar process shall be issued against any part of the property of any Obligor
or any of its Subsidiary;

(h) any Obligor or any Material Subsidiary shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof, except as permitted under Sections 8.9(j) or 8.10,
unless the assets of such Obligor are distributed to another Obligor;

(i) all or any material part of the property of the Obligors having a value in
excess of $10,000,000, taken as a whole, shall be nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or control of such
property or of any such Obligor shall be assumed by any Governmental Authority
or any court of competent jurisdiction at the instance of any Governmental
Authority, except where contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect;

(j) any Loan Document shall be terminated, revoked or declared void or invalid
or unenforceable or challenged by any Obligor;

(k) one or more judgments, orders, decrees or arbitration awards is entered
against any Obligor or any Subsidiary involving in the aggregate liability as to
any single or related or unrelated series of transactions, incidents or
conditions, of $10,000,000 or more (to the extent not paid or fully covered by
insurance provided by a carrier that has acknowledged coverage and has the
ability to perform), and the same shall remain unsatisfied, unvacated, unbonded
and unstayed pending appeal for a period of thirty (30) days (or such longer
period expressly contemplated by the terms thereof during which a stay against
enforcement is in effect) after the entry thereof;

(l) any loss, theft, damage or destruction of any item or items of Collateral or
other property of any Obligor or any Subsidiary occurs which could reasonably be
expected to cause a Material Adverse Effect and is not adequately covered by
insurance;

 

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(m) there is filed against any Obligor or any Subsidiary any action, suit or
proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit
or proceeding (i) is not dismissed within one hundred twenty (120) days, and
(ii) could reasonably be expected to result in the confiscation or forfeiture of
any material portion of the Collateral;

(n) for any reason other than the failure of the Agent to take any action
available to it to maintain perfection of the Agent’s Liens pursuant to the Loan
Documents, any Loan Document ceases to be in full force and effect or any Lien
of the Agent with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated, revoked or declared
void;

(o) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer
Plan which has resulted or could reasonably be expected to result in liability
of any Obligor or any Subsidiary under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an aggregate amount in excess of $10,000,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $10,000,000; or (iii) any Obligor or any Subsidiary or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $10,000,000; or

(p) there occurs a Change of Control.

10.2 Remedies.

(a) If a Default or an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Required Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on any Borrower or other Obligor: (i) reduce the Maximum Revolver Amount,
or the advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Borrowing Base, or reduce one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make
Loans; and (iii) restrict or refuse to provide Letters of Credit. If an Event of
Default exists, the Agent shall, at the direction of the Required Lenders, do
one or more of the following, in addition to the actions described in the
preceding sentence, at any time or times and in any order, without notice to or
demand on any Borrower or other Obligor: (A) terminate the Commitments and this
Agreement; (B) declare any or all Obligations to be immediately due and payable;
provided, however, that upon the occurrence of any Event of Default described in
Sections 10.1(e), 10.1(f), 10.1(g), or 10.1(h), the Commitments shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind;
(C) require the Borrowers to cash collateralize, or provide Supporting Letters
of Credit for, all outstanding Letter of Credit Obligations; and (D) pursue its
other rights and remedies under the Loan Documents and applicable law.

(b) If an Event of Default has occurred and is continuing, the Agent shall have,
for the benefit of the Secured Parties, in addition to all other rights of the
Agent and the Secured Parties, the rights and remedies of a secured party under
the Loan Documents and the UCC (except any consent of an Obligor under
Section 9-620 of the UCC must be in writing and may not be deemed given by
failure to respond to any notice given by any secured party thereunder) and
otherwise at law or in equity. If an Event of Default has occurred and is
continuing, the Agent may, at any time, take possession of the Collateral and
keep it on any Obligor’s premises, at no cost to the Agent or any Lender, or
remove any part of it to such other place or places as the Agent may desire, or
the Obligors shall, upon the Agent’s demand, at the Obligors’ cost, assemble the
Collateral and make it available to the Agent at a place reasonably convenient
to the

 

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Agent. Without limiting the generality of the foregoing, each Obligor expressly
agrees that in any such event the Agent, without demand of performance or other
advertisement or notice of any kind (except the notice below of time and place
of public or private sale) to or upon any Obligor or any other Person (all and
each of which demands, advertisements and notices are hereby expressly waived to
the maximum extent permitted by the UCC and other law), may forthwith enter upon
the premises of any Obligor where any Collateral is located through self help,
without judicial process, without first obtaining a final judgment or giving any
Obligor or any other Person notice and opportunity for a hearing on the Agent’s
claim or action and may collect, receive, assemble, process, appropriate and
realize upon the Collateral, or any part thereof, and may forthwith sell, lease,
assign, give an option or options to purchase, or dispose of and said Collateral
(or contract to do so), or any part thereof, in one or more parcels at a public
or private sale or sales, at any exchange at such prices and upon such terms as
it may deem acceptable in its sole discretion, for cash or on credit or for
future delivery without assumption of any credit risk and may, if the Agent
deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring notice
(unless the UCC expressly requires a longer notice period) to be given in the
following manner, each Obligor agrees that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to
such Obligor if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least five (5) Business Days prior to such action to the address for notices
to the Obligors specified in or pursuant to Section 15.8. The Agent or any
Secured Party shall have the right upon any such public sale or sales and, to
the extent permitted by law, upon any such private sale or sales, to purchase
for the benefit of the Agent and the Secured Parties, the whole or any part of
said Collateral so sold, free of any right or equity of redemption, which equity
of redemption each Obligor hereby releases. The Agent shall have the right to
conduct such sales on any Obligor’s premises or elsewhere and shall have the
right to use any Obligor’s premises without charge for such time or times as the
Agent deems necessary or advisable. If any Collateral is sold on terms other
than payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Secured Parties receive payment, and if the
buyer defaults in payment, the Agent may resell the Collateral without further
notice to any Obligor. In the event the Agent seeks to take possession of all or
any portion of the Collateral by judicial process, each Obligor irrevocably
waives: (A) the posting of any bond, surety or security with respect thereto
which might otherwise be required; (B) any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. Each Obligor agrees that the Agent has no
obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person. The Agent is hereby granted a license or other right
to use, without charge, each Obligor’s labels, patents, copyrights, name, trade
secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and each Obligor’s rights under all licenses and all franchise agreements shall
inure to the Agent’s benefit for such purpose. The proceeds of sale shall be
applied first to all expenses of sale, including attorneys’ fees, and then to
the Obligations. The Agent will return any excess to the Borrowers’ Agent and
the Obligors shall remain liable for any deficiency. Nothing herein waives any
rights of the Borrowers or any Obligor which cannot be waived under the UCC.
Until the Agent is to effect a sale, lease, or other disposition of Collateral,
the Agent shall have the right to hold or use Collateral, or any part thereof,
to the extent that it deems appropriate for the purpose of preserving Collateral
or its value or for any other deemed appropriate by the Agent. The Agent shall
have no obligation to any Obligor to maintain or preserve the rights of any
Obligor as against third parties with respect to any Collateral in the
possession of the Agent. The Agent may, if it so elects, seek the appointment of
a receiver or keeper to take possession of Collateral and to enforce any of the
Agent’s remedies (for the benefit of the Agent and the Lenders), with respect to
such appointment without prior notice or hearing as to such appointment. The
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in this
Agreement, and only after so paying over such net proceeds, and after the
payment by the Agent of any other amount required by any provision of law, need
the Agent account for the surplus, if any, to the Obligors. To the maximum
extent permitted by applicable law, each Obligor waives all claims, damages, and
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Secured Party arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the gross or willful misconduct of
the Agent or such Lender as finally determined by a court of competent
jurisdiction. Each Obligor agrees that ten (10) days prior notice by the Agent
of the time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters. The Obligors
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Obligations, including
any attorneys’ fees or other expenses incurred by the Agent or any Lender to
collect such deficiency.

(c) Except as otherwise specifically provided herein, each Obligor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Agreement or any Collateral.
Notwithstanding any provision in this to the contrary, the Agent waives any
right to compel any Obligor to accept or be deemed to have accepted any proposal
to accept Collateral in satisfaction of all or part of the Obligations under
Section 9-620(c)(2)(A)-(C) of the UCC.

(d) EACH OBLIGOR HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ALL
RIGHTS WHICH IT HAS UNDER CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA
OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL
HEARING PRIOR TO THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE AGENT OR ANY
SECURED PARTY OR THE SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH TO POSSESSION
OF THE COLLATERAL UPON AN EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING AND WITHOUT ANY OTHER RIGHT WHICH THE AGENT OR THE SECURED PARTIES
MAY HAVE, EACH OBLIGOR CONSENTS THAT IF THE AGENT OR ANY LENDER FILES A PETITION
FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 44-14-261 AND
44-14-262 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND
ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE
WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN
IMMEDIATE WRIT OF POSSESSION ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY PROVISION OF APPLICABLE LAW,
WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE REQUIRED BY SECTION
44-14-263 OF THE OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR PROVISION UNDER
APPLICABLE LAW.

ARTICLE 11

TERM AND TERMINATION

11.1 Term and Termination. The term of this Agreement shall end on the Stated
Termination Date unless sooner terminated in accordance with the terms hereof.
The Agent, upon direction from the Required Lenders, may terminate this
Agreement without notice upon the occurrence of an Event of Default. Upon the
effective date of termination of this Agreement for any reason whatsoever, all
Obligations (including all unpaid principal, accrued and unpaid interest and any
early termination or prepayment fees or penalties) shall become immediately due
and payable and the Borrowers shall immediately arrange for the cancellation and
return of Letters of Credit then outstanding. Notwithstanding the termination of
this Agreement, until Full Payment of all Obligations and the Agent receives a
written agreement satisfactory to the Agent, executed by Borrowers and any
Person whose advances are used in whole or part to satisfy the Obligations,
indemnifying Secured Parties from any damages the Agent may incur as a result of
the dishonor or return of any payment applied to the Obligations, the Obligors
shall remain bound by the terms of this Agreement and shall not be relieved of
any of their Obligations hereunder or under any other Loan Document, and the
Agent and the Lenders shall retain all their rights and remedies hereunder
(including the Agent’s Liens in and all rights and remedies with respect to all
then existing and after-arising Collateral).

 

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ARTICLE 12

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

12.1 Amendments and Waivers.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by any Obligor therefrom,
shall be effective unless the same shall be in writing and signed by the
Required Lenders (or by the Agent at the written request of the Required
Lenders) and the Obligors and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that

(i) no such waiver, amendment, or consent shall, unless in writing and signed by
all the Lenders affected thereby (including a Defaulting Lender) and the
Obligors and acknowledged by the Agent (A) increase or extend the Commitment of
any Lender; (B) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document
(except as provided in Section 1.2(k)(iii))(it being understood, however that
amendments to the definition of “Dominion Trigger Period” and Sections 3.1(c)
and (d) shall not require unanimous consent); (C) reduce the principal of, or
the rate or amount of interest specified herein on any Loan, or any fees or
other amounts payable hereunder or under any other Loan Document; (D) amend this
Section 12.1(a)(i);

(ii) no such waiver, amendment or consent shall, unless in writing and signed by
all the Lenders affected thereby (except any Defaulting Lender) and the Obligors
and acknowledged by the Agent (A) amend the definition of Borrowing Base,
increase any of the percentages set forth in the definition of the Borrowing
Base or amend any defined term used in the definition of Borrowing Base
(provided that the foregoing shall not limit the discretion of the Agent to
change, establish or eliminate any Reserves (other than the Senior Convertible
Notes Reserve and the Letter of Credit Reserve) with respect to the Borrowing
Base even if such change or elimination results in an increase in the amount of
credit available to the Borrowers under this Agreement); (B) release any
Guaranties of the Obligations or release Collateral other than as permitted by
Section 13.11; (C) except as permitted pursuant to this Agreement, release any
Borrower from this Agreement; (D) subordinate any of the Agent’s Liens upon any
Collateral to the Liens of any other Person or subordinate any of the
Obligations to any other Debt; (E) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action under this Section 12(a); (F) alter or
amend Article 5, Section 3.6 or the definition of Pro Rata Share, this
Section 12.1 or any provision of this Agreement providing for consent or other
action by all Lenders; (G) change the definition of “Required Lenders”; or
(H) increase the Maximum Revolver Amount (other than as set forth in
Section 1.2(j));

provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (i) and (ii) above and any other terms of this
Agreement, make Overadvances in accordance with Section 1.2(h) or Agent Advances
in accordance with Section 1.2(i); provided further, that no amendment, waiver
or consent shall, unless in writing and signed by the Agent, affect the rights
or duties of the Agent under this Agreement or any other Loan Document; provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Letter of Credit Issuer, affect the rights or duties of the Letter
of Credit Issuer under this Agreement or any other Loan Document; provided
further, that Schedule 1.1 hereto (Commitments) may be amended from time to time
by the Agent alone to reflect assignments of Commitments in accordance herewith;
and provided further, that any Loan Document relating to Bank Products may be
amended by the applicable Obligor and the Bank (or any Affiliate of the Bank)
without the consent or approval of any other Lender; provided further, that no
amendment, waiver or consent shall, unless in writing and signed by the Secured
Bank Product Provider, affect the relative payment priority under Section 3.6.

 

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(b) If any fees are paid to the Lenders as consideration for amendments, waivers
or consents with respect to this Agreement, at Agent’s election, such fees may
be paid only to those Lenders that agree to such amendments, waivers or consents
within the time specified for submission thereof.

(c) If, in connection with any proposed amendment, waiver or consent (a
“Proposed Change”) requiring the consent of all Lenders, the consent of Required
Lenders is obtained, but the consent of other Lenders is not obtained (any such
Lender whose consent is not obtained as described in this clause (c) being
referred to as a “Non-Consenting Lender”) or there are Defaulting Lenders, then,
so long as the Agent is not a Non-Consenting Lender or a Defaulting Lender, as
applicable, at the Borrowers’ request, the Agent or an Eligible Assignee shall
have the right (but not the obligation) with the Agent’s approval, to purchase
from the Non-Consenting Lenders or the Defaulting Lenders, as applicable, and
the Non-Consenting Lenders and the Defaulting Lenders agree that they shall
sell, all the Non-Consenting Lenders’ Commitments or the Defaulting Lenders’
Commitments, as applicable, for an amount equal to the principal balances
thereof and all accrued interest and fees with respect thereto through the date
of sale pursuant to Assignment and Acceptance Agreement(s), without premium or
discount.

12.2 Assignments; Participations.

(a) Any Lender may, with the written consent of the Agent (which consent shall
not be unreasonably withheld), the Letter of Credit Issuer (which consent shall
not be unreasonably withheld), and, if no Default or Event of Default exists,
with the written consent of the Borrowers’ Agent (which consent shall not be
unreasonably withheld), assign and delegate to one or more Eligible Assignees
(provided that no consent of the Borrowers’ Agent shall be required in
connection with any assignment and delegation by a Lender to another Lender, to
an Affiliate of such Lender) (each an “Assignee”) all, or any ratable part of
all, of the Loans, the Commitments and the other rights and obligations of such
Lender hereunder, in a minimum amount of $5,000,000 (provided that, unless an
assignor Lender has assigned and delegated all of its Loans and Commitments, no
such assignment and/or delegation shall be permitted unless, after giving effect
thereto, such assignor Lender retains a Commitment in a minimum amount of
$5,000,000); provided, however, that the Obligors and the Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrowers’ Agent and the Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered
to the Borrowers’ Agent and the Agent an Assignment and Acceptance in the form
of Exhibit D (“Assignment and Acceptance”), and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $3,500. Any
assignment in violation of this Section 12.2 shall be null and void.

(b) From and after the date that the Agent notifies the assignor Lender that it
has received an executed Assignment and Acceptance (including the consent of the
Borrowers’ Agent, if required) and payment of the above-referenced processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations, including, but not limited to, the obligation to
participate in Letters of Credit have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender

 

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makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto or the attachment, perfection, or priority of any Lien
granted by any Obligor to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Obligor or the
performance or observance by any Obligor of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) 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; (v) 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, including the
discretionary rights and incidental power, as are reasonably incidental thereto;
and (vi) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

(d) Immediately upon satisfaction of the requirements of Section 12.2(a), this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons not Affiliates of the Borrowers (a “Participant”)
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the “originating Lender”) hereunder and under
the other Loan Documents; provided, however, that (i) the originating Lender’s
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Obligors and the Agent shall continue to deal solely and directly with
the originating Lender in connection with the originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document except the matters
set forth in Section 12.1(a)(i) and (a)(ii)(B) and all amounts payable by the
Obligors hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. Any Participant exercising such right of set-off shall give prompt
written notice thereof to the Borrowers’ Agent after such set-off.

(f) No assignment or participation may be made to an Obligor, Affiliate of an
Obligor, Defaulting Lender or natural person. In connection with any assignment
by a Defaulting Lender, such assignment shall be effective only upon payment by
the Eligible Assignee or Defaulting Lender to Agent of an aggregate amount
sufficient, upon distribution (through direct payment, purchases of
participations or other compensating actions as Agent deems appropriate), (a) to
satisfy all funding and payment liabilities then owing by the Defaulting Lender
hereunder, and (b) to acquire its Pro Rata Share of all Loans and Letter of
Credit Obligations. If an assignment by a Defaulting Lender shall become
effective under Applicable Law for any reason without compliance with the
foregoing sentence, then the assignee shall be deemed a Defaulting Lender for
all purposes until such compliance occurs.

 

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(g) Notwithstanding any other provision in this Agreement, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
§203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

ARTICLE 13

THE AGENT

13.1 Appointment and Authorization. Each Lender hereby designates and appoints
Bank as its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 13. The provisions of this
Article 13 are solely for the benefit of the Agent and the Lenders and no
Obligor shall have any rights as a third party beneficiary of any of the
provisions contained herein, except with respect to the provisions of Sections
13.9, 13.10 and 13.11 to the extent such Sections provide rights or benefits to
the Obligors. Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 1.2(i), and (c) the exercise of remedies pursuant to Section 10.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.

13.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

13.3 Liability of the Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Obligor or any Subsidiary or
Affiliate of any Obligor, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Obligor or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person

 

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shall be under any obligation to any Secured Party to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Obligor or any Subsidiary or Affiliate of
any Obligor.

13.4 Reliance by the Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, email or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Obligors), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 12.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

13.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default (other than an Event
of Default arising out of the Borrowers’ failure to pay principal, interest or
fees hereunder in a timely manner), unless the Agent shall have received written
notice from a Lender or an Obligor referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default.” The Agent will notify the Lenders of its receipt of any such notice.
The Agent shall take such action with respect to such Default or Event of
Default as may be requested by the Required Lenders in accordance with Article
10; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.

13.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of the Obligors and
their Affiliates, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Obligors and
their Affiliates, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Obligors. Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Obligors. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Obligors
which may come into the possession of any of the Agent-Related Persons.

 

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13.7 Indemnification. EACH LENDER AND EACH SECURED BANK PRODUCT PROVIDER SHALL
INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES AND LETTER OF CREDIT ISSUER
INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS,
AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH
INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR
ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF AGENT); provided,
however, that no Lender shall be liable for the payment to the Agent Indemnitees
or Letter of Credit Issuer Indemnitees of any portion of such Claims resulting
solely from such Person’s gross negligence or willful misconduct. In Agent’s
discretion, it may reserve for any Claims made against an Agent Indemnitee or
Letter of Credit Issuer Indemnitee. If Agent is sued by any receiver, bankruptcy
trustee, debtor-in-possession or other Person for any alleged preference or
fraudulent transfer, then any monies paid by Agent in settlement or satisfaction
of such proceeding, together with all interest, costs and expenses (including
attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed
to Agent by each Lender to the extent of its Pro Rata Share. Without limitation
of the foregoing, each Lender shall reimburse the Agent upon demand for its Pro
Rata Share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Obligors. The
undertaking in this Section 13.7 shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent. Nothing in this
Section 13.7 shall be construed to in any way limit the obligations of the
Obligors pursuant to Section 15.7.

13.8 Agent in Individual Capacity. The Bank and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any Obligors and their
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that the
Bank or its Affiliates may receive information regarding any Obligor, its
Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of such Obligor or such Subsidiary), and
the Lenders acknowledge that the Agent and the Bank shall be under no obligation
to provide such information to them. With respect to its Loans, the Bank shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms “Lender” and
“Lenders” include the Bank in its individual capacity.

13.9 Successor Agent. The Agent may resign as Agent upon at least 30 days’ prior
notice to the Lenders and the Borrowers’ Agent, such resignation to be effective
upon the acceptance of a successor agent to its appointment as Agent. In the
event the Bank sells all of its Commitment and Loans as part of a sale, transfer
or other disposition by the Bank of substantially all of its loan portfolio, the
Bank shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. Subject to the foregoing, if the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrowers’ Agent, a successor agent from
among the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term “Agent” shall mean such successor
agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article 13 shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

 

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13.10 Withholding Tax.

(a) If any Lender is a “foreign corporation, partnership or trust” within the
meaning of the Code and such Lender is eligible to claim exemption from, or a
reduction of, the U.S. withholding tax imposed by Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent:

(i) if such Lender is eligible to claim an exemption from, or a reduction of,
withholding tax under a United States of America tax treaty, properly completed
IRS Form W-8BEN before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;

(ii) if such Lender is eligible to claim that interest paid under this Agreement
is exempt from United States of America withholding tax because it is
effectively connected with a United States of America trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI before the
payment of any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and

(iii) such other form or forms as may be required under the Code or other laws
of the United States of America as a condition to exemption from, or reduction
of, United States of America withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

(b) If any Lender claims exemption from, or reduction of, withholding tax under
a United States of America tax treaty by providing IRS Form FW-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations owing to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrowers to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender’s IRS Form W-8BEN as no longer valid.

(c) If any Lender claiming exemption from United States of America withholding
tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing to
such Lender, such Lender agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.

(d) If any Lender is entitled to a reduction in the applicable withholding tax,
the Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax and the
Borrowers shall be under no obligation under Section 4.1(a), Section 4.1(c)(i)
or otherwise to increase the amount of any payment to such Lender or to
indemnify such Lender in respect of the withholding taxes to the extent that
such withholding taxes would have been avoided had such Lender supplied such
documentation.

 

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(e) If the IRS or any other Governmental Authority of the United States of
America or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason), such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.

13.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize the Agent, at its option and in its
sole discretion (unless otherwise provided below), to release any Agent’s Liens
upon any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrowers of all Loans and Letter of Credit
Obligations, and the termination of all outstanding Letters of Credit (whether
or not any of such obligations are due) and all other Obligations;
(ii) constituting property being sold or disposed of if the Borrowers’ Agent
certifies to the Agent that the sale or disposition is made in compliance with
Section 8.9 (and the Agent may rely conclusively on any such certificate,
without further inquiry) and to the extent that such sale or disposition is
permitted under Section 8.9, Agent shall release its Lien; (iii) constituting
property in which the Obligors owned no interest at the time the Lien was
granted or at any time thereafter; or (iv) constituting property leased to an
Obligor under a lease which has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not
release any of the Agent’s Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the Agent’s
Liens on any Subsidiary being sold (whether through a stock or asset sale), and
on Collateral valued in the aggregate not in excess of $10,000,000 during each
Fiscal Year. Upon request by the Agent or the Borrowers’ Agent at any time, the
Lenders will confirm in writing the Agent’s authority to release any Agent’s
Liens upon particular types or items of Collateral pursuant to this
Section 13.11.

(b) Upon receipt by the Agent of any authorization required pursuant to
Section 13.11(a) from the Lenders of the Agent’s authority to release the
Agent’s Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days prior written request by the Borrowers’ Agent, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent’s Liens upon
such Collateral (including amendments or terminations of UCC financing
statements, if any, the return of stock certificates, if any, and the release of
any Subsidiary being released in its entirety from its obligations, if any,
under the Loan Documents); provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent’s opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of any Obligor in respect of) all interests retained by the
applicable Obligor, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.

(c) The Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by any Obligor or is cared for,
protected or insured or has been encumbered, or that the Agent’s Liens have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any

 

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manner it may deem appropriate, in its sole discretion, given the Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.

13.12 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express consent of
all Lenders, and that it shall, to the extent it is lawfully entitled to do so,
upon the request of all Lenders, set off against the Obligations, any amounts
owing by such Lender to any Obligor or any accounts of any Obligor now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or cause
to be taken any action to enforce its rights under this Agreement or against any
Obligor, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral.

(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of any Obligor to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender’s ratable portion of all such distributions by the Agent, such Lender
shall promptly (A) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (B) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment. Notwithstanding the
foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn the same over to the Agent in kind, and
with such endorsements as may be required to negotiate the same to the Agent, or
in same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement and it shall provide a written statement to the Agent describing
the Obligations affected by such payment or reduction.

13.13 Agency for Perfection. Each Lender hereby appoints each other Lender as
agent for the purpose of perfecting the Lenders’ security interest in assets
which, in accordance with Article 9 of the UCC 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 in
accordance with the Agent’s instructions.

13.14 Payments by the Agent to the Lenders. All payments to be made by the Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from the Borrowers prior to the date on which
any payment is due to the Lenders that the Borrowers will not make such payment
in full as and when required, the Agent may assume that the Borrowers have made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be

 

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so required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrowers have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

13.15 Reserved.

13.16 Letters of Credit; Intra-Lender Issues.

(a) Notice of Letter of Credit Balance. On each Settlement Date the Agent shall
notify each Lender of the issuance of all Letters of Credit since the prior
Settlement Date.

(b) Participations in Letters of Credit.

(i) Purchase of Participations. Immediately upon issuance of any Letter of
Credit in accordance with Section 1.3(d), each Lender shall be deemed to have
irrevocably and unconditionally purchased and received without recourse or
warranty, an undivided interest and participation equal to such Lender’s Pro
Rata Share of the face amount of such Letter of Credit in connection with the
issuance of such Letter of Credit (including all obligations of the Obligors
with respect thereto, and any security therefor or guaranty pertaining thereto).

(ii) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a
payment from any Obligor on account of reimbursement obligations in respect of a
Letter of Credit as to which the Agent has previously received for the account
of the Letter of Credit Issuer thereof payment from a Lender, the Agent shall
promptly pay to such Lender such Lender’s Pro Rata Share of such payment from
such Obligor. Each such payment shall be made by the Agent on the next
Settlement Date.

(iii) Documentation. Upon the request of any Lender, the Agent shall furnish to
such Lender copies of any Letter of Credit, reimbursement agreements executed in
connection therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.

(iv) Obligations Irrevocable. The obligations of each Lender to make payments to
the Agent with respect to any Letter of Credit or with respect to their
participation therein or with respect to the Revolving Loans made as a result of
a drawing under a Letter of Credit and the obligations of the Obligor for whose
account the Letter of Credit was issued to make payments to the Agent, for the
account of the Lenders, shall be irrevocable and shall not be subject to any
qualification or exception whatsoever, including any of the following
circumstances:

(1) any lack of validity or enforceability of this Agreement or any of the other
Loan Documents;

(2) the existence of any claim, setoff, defense or other right which any Obligor
may have at any time against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), any Lender, the Agent, the issuer of such Letter of Credit, or
any other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between any Obligor or any other Person
and the beneficiary named in any Letter of Credit);

 

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(3) any draft, certificate or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

(4) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;

(5) the occurrence of any Default or Event of Default; or

(6) the failure of the Obligors to satisfy the applicable conditions precedent
set forth in Article 9.

(c) Recovery or Avoidance of Payments; Refund of Payments In Error. In the event
any payment by or on behalf of any Obligor received by the Agent with respect to
any Letter of Credit and distributed by the Agent to the Lenders on account of
their respective participations therein is thereafter set aside, avoided or
recovered from the Agent in connection with any receivership, liquidation or
bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the
Agent their respective Pro Rata Shares of such amount set aside, avoided or
recovered, together with interest at the rate required to be paid by the Agent
upon the amount required to be repaid by it. Unless the Agent receives notice
from the Borrowers prior to the date on which any payment is due to the Lenders
that the Borrowers will not make such payment in full as and when required, the
Agent may assume that the Borrowers have made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrowers have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

(d) Indemnification by Lenders. To the extent not reimbursed by the Obligors and
without limiting the obligations of the Obligors hereunder, the Lenders agree to
indemnify the Letter of Credit Issuer ratably in accordance with their
respective Pro Rata Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys’ fees) or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Letter of Credit Issuer in any
way relating to or arising out of any Letter of Credit or the transactions
contemplated thereby or any action taken or omitted by the Letter of Credit
Issuer under any Letter of Credit or any Loan Document in connection therewith;
provided that no Lender shall be liable for any of the foregoing to the extent
it arises from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees to
reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata
Share of any costs or expenses payable by the Obligors to the Letter of Credit
Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Obligors. The agreement contained
in this Section 13.16(d) shall survive payment in full of all other Obligations.

13.17 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into the other Loan Documents, for the
ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees
that any action taken by the Agent or the Required Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan Documents, and the
exercise by the Agent or the Required Lenders, as applicable, of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances,
Swingline Loans, Bank Products and all interest, fees and expenses hereunder
constitute one Debt, secured pari passu by all of the Collateral.

 

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13.18 Field Audit and Examination Reports; Disclaimer by Lenders. By signing
this Agreement, each Lender:

(a) is deemed to have requested that the Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
(each a “Report” and collectively, “Reports”) prepared by or on behalf of the
Agent;

(b) expressly agrees and acknowledges that neither the Bank nor the Agent
(i) makes any representation or warranty as to the accuracy of any Report, or
(ii) shall be liable for any information contained in any Report;

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agent or the Bank or other party performing any
audit or examination will inspect only specific information regarding the
Obligors and will rely significantly upon the Obligors’ books and records, as
well as on representations of the Obligors’ personnel;

(d) agrees to keep all Reports confidential and strictly for its internal use,
and not to distribute except to its participants, or use any Report in any other
manner; and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to the Borrowers, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
the Borrowers; and (ii) to pay and protect, and indemnify, defend and hold the
Agent and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.

13.19 Relation Among Lenders. The Lenders are not partners or co-venturers, and
no Lender shall be liable for the acts or omissions of, or (except as otherwise
set forth herein in case of the Agent) authorized to act for, any other Lender.

13.20 Remittance of Payments and Collections.

(a) Remittances Generally. All payments by any Lender to Agent shall be made by
the time and on the day set forth in this Agreement, in immediately available
funds. If no time for payment is specified or if payment is due on demand by
Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day,
payment shall be made by Lender not later than 2:00 p.m. on such day, and if
request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on
the next Business Day. Payment by Agent to any Secured Party shall be made by
wire transfer, in the type of funds received by Agent. Any such payment shall be
subject to Agent’s right of offset for any amounts due from such payee under the
Loan Documents.

(b) Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest from the due
date until paid at the rate determined by Agent as customary in the banking
industry for interbank compensation. In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent, nor shall any
Defaulting Lender be entitled to interest on any amounts held by Agent pursuant
to Section 1.2(k)(iii).

 

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(c) Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
each Lender that received it. If Agent determines at any time that an amount
received under any Loan Document must be returned to an Obligor or paid to any
other Person pursuant to Applicable Law or otherwise, then, notwithstanding any
other term of any Loan Document, Agent shall not be required to distribute such
amount to any Lender. If any amounts received and applied by Agent to any
Obligations are later required to be returned by Agent pursuant to Applicable
Law, each Lender shall pay to Agent, on demand, such Lender’s Pro Rata Share of
the amounts required to be returned.

13.21 Bank Product Providers. Each Secured Bank Product Provider, by delivery of
a notice in the form of Exhibit E to Agent of a Bank Product, agrees to be bound
by Section 3.6 and this Section 13.

ARTICLE 14

SUBSIDIARY GUARANTIES

14.1 Subsidiary Guaranties. Each of the Guarantors hereby unconditionally and
irrevocably, jointly and severally, guarantees the full payment and performance
by the Borrowers of all of the Obligations, whether now existing or hereafter
arising. Each Guarantor hereby unconditionally and irrevocably agrees that upon
default in the payment when due (whether at stated maturity, by acceleration or
otherwise) of any principal of, or interest on, any Loan or any other
Obligation, it will forthwith pay the same, without notice or demand.

14.2 Obligations Absolute. Each Guarantor agrees that the Obligations will be
paid strictly in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or any Lender with
respect thereto. All Obligations shall be conclusively presumed to have been
created in reliance hereon. The Guarantors’ obligations under this Agreement
shall be absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto; (b) any change in the time, manner or place of payments of, or
in any other term of, all or any part of the Obligations, or any other amendment
or waiver thereof or any consent to departure therefrom, including any increase
in the Obligations resulting from the extension of additional credit to any
Borrower or otherwise; (c) any taking, exchange, release or non-perfection of
any Collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Obligations; (d) any change,
restructuring or termination of the corporate structure or existence of any
Obligor; or (e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Obligor. The Guarantors’
obligations under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent or any
Lender upon the insolvency, bankruptcy or reorganization of any Obligor or
otherwise, all as though such payment had not been made. The Guarantors’
obligations under this Agreement may be deemed by the Agent to be an agreement
of guaranty or surety.

14.3 Waiver of Suretyship Defenses. Each Guarantor agrees that the joint and
several liability of the Guarantors provided for in Section 14.1 shall not be
impaired or affected by any modification, supplement, extension or amendment of
any contract or agreement to which any other Obligor may hereafter agree (other
than an agreement signed by the Agent and the Lenders specifically releasing
such liability), nor by any delay, extension of time, renewal, compromise or
other indulgence granted by the Agent or any Lender with respect to any of the
Obligations, nor by any other agreements or arrangements whatever with the other
Obligors

 

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or with anyone else, each Guarantor hereby waiving all notice of such delay,
extension, release, substitution, renewal, compromise or other indulgence, and
hereby consenting to be bound thereby as fully and effectually as if it had
expressly agreed thereto in advance. The liability of each Guarantor is direct
and unconditional as to all of the Obligations, and may be enforced without
requiring the Agent or any Lender first to resort to any other right, remedy or
security. Each Guarantor hereby expressly waives promptness, diligence, notice
of acceptance and any other notice (except to the extent expressly provided for
herein or in another Loan Document) with respect to any of the Obligations, this
Agreement or any other Loan Document and any requirement that the Agent or any
Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any Obligor or any other
Person or any Collateral, including any rights any Guarantor may otherwise have
under Official Code of Georgia Annotated Section 10-7-24 or any successor
statute or any analogous statute in any jurisdiction under the laws of which any
Guarantor is incorporated or in which any Guarantor conducts business.

14.4 Contribution and Indemnification. To the extent that any Guarantor shall
repay any of the Obligations (an “Accommodation Payment”), then, to the extent
that such Guarantor has not received the benefit of such repaid Obligations
(whether through an inter-company loan or otherwise), the Guarantor making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Obligors in an amount, for each of
such other Obligors, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Obligors’ “Allocable Amount” (as
defined below) and the denominator of which is the sum of the Allocable Amounts
of all of the Obligors. As of any date of determination, the “Allocable Amount”
of each Guarantor shall be equal to the maximum amount of liability for
Accommodation Payments which could be asserted against such Guarantor hereunder
without (a) rendering such Guarantor “insolvent” within the meaning of the
Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (the “UFTA”),
Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such
Guarantor with unreasonably small capital or assets, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 4 of the
UFCA, or (c) leaving such Guarantor unable to pay its debts as they become due
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA,
or Section 5 of the UFCA. All rights and claims of contribution, indemnification
and reimbursement under this Section 13.4 shall be subordinate in right of
payment to the prior payment in full of the Obligations.

14.5 Subordination of Intercompany Debt. Each of the Obligors hereby agrees that
(a) all Debt owing by any Obligor or any Subsidiary to any other Obligor or any
Subsidiary shall be subject and subordinate in all respects to the Obligations,
provided that, as long as no Event of Default exists, payments may be made on
such Debt to the extent expressly permitted hereunder, (b) it shall deliver, or
cause to be delivered, to the Agent the original of each promissory note
evidencing such Debt, properly endorsed over to the Agent, and (c) all such
promissory notes shall contain a legend in the form set forth below:

THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE IS SUBJECT AND SUBORDINATE TO
THE “OBLIGATIONS” AS DESCRIBED IN THAT CERTAIN SECOND AMENDED AND RESTATED
CREDIT AGREEMENT, DATED AS OF NOVEMBER 16, 2011, AMONG PSS WORLD MEDICAL, INC.
AND CERTAIN OF ITS SUBSIDIARIES, THE LENDERS FROM TIME TO TIME PARTY THERETO,
AND BANK OF AMERICA, N.A., AS AGENT, AS AMENDED, MODIFIED AND SUPPLEMENTED FROM
TIME TO TIME.

 

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ARTICLE 15

MISCELLANEOUS

15.1 No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any
Obligor and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by the Agent or
any Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent’s and each Lender’s rights
thereafter to require strict performance by the Obligors of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent’s and each
Lender’s rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.

15.2 Severability. The illegality or unenforceability of any provision of this
Agreement or any Loan Document or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

15.3 Governing Law; Choice of Forum; Service of Process.

(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO
ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF GEORGIA; PROVIDED THAT
THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA LOCATED IN THE NORTHERN DISTRICT OF GEORGIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE OBLIGORS, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE OBLIGORS, THE AGENT AND
THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OBLIGOR OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

(c) EACH OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
(RETURN RECEIPT REQUESTED) DIRECTED TO SUCH OBLIGOR

 

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AT THE BORROWERS’ AGENT’S ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE
BEEN SO DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. NOTHING CONTAINED HEREIN
SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY
OTHER MANNER PERMITTED BY LAW.

15.4 WAIVER OF JURY TRIAL. EACH OBLIGOR, THE LENDERS AND THE AGENT EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
OBLIGOR, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

15.5 Survival of Representations and Warranties. All of the Obligors’
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.

15.6 Other Security and Guaranties. The Agent may, without notice or demand and
without affecting the Obligors’ obligations hereunder, from time to time:
(a) take from any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Obligations and exchange, enforce or release
such collateral or any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and release or
substitute any such endorser or guarantor, or any Person who has given any Lien
in any other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of
the Obligations.

15.7 Fees and Expenses. The Borrowers agree to pay to the Agent, for its
benefit, on demand, all reasonable costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement or
any of the other Loan Documents, including: (a) Attorney Costs; (b) reasonable
costs and expenses (including attorneys’ and paralegals’ fees and disbursements)
for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien searches; (d) taxes, fees and other charges for
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent’s Liens (including reasonable costs and expenses
paid or incurred by the Agent in connection with the consummation of Agreement);
(e) sums paid or incurred to pay any amount or take any action required of any
Obligor under the Loan Documents that such Obligor fails to pay or take;
(f) costs of appraisals (including all Appraisals), inspections, and
verifications of the Collateral, including travel, lodging, and meals for
inspections of the Collateral and the Obligors’ operations by the Agent plus the
Agent’s then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $1,000 per day (or
portion thereof) for each Person retained or employed by the Agent with respect
to each field examination or audit) but, in each case,

 

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only to the extent provided for elsewhere in this Agreement; and (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Blocked Accounts and lock boxes, and
costs and expenses of preserving and protecting the Collateral. In addition, the
Borrowers agree to pay on demand to the Agent, for its benefit, all costs and
expenses incurred by the Agent (including Attorneys’ Costs), and to the other
Lenders, for their benefit, on demand, all reasonable fees, expenses and
disbursements incurred by such other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrowers. All of the foregoing costs and expenses shall be
charged to the Borrowers’ Loan Account as Revolving Loans as described in
Section 3.5.

15.8 Notices. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) five (5) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:

If to the Agent or to the Bank:

Bank of America, N.A.

300 Galleria Parkway, Suite 800

Atlanta, GA 30339

Attention: Business Credit-Account Manager

Telecopy No.: 404-607-3277

with copies to:

Parker, Hudson, Rainer & Dobbs LLP

285 Peachtree Center Avenue

1500 Marquis Two Tower

Atlanta, GA 30303

Attention: Bobbi Acord Noland

Telecopy No.: 678-533-7774

If to any Borrower or Guarantor:

PSS World Medical, Inc.

4345 Southpoint Boulevard

Jacksonville, FL 32216

Attention: David D. Klarner

Telecopy No.: 904-332-3214

 

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with copies to:

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309

Attention: Richard W. Grice

Telecopy No.: 404-881-7777

If to a Lender:

To the address of such Lender set forth on the signature page hereto or on the
Assignment and Acceptance for such Lender, as applicable

or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.

15.9 Waiver of Notices. Unless otherwise expressly provided herein, each Obligor
waives presentment, and notice of demand or dishonor and protest as to any
instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on any Obligor which the
Agent or any Lender may elect to give shall entitle any Obligor to any or
further notice or demand in the same, similar or other circumstances.

15.10 Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective representatives, successors, and assigns
of the parties hereto; provided, however, that no interest herein may be
assigned by any Obligor without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.

15.11 Indemnity of the Agent and the Lenders by the Borrowers. EACH BORROWER
SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE
INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ASSERTED BY ANY
OBLIGOR OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no
event shall any party to a Loan Document have any obligation thereunder to
indemnify or hold harmless an Indemnitee with respect to a Claim that is
determined in a final, non-appealable judgment by a court of competent
jurisdiction to result from the gross negligence or willful misconduct of such
Indemnitee. The agreements in this Section 15.11 shall survive payment of all
other Obligations and the termination of this Agreement.

15.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY OBLIGOR, ANY LENDER
OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF
ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH OBLIGOR AND

 

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EACH LENDER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR
SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.

15.13 Final Agreement. This Agreement and the other Loan Documents are intended
by the Obligors, the Agent and the Lenders to be the final, complete, and
exclusive expression of the agreement between them. This Agreement supersedes
any and all prior oral or written agreements relating to the subject matter
hereof (except for the Fee Letter). No modification, rescission, waiver,
release, or amendment of any provision of this Agreement or any other Loan
Document shall be made, except by a written agreement signed by the Obligors and
a duly authorized officer of each of the Agent and the requisite Lenders.

15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Obligor in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.

15.15 Captions. The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.

15.16 Right of Setoff. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Obligor, any such notice being waived by the
Obligors to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Obligor
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrowers’
Agent and the Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY OBLIGOR HELD OR MAINTAINED BY SUCH LENDER
WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

15.17 Confidentiality.

(a) Each Obligor hereby consents that the Agent and each Lender may issue and
disseminate to the public general information describing the credit
accommodations entered into pursuant to this Agreement, including the names and
addresses of the Obligors and a general description of the Obligors’ business
and may use each Obligor’s name in advertising and other promotional material.

(b) Each Lender severally agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as “confidential” or “secret” by any Obligor and provided to the Agent or such
Lender by or on behalf of any Obligor, under this Agreement or any other Loan
Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a nonconfidential
basis from a source other than an Obligor, provided that such source is not
bound by a confidentiality agreement with any Obligor known to the Agent or such
Lender; provided,

 

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however, that the Agent and any Lender may disclose such information (1) at the
request or pursuant to any requirement of any Governmental Authority to which
the Agent or such Lender is subject or in connection with an examination of the
Agent or such Lender by any such Governmental Authority; (2) pursuant to
subpoena or other court process; (3) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent’s or such Lender’s independent auditors, accountants,
attorneys and other professional advisors; (7) to any prospective Participant or
Assignee under any Assignment and Acceptance, actual or potential, provided that
such prospective Participant or Assignee agrees to keep such information
confidential to the same extent required of the Agent and the Lenders hereunder;
(8) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which any Obligor is party or is deemed party with
the Agent or such Lender, and (9) to its Affiliates. Notwithstanding anything
herein to the contrary, the information subject to this Section 15.17(b) shall
not include, and the Agent and each Lender may disclose without limitation of
any kind, any information with respect to the “tax treatment” and “tax
structure” (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are provided to the
Agent or such Lender relating to such tax treatment and tax structure; provided
that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transactions as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the Loans, Letters of Credit and transactions contemplated hereby.

15.18 Patriot Act Notice. Agent and Lenders hereby notify Borrowers that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Borrower,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding Borrowers’ management and owners,
such as legal name, address, social security number and date of birth.

15.19 Conflicts with Other Loan Documents. Unless otherwise expressly provided
in this Agreement (or in another Loan Document by specific reference to the
applicable provision contained in this Agreement), if any provision contained in
this Agreement conflicts with any provision of any other Loan Document, the
provision contained in this Agreement shall govern and control.

15.20 Interest Rate Disclosure. The LIBOR Rate for an Interest Period of one
month on the Closing Date is 0.2172% per annum and, therefore, the rate of
interest in effect hereunder on the date hereof, expressed in simple interest
terms (but on a 360-day basis), is 1.4672% per annum with respect to any portion
of the Loans bearing interest as a LIBOR Loan. The Prime Rate on the Closing
Date is 3.25% per annum and, therefore, the rate of interest in effect hereunder
on the date hereof, expressed in simple interest terms (but on a 365-day or
366-day basis), is 3.50% per annum with respect to any portion of the Loans
bearing interest as a Base Rate Loan.

15.21 No Novation. The amendment and restatement of the terms of the Existing
Credit Agreement, as more fully set forth in this Agreement, shall not
constitute a novation of any of the indebtedness outstanding under the Existing
Credit Agreement.

15.22 Amendment and Restatement.

(a) This Agreement and the other Loan Documents amend and restate the Existing
Agreements and the “Loan Documents” (as defined in the Existing Credit
Agreement). All rights,

 

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benefits, indebtedness, interests, liabilities and obligations of the parties to
the Existing Credit Agreement and the agreements, documents and instruments
executed and delivered in connection with the Existing Credit Agreement
(collectively, the “Existing Loan Documents”) are hereby renewed, amended,
restated and superseded in their entirety according to the terms and provisions
set forth herein and in the other Loan Documents (except to the extent otherwise
set forth in the Loan Documents). This Agreement does not constitute, nor shall
it result in, a waiver of or release, discharge or forgiveness of any amount
payable pursuant to the Existing Loan Documents or any indebtedness, liabilities
or obligations of the Obligors thereunder, all of which are renewed and
continued and are hereafter payable and to be performed in accordance with this
Agreement and the other Loan Documents (except to the extent otherwise set forth
in the Loan Documents). Neither this Agreement nor any other Loan Document
extinguishes any Loans, Letters of Credit or other indebtedness or liabilities
outstanding in connection with the Existing Loan Documents, nor do they
constitute a novation with respect thereto.

(b) All security interests, pledges, assignments and other Liens and Guaranties
previously granted by any Obligor pursuant to the Existing Loan Documents are
hereby renewed and continued (except to the extent otherwise set forth in the
Loan Documents), and all such security interests, pledges, assignments and other
Liens and guarantees shall remain in full force and effect as security for the
Obligations in the manner set forth in the Loan Documents.

(c) Amounts in respect of interest, fees and other amounts payable to or for the
account of the Agent, the Letter of Credit Issuers and the Lenders shall be
calculated (i) in accordance with the provisions of the Existing Credit
Agreement with respect to any period (or a portion of any period) ending prior
to the Closing Date, and (ii) in accordance with the provisions of this
Agreement with respect to any period (or a portion of any period) commencing on
or after the Closing Date.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the parties have entered into this Second Amended and
Restated Credit Agreement on the date first above written.

 

“BORROWERS” PSS WORLD MEDICAL, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer THERATECH, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer GULF SOUTH MEDICAL SUPPLY, INC.
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer CASCADE MEDICAL SUPPLY, INC.
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer DS HOLDINGS, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

DSRX, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer DISPENSING SOLUTIONS
ACQUISITION CORP. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer DISPENSING SOLUTIONS, INC. By:
 

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer POC MANAGEMENT GROUP, LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer WORLDMED SHARED SERVICES, INC.
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

LINEAR HOLDINGS, LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer LINEAR MEDICAL SOLUTIONS, LLC
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer STAT RX USA, LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer SCRIP PAK, LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer CLAIMONE, LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer BOTTOMLINE MEDICAL SOLUTIONS,
LLC By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP By:   PSS World Medical, Inc.,  
its general partner By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer “GUARANTORS” PSS HOLDING, INC.
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer PSS SERVICE, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer PHYSICIAN SALES & SERVICE, INC.
By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer THRIFTYMED, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

PROCLAIM, INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer ANCILLARY MANAGEMENT SOLUTIONS,
INC. By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

    “AGENT”     BANK OF AMERICA, N.A., as the Agent     By:  

/s/ John M. Olsen

    Name:   John M. Olsen     Title:   Senior Vice President     “LENDERS”
Address:     BANK OF AMERICA, N.A., as a Lender 300 Galleria Parkway, Suite 800
    Atlanta, GA 30339     By:  

/s/ John M. Olsen

Attn: Business Capital - Account Manager     Name:   John M. Olsen Telecopy No:
404-607-3277     Title:   Senior Vice President

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

Address:  

WELLS FARGO BANK, NATIONAL

ASSOCIATION

301 South College Street   as successor to Wachovia Bank, N.A. Charlotte, NC
28202     Attn: Brian Mobley     Telecopy No: 704-374-2703   By:  

/s/ Mark Bradford

  Name:   Mark Bradford   Title:   Vice President

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

  JPMORGAN CHASE BANK, N.A.

Address:

2200 Ross Avenue 9th Floor

Dallas, TX 75201

Attn: Andrew Ray

Telecopy No: 214-965-2594

        By:  

/s/ Andrew Ray

  Name:   Andrew Ray   Title:   Authorized Officer

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

  U.S. BANK NATIONAL ASSOCIATION

Address:

425 Walnut Street

CN-OH-W14S

Attn: Matthew Kasper

Telecopy No: 513-632-2040

        By:  

/s/ Matthew Kasper

  Name:   Matthew Kasper   Title:   Relationship Manager

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

  SUNTRUST BANK

Address:

303 Peachtree St. 23rd Floor

Atlanta, GA 30308

Attn: Steve Metts

Telecopy No:

        By:  

/s/ John Bauer

  Name:   John Bauer   Title:   Vice President

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

  BRANCH BANKING AND TRUST COMPANY

Address:

200 W. Forsyth Street

Jacksonville, FL 32202

Attn: Bill Buchholz

Telecopy No: 904-361-5276

      By:  

/s/ C. William Buchholz

  Name:   C. William Buchholz   Title:   Senior Vice President

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

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

AFFIDAVIT OF OUT-OF-STATE EXECUTION AND DELIVERY

STATE OF GEORGIA

COUNTY OF                     

Before me this day personally appeared David D. Klarner, the Vice President and
Treasurer (“Borrowers’ Officer”) of PSS WORLD MEDICAL, INC., a Florida
corporation (“PSS”), GULF SOUTH MEDICAL SUPPLY, INC., a Delaware corporation
(“Gulf South”), and of PSS, in its capacity as sole general partner of PHYSICIAN
SALES & SERVICES LIMITED PARTNERSHIP, a Florida limited partnership (“PSS LP”),
WORLDMED SHARED SERVICES, INC., a Florida corporation (“WorldMed”), and CASCADE
MEDICAL SUPPLY, INC., a Washington corporation (“Cascade”); THERATECH, INC., a
Tennessee corporation (“Theratech”), DS HOLDINGS, INC., a Delaware corporation
(“DS Holdings”), DSRX, INC., a California corporation (“DSRx”), DISPENSING
SOLUTIONS ACQUISITION CORP., a California corporation (“DSAC”), DISPENSING
SOLUTIONS, INC., a Delaware corporation (“DSI”), POC MANAGEMENT GROUP, LLC, a
California limited liability company (“POC Management”), LINEAR HOLDINGS, LLC, a
Delaware limited liability company (“Linear Holdings”), LINEAR MEDICAL
SOLUTIONS, LLC, a Delaware limited liability company (“Linear Medical”), STAT RX
USA, LLC, a Delaware limited liability company (“Stat Rx”), SCRIP PAK, LLC, a
Florida limited liability company (“Scrip Pak”), CLAIMONE, LLC, a Delaware
limited liability company (“ClaimOne”), BOTTOMLINE MEDICAL SOLUTIONS, LLC, a
Delaware limited liability company (“BottomLine”); PSS, Gulf South, PSS LP, and
WorldMed, are referred to herein collectively as the “Existing Borrowers” and
together with Cascade, Theratech, DS Holdings, DSRx, DSAC, DSI, POC Management,
Linear Holdings, Linear Medical, Stat Rx, Scrip Pak, ClaimOne and BottomLine are
referred to hereinafter each individually as a “Borrower” and collectively as
the “Borrowers”), and PSS HOLDING, INC., a Florida corporation (“PSS Holding”),
PSS SERVICE, INC., a Florida corporation (“PSS Service”), PHYSICIAN SALES &
SERVICE, INC., a Florida corporation (“Physician Sales & Service”), THRIFTYMED,
INC., a Florida corporation (“ThriftyMed”), PROCLAIM, INC., a Tennessee
corporation (“ProClaim”) and ANCILLARY MANAGEMENT SOLUTIONS, INC., a Tennessee
corporation (“AMS”); PSS Holding, PSS Service, Physician Sales & Service,
ThriftyMed, ProClaim and AMS are referred to hereinafter each individually as a
“Guarantor” and collectively as the “Guarantors” and together with the
Borrowers, collectively, the “Obligors”), who being by me first duly sworn,
depose ad say:

 

1. On the date hereof, the Obligors executed that certain Second Amended and
Restated Credit and Security Agreement dated as of November 16, 2011 (the
“Credit and Security Agreement”) among the Obligors and Bank of America, N.A.,
in its capacity as agent for a syndicate of lenders (in such capacity, the
“Agent”), in the State of Georgia;   Dated: November 16, 2011 2. On the date
hereof, the Borrowers executed that certain Revolving Note dated as of
November 16, 2011 (the “BB&T Note”) by the Borrowers in favor of Branch Banking
and Trust and in the original principal amount of $30,000,000, in the State of
Georgia;   3. Borrower’s Officer initiated delivery of the Credit and Security
Agreement and the BB&T Note via overnight mail from                     County,
Georgia, to the Agent’s counsel, Parker, Hudson, Rainer & Dobbs LLP, in Atlanta,
Georgia.   FURTHER AFFIANTS SAYETH NOT:   Signature of Borrowers’ Officer:  

 

By:  

/s/ David D. Klarner

  David D. Klarner, Vice President and Treasurer

The foregoing affidavit was sworn to before me this 16th day of November, 2011,
at             County, Georgia.

 

 

Notary Public, State of Georgia My commission expires:                    

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ANNEX A

to

Credit Agreement

Definitions

Capitalized terms used in the Loan Documents shall have the following respective
meanings (unless otherwise defined therein), and all section references in the
following definitions shall refer to sections of the Agreement:

“Account Debtor” means each Person obligated in any way on or in connection with
an Account.

“Accounts” means all of any Obligor’s now owned or hereafter acquired or arising
accounts, as defined in the UCC, including any rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned by
performance and all health-care-insurance receivables.

“ACH Transactions” means any cash management, disbursement or related services,
including overdrafts and the automatic clearing house transfer of funds by any
Lender or any Affiliate of a Lender for the account of any Obligor.

“Acquisition” means an acquisition of all or substantially all assets or line of
business of a Person, or any acquisition of record or beneficial ownership of
all or substantially all (whether by means of a merger, consolidation, or
otherwise) capital stock or other equity interests (other than directors’
qualifying shares) of a Person.

“Adjusted Net Earnings from Operations” means, with respect to any fiscal period
of the Obligors, the net income of the Obligors and their consolidated
Subsidiaries after provision for income taxes for such fiscal period, as
determined in accordance with GAAP and reported on the Financial Statements for
such period, excluding any and all of the following included in such net income:
(a) gain or loss arising from the sale of any capital assets; (b) all non-cash
gains, credits, losses, expenses or debits including any gain or loss arising
from any write-up or write-down in the book value of any asset and all non-cash
compensation to officers, directors and employees paid in the form of equity
interests and all write-downs of good will; (c) earnings of any Person,
substantially all the assets of which have been acquired by an Obligor in any
manner, to the extent realized by such other Person prior to the date of
acquisition; (d) earnings of any Person in which an Obligor has a minority
ownership interest unless (and only to the extent) such earnings shall actually
have been received by such Obligor in the form of cash distributions;
(e) earnings of any Person (other than an Obligor or another consolidated
Subsidiary) to which assets of any Obligor shall have been sold, transferred or
disposed of, or into which an Obligor shall have been merged, or which has been
a party with any Obligor to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain arising from the acquisition of
debt or equity securities of any Obligor or from cancellation or forgiveness of
Debt; (g) cash credits, gains, losses and expenses arising from extraordinary
items, as determined in accordance with GAAP, or from any other non-recurring or
unusual items that could be classified as such under Item 10 of Regulation S-K
and (h) all gains or losses from discontinued operations, (i) all cash expenses
incurred in connection with: (i) the transactions contemplated by this Agreement
and (ii) any capital markets transactions (including any merger or acquisition
transaction) for the issuance of debt, equity or convertible securities or any
other permitted Investment or Asset Disposition, whether or not such transaction
is ultimately consummated, and (j) fees and expenses incurred in connection with
the early extinguishment of indebtedness and calculated on a pro forma basis
after giving effect to any Permitted Acquisition or Asset Disposition and taking
into account any Permitted Pro Forma Adjustments with respect thereto. For
purposes of this definition “Permitted Pro Forma Adjustments” as applied to any
Person or business unit acquired or disposed

 

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of on or after the Closing Date means any adjustment to the actual results of
operations of such Person or business unit that are permitted to be recognized
in pro forma financial statements prepared in accordance with Regulation S-X of
the Securities Act of 1933 or that are otherwise approved by the Agent to
reflect verifiable and adequately documented severance payments and reductions
in, among other items, officer and employee compensation, insurance expenses,
interest expense, rental expense and other overhead expense, and other
quantifiable expenses which are not anticipated to be incurred on an ongoing
basis following consummation of such Acquisitions or dispositions.

“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, five percent (5%) or more of
the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.

“Agent” means the Bank, solely in its capacity as agent for the Lenders, and any
successor agent.

“Agent Advances” has the meaning specified in Section 1.2(i).

“Agent Indemnitees” Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

“Agent’s Liens” means the Liens in the Collateral granted to the Agent, for the
benefit of the Lenders, the Bank and the Agent pursuant to this Agreement and
the other Loan Documents.

“Agent-Related Persons” means the Agent, together with its Affiliates, and the
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.

“Aggregate Revolver Outstandings” means, at any date of determination, the sum
of (a) the aggregate unpaid principal balance of Revolving Loans, (b) one
hundred percent (100%) of the aggregate undrawn face amount of all outstanding
Letters of Credit, and (c) the aggregate amount of any unpaid reimbursement
obligations in respect of Letters of Credit.

“Agreement” means the Second Amended and Restated Credit Agreement to which this
Annex A is attached, as from time to time amended, modified or restated.

“Anniversary Date” means each anniversary of the Closing Date.

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering,
including the Patriot Act.

“Applicable Law” means all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.

 

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“Applicable Margin” means: (i) with respect to Base Rate Loans and the principal
amount of all other Obligations (other than LIBOR Loans and Letter of Credit
Fees), 0.25%; (ii) with respect to LIBOR Loans, 1.25%; and (iii) with respect to
Letter of Credit Fees, 1.25%. The Applicable Margin shall be adjusted (up or
down) as provided below each fiscal quarter based on the Average Availability
(as calculated by the Agent) for such fiscal quarter, as determined based on the
following grid:

 

Level

 

Average

Availability

 

Applicable

Margin for

LIBOR Loans

   

Applicable Margin for Base

Rate Loans

  I   £$75,000,000     2.00 %      1.00 %  II   > $75,000,000 but

£ $150,000,000

    1.75 %      0.75 %  III   > $150,000,000 but

£ $200,000,000

    1.50 %      0.50 %  IV   >$200,000,000     1.25 %      0.25 % 

Applicable Margins shall be determined as if Level IV were applicable until the
delivery of the Borrowing Base for the fiscal month ending December 31, 2011.
Thereafter, except as otherwise set forth below, any such increase or reduction
in the Applicable Margin shall be subject to receipt by the Agent of the
applicable Borrowing Base Certificate pursuant to Section 6.2, and all
adjustments in the Applicable Margin shall be implemented quarterly on the third
Business Day after the Agent’s receipt of such applicable Borrowing Base
Certificate. If the Borrowing Base Certificate of the Borrowers setting forth
Average Availability is not received by the Agent within five (5) Business Days
of the date required pursuant to Section 6.2, the Applicable Margin shall be
determined as if Level I was in effect until such time as such Borrowing Base
Certificate is received and any Event of Default resulting from a failure timely
to deliver such Borrowing Base Certificate is waived in writing by the Agent and
the Required Lenders; provided, however, that the Agent and the Lenders shall be
entitled to accrue and receive (and the Borrowers shall be obligated to pay)
interest at the Default Rate to the extent authorized by Section 2.1(b) and, on
each date that the Default Rate accrues on any Loan, the Applicable Margin on
such date for such Loan shall be the Applicable Margin that would apply if Level
I was in effect (without regard to the actual Average Availability for the
applicable fiscal quarter). If at any time Borrowers deliver a revised Borrowing
Base Certificate (a “Revised Borrowing Base Certificate” and the Borrowing Base
Certificate previously delivered to the Agent, the “Initial Borrowing Base
Certificate”) and such Revised Borrowing Base Certificate evidences that the
Borrowers have not met the criteria for reduction of the Applicable Margin
pursuant to the terms hereinabove based on the Average Availability on the date
of such Revised Borrowing Base Certificate, then (a) such Applicable Margin
reduction shall be terminated and, effective on the first day of the month
following receipt by the Agent of such Revised Borrowing Base Certificate, the
Applicable Margin shall be the Applicable Margin that would have been in effect
if such reduction had been implemented based upon the Revised Borrowing Base
Certificate of the Borrowers, and (b) the Borrowers shall pay to the Agent, for
the Pro Rata benefit of the Lenders, on the first day of the month following
receipt by the Agent of such Revised Borrowing Base Certificate, an amount equal
to the difference between the amount of interest that would have been paid using
the Applicable Margin determined based upon such Revised Borrowing Base
Certificate and the amount of interest actually paid during the period in which
the reduction of the Applicable Margin was in effect based upon the Initial
Borrowing Base Certificate.

“Appraisal” means an appraisal, prepared on a basis satisfactory to the Agent,
setting forth the Net Orderly Liquidation Value of all of each Borrower’s
Inventory, which appraisal shall be prepared in accordance with Section 8.4(c).

 

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“Asset Dispositions” means, collectively, a transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease, or otherwise
dispose of all or any part of its property, or wind up, liquidate or dissolve.

“Assignee” has the meaning specified in Section 12.2(a).

“Assignment and Acceptance” has the meaning specified in Section 12.2(a).

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent, including
the reasonably allocated costs and expenses of internal legal services of the
Agent.

“Availability” means, at any time (a) the lesser of (i) the Maximum Revolver
Amount minus the Letter of Credit Reserve and (ii) the Borrowing Base minus
without duplication, Reserves, minus (b) without duplication (including, without
duplication of any Letter of Credit Reserves), the Aggregate Revolver
Outstandings.

“Average Availability” means, for any calendar period, the amount obtained by
adding the Availability at the end of each day for such period and dividing such
sum by the number of days in such period.

“Bank” means Bank of America, N.A., a national banking association, or any
successor entity thereto.

“Bank of America Indemnitees” means Bank and its officers, directors, employees,
Affiliates, including, without limitation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, agents and attorneys.

“Bank Product” means any of the following products, services or facilities
extended to any Borrower or Subsidiary by a Lender or any of its Affiliates:
(a) ACH Transactions and any services provided from time to time by any Lender
or by any Affiliate of any Lender to any Borrower or Subsidiary in connection
with operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services, (b) products under
Hedge Agreements extended to an Obligor by any Lender or by any Affiliate of any
Lender, (c) commercial credit card, purchase card and merchant card services;
and (d) other banking products or services as may be requested by any Borrower
or any Subsidiary, other than Letters of Credit; provided, however that leases
shall not constitute “Bank Products.”

“Bank Product Debt” means Debt and other obligations of an Obligor relating to
Bank Products.

“Bank Products Reserve” means the aggregate amount of reserves established by
the Agent from time to time its reasonable credit judgment in respect of Secured
Bank Product Obligations and in the case of any Secured Bank Product Obligations
arising under a Hedging Agreement, such reserves shall not exceed the
mark-to-market exposure thereof.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et
seq.).

“Base Rate” means, for any day, a per annum rate equal to the greatest of
(a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus
0.50%; or (c) LIBOR for a 30 day interest period as determined on such day, plus
1.00%. Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.

 

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“Base Rate Loans” means all Base Rate Revolving Loans.

“Base Rate Revolving Loan” means a Revolving Loan during any period in which it
bears interest based on the Base Rate.

“Borrowers’ Agent” means PSS, in its capacity as agent for the Borrowers in
accordance with Section 3.9.

“Borrowing” means a borrowing hereunder consisting of Revolving Loans made on
the same day by the Lenders to the Borrowers or by the Bank in the case of a
Borrowing funded by Swingline Loans or by the Agent in the case of a Borrowing
consisting of an Agent Advance, or the issuance of a Letter of Credit hereunder.

“Borrowing Base” means, at any time, an amount equal to (a) the sum of
(i) eighty-five percent (85%) of the Net Amount of Eligible Accounts; plus
(ii) the lesser of (A) sixty-five percent (65%) of the net book value of
Eligible Inventory, or (B) eighty-five percent (85%) of the Net Orderly
Liquidation Value of Eligible Inventory (which shall be determined between
Appraisal dates by reference to the ratio of the Net Orderly Liquidation Value
of Eligible Inventory as set forth in the most recent Appraisal to the book
value of Eligible Inventory as of the effective date of such Appraisal);
provided, that, the amount of availability included in the Borrowing Base with
respect to (1) Inventory consisting of flu vaccines shall be $0 from January 1
through July 31 of each year and shall not at any other time exceed $30,000,000,
and (2) Eligible In-Transit Inventory shall not at any time exceed $20,000,000;
minus (b) the sum of (i) a Reserve in the amount of three (3) months (six
(6) months in the case of the Borrowers’ headquarters location) of rental,
storage and other charges with respect to leased and warehouse premises at which
Inventory is located from time to time for which a landlord or similar waiver
acceptable to the Agent has not been obtained, as such Reserve may be modified
by the Agent from time to time in its reasonable credit judgment, plus (ii) the
amount of such other Reserves from time to time established by the Agent in its
reasonable credit judgment.

“Borrowing Base Certificate” means a certificate by a Responsible Officer of the
Borrowers, substantially in the form of Exhibit A (or another form acceptable to
the Agent) setting forth the calculation of the Borrowing Base, including a
calculation of each component thereof, all in such detail as shall be reasonably
satisfactory to the Agent. All calculations of the Borrowing Base in connection
with the preparation of any Borrowing Base Certificate shall originally be made
by the Borrowers and certified to the Agent; provided, that the Agent shall have
the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation (a) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and (b) to the
extent that such calculation is not in accordance with this Agreement.

“Business Day” means (a) any day that is not a Saturday, Sunday, or a day on
which banks in Atlanta, Georgia or Charlotte, North Carolina are required or
permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with LIBOR or LIBOR Loans, any day that is a
Business Day pursuant to clause (a) above and that is also a day on which
trading in Dollars is carried on by and between banks in the London interbank
market.

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

 

5

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“Capital Expenditures” means all payments due (whether or not paid during any
fiscal period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges or in connection with a Capital Lease. Capital
Expenditures do not include the purchase price payable under any Permitted
Acquisition.

“Capital Lease” means any lease of property by any Obligor which, in accordance
with GAAP, should be reflected as a capital lease on the balance sheet of such
Obligor.

“Cash Collateralize” means the delivery of cash to Agent, as security for the
payment of Obligations, in an amount equal to (a) with respect to Letter of
Credit Obligations, 105% of the aggregate Letter of Credit Obligations, and
(b) with respect to any inchoate, contingent or other Obligations (including
Secured Bank Product Obligations), Agent’s good faith estimate of the amount due
or to become due, including all fees and other amounts relating to such
Obligations. “Cash Collateralization” has a correlative meaning.

“Cash Equivalents” means:

(a) direct obligations of the United States of America, or any agency thereof,
or obligations guaranteed by the United States of America, provided that such
obligations mature within ninety days from the date of acquisition thereof;

(b) acquisitions of certificates of deposit maturing within ninety days from the
date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with (i) any
Lender, (ii) any bank or trust company organized under the laws of the United
States of America or any state thereof having capital and surplus aggregating at
least $100,000,000, or (iii) any bank having one of the two highest ratings from
both Moody’s Investors Service, Inc. and Standard & Poor’s Corporation;

(c) repurchase agreements with a bank or trust company (including any of the
Lenders that are banks) or recognized securities dealer having capital and
surplus in excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the applicable Obligor shall
have a perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at least
100% of the amount of the repurchase obligations; and

(d) Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
investments of the character described in the foregoing clauses (a) through (c).

“Change of Control” means the occurrence of any of the following: (a) a Person
or “group” of Persons (within the meaning of Section 13(d) of the Exchange Act),
shall acquire, beneficially or of record, 30% or more of the outstanding voting
stock (stock entitled to vote for election of directors) of PSS; (b) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the Board of Directors of PSS (together with any new
directors whose election by the Board of Directors of PSS or whose nomination
for election by the shareholders of PSS, as the case may be, was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of PSS, as the case may be, then in office; (c) any
Obligor shall cease to own 80% of the voting stock of any other Obligor owned by
it on the Closing Date or such ownership shall cease to vest in

 

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such Obligor voting control with respect to any such other Obligor, except as a
result of a transaction permitted under this Agreement; or (d) a “Fundamental
Change” shall occur under (and as defined in) the Senior Convertible Notes
Indenture.

“Chattel Paper” means all of any Obligor’s now owned or hereafter acquired
chattel paper, as defined in the UCC, including electronic chattel paper.

“Claims” means all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after the full payment and performance by the Borrowers
of all of the Obligations or replacement of Agent or any Lender) incurred by any
Indemnitee or asserted against any Indemnitee by any Obligor or other Person, in
any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use
thereof or transactions relating thereto, (b) any action taken or omitted in
connection with any Loan Documents, (c) the existence or perfection of any
Liens, or realization upon any Collateral, (d) exercise of any rights or
remedies under any Loan Documents or Applicable Law, or (e) failure by any
Obligor to perform or observe any terms of any Loan Document, in each case
including all costs and expenses relating to any investigation, litigation,
arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means all of the “Collateral”, as defined in the Existing Security
Agreement and this Agreement, all of the “Pledged Collateral”, as defined in the
Existing Pledge Agreements and the Pledge Agreements, and all other assets of
any Person from time to time subject to Agent’s Liens securing payment or
performance of the Obligations.

“Commitment” means, at any time with respect to a Lender, the principal amount
set forth beside such Lender’s name under the heading “Commitment” on
Schedule 1.1 attached to this Agreement or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 12.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of
Section 12.2, and “Commitments” means, collectively, the aggregate amount of the
commitments of all of the Lenders.

“Contaminant” means any waste, pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or
any constituent of any such substance or waste.

“Continuation/Conversion Date” means the date on which a Loan is converted into
or continued as a LIBOR Loan.

“Copyright Security Agreement” means the Second Amended and Restated Conditional
Assignment and Copyright Security Agreement dated as of the date hereof,
executed and delivered by the Obligors to the Agent, for the benefit of the
Agent and the Lenders, to evidence and perfect the Agent’s Liens in the
Obligors’ present and future copyrights and related licenses and rights.

“Covenant Trigger” means the circumstance where Availability is less than the
greater of (a) 10% of the Maximum Revolver Amount and (b) $30,000,000.

 

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“Debt” means, without duplication, all liabilities, obligations and indebtedness
of any Obligor to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, in
each case to the extent such liabilities, obligations and indebtedness consist
of (a) indebtedness for borrowed money or the deferred purchase price of
property (including obligations to be paid in one or more installments under
non-compete arrangements entered into in connection with Permitted
Acquisitions), excluding trade payables; (b) the Obligations; (c) obligations
and liabilities of any Person secured by any Lien on any Obligor’s property,
even though such Obligor shall not have assumed or become liable for the payment
thereof; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of such Obligor prepared in accordance with GAAP; (d) the principal amount of
all obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by any Obligor, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such property;
provided, however, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Obligor
prepared in accordance with GAAP; (e) obligations and liabilities under
Guaranties of Debt; and (f) the present value (discounted at the Base Rate) of
lease payments due under synthetic leases.

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.

“Default Rate” means a fluctuating per annum interest rate at all times equal to
the sum of (a) the otherwise applicable Interest Rate, plus (b) two percent
(2%) per annum. Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, the Default Rate shall
result in an increase in the Letter of Credit Fee by two percentage points per
annum.

“Defaulting Lender” any Lender that, as determined by Agent, (a) has failed to
perform any funding obligations hereunder, and such failure is not cured within
three Business Days; (b) has notified Agent or any Borrower that such Lender
does not intend to comply with its funding obligations hereunder or has made a
public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding or taken any action in
furtherance thereof; provided, however, that a Lender shall not be a Defaulting
Lender solely by virtue of a Governmental Authority’s ownership of an equity
interest in such Lender or parent company.

“Deposit Account Control Agreements” means the deposit account control
agreements to be executed by each institution maintaining a deposit account for
an Obligor, in favor of Agent, for the benefit of Secured Parties, as security
for the Obligations.

“Designated Account” has the meaning specified in Section 1.2(c).

“Designated Financial Officer” means each of the chief financial officer, the
treasurer and any other financial officer of PSS reasonably acceptable to the
Agent.

“Distribution” means, in respect of any corporation: (a) the payment or making
of any dividend or other distribution of property in respect of capital stock
(or any options or warrants for, or other rights with respect to, such stock) of
such corporation, other than distributions in capital stock (or any options

 

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or warrants for such stock) of such corporation; or (b) the redemption or other
acquisition by such corporation of any capital stock (or any options or warrants
for such stock) of such corporation other than through the issuance of capital
stock of such corporation.

“Documents” means all documents as such term is defined in the UCC, including
bills of lading, warehouse receipts or other documents of title, now owned or
hereafter acquired by any Obligor.

“DOL” means the United States Department of Labor or any successor department or
agency.

“Dollar” and “$” means dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement and the other Loan
Documents shall be made in Dollars.

“Dominion Account” means a special account established by Borrowers, over which
the Agent has exclusive control for withdrawal purposes during a Dominion
Trigger Period.

“Dominion Trigger Period” means period (a) beginning on the date when either
(i) Availability is less than the greater of (A) 10% of the Maximum Revolver
Amount and (B) $30,000,000 or (ii) an Event of Default exists and (b) continuing
until such time as (i) Borrowers have maintained Availability greater than or
equal to the greater of 10% of the Maximum Revolver Amount and $30,000,000 for a
period of 60 consecutive days and (ii) no Default or Event of Default exists.

“EBITDA” means, with respect to any fiscal period of the Obligors, Adjusted Net
Earnings from Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that fiscal period, Interest Expense,
federal, state, local and foreign income taxes, depreciation and amortization.

“Eligible Accounts” means the Accounts arising from the sale of goods or
rendition of services in the ordinary course of business which the Agent in the
exercise of its reasonable credit judgment determines to be Eligible Accounts.
Without limiting the discretion of the Agent to establish other criteria of
ineligibility, Eligible Accounts shall not, unless the Required Lenders in their
sole discretion elect, include any Account:

(a) with respect to which more than 90 days have elapsed since the date of the
original invoice therefor or which is more than 60 days past due;

(b) with respect to which any of the representations, warranties, covenants, and
agreements contained in this Agreement are incorrect or have been breached;

(c) which represents a progress billing (as hereinafter defined) or as to which
the applicable Borrower has extended the time for payment without the consent of
the Agent; for the purposes hereof, “progress billing” means any invoice for
goods sold or leased or services rendered under a contract or agreement pursuant
to which the Account Debtor’s obligation to pay such invoice is conditioned upon
a Borrower’s completion of any further performance under the contract or
agreement (and “progress billings” shall include deferred service revenue
billings);

(d) with respect to which any one or more of the following events has occurred
to the Account Debtor on such Account: death or judicial declaration of
incompetency of an Account Debtor who is an individual; the filing by or against
the Account Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the Account Debtor

 

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for the benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a “custodian,” as
defined in the Federal Bankruptcy Code; the institution by or against the
Account Debtor of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against, or winding
up of affairs of, the Account Debtor; the sale, assignment, or transfer of all
or substantially all of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the Account Debtor as a going concern;

(e) owing by an Account Debtor for which fifty percent (50%) or more of the
aggregate Dollar amount of outstanding Accounts owed at such time by such
Account Debtor are classified as ineligible under this definition;

(f) owed by an Account Debtor which: (i) does not maintain its chief executive
office in the United States of America; or (ii) is not organized under the laws
of the United States of America; or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public corporation,
or other instrumentality thereof; except to the extent that such Account is
secured or payable by a letter of credit satisfactory to the Agent in its
discretion;

(g) owed by an Account Debtor which is an Affiliate or employee of a Borrower;

(h) except as provided in clause (j) below, with respect to which either the
perfection, enforceability, or validity of the Agent’s Liens in such Account, or
the Agent’s right or ability to obtain direct payment to the Agent of the
proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;

(i) owed by an Account Debtor to which any Borrower or any of its Subsidiaries
is indebted in any way, or which is subject to any right of setoff or recoupment
by the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or if the Account Debtor thereon
has disputed liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim;

(j) owed by the government of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq.), and any
other steps necessary to perfect the Agent’s Liens therein, have been complied
with to the Agent’s satisfaction with respect to such Account;

(k) owed by any state, municipality, or other political subdivision of the
United States of America, or any department, agency, public corporation, or
other instrumentality thereof and as to which the Agent determines that its Lien
therein is not or cannot be perfected;

(l) which represents a sale on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis;

(m) which is evidenced by a promissory note or other instrument or by chattel
paper;

(n) if the Agent believes, in the exercise of its reasonable judgment, that the
prospect of collection of such Account is impaired or that the Account may not
be paid by reason of the Account Debtor’s financial inability to pay;

 

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(o) with respect to which the Account Debtor is located in any state requiring
the filing of a Notice of Business Activities Report or similar report in order
to permit the applicable Borrower to seek judicial enforcement in such State of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;

(p) which arises out of a sale not made in the ordinary course of the applicable
Borrower’s business, or to the extent such Account arises out of finance
charges;

(q) with respect to which the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the applicable Borrower,
and, if applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services;

(r) owed by an Account Debtor which is obligated to the Borrowers respecting
Accounts the aggregate unpaid balance of which exceeds ten percent (10%) (or,
with the approval of the Agent, fifteen percent (15%)) of the aggregate unpaid
balance of all Accounts owed to the Borrowers at such time by all of the
Borrowers’ Account Debtors, but only to the extent of such excess;

(s) with respect to which the invoice has been re-dated or the sale made on
extended dating beyond that customary in the ordinary course of the Obligors’
business or which otherwise constitute “refreshed” Accounts;

(t) which is not subject to a first priority and perfected security interest in
favor of the Agent for the benefit of the Lenders.

If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of Eligible Accounts.

With the consent of the Agent, the amount of Accounts included as ineligible
under one or more categories above may be estimated as a fixed percentage of
total Accounts or otherwise. The consent of the Agent may be evidenced by the
use of a form of Borrowing Base Certificate specifying the estimated amounts or
in such other manner as the Agent may designate. Such consent may be withdrawn
by the Agent in its discretion by written notice to the Borrowers’ Agent.

“Eligible Customs Broker” means a customs broker that is a party to an Imported
Inventory Agreement.

“Eligible Assignee” means (a) a commercial bank, commercial finance company or
other asset based lender, having total assets in excess of $1,000,000,000;
(b) any Lender listed on the signature page of this Agreement; (c) any Affiliate
of any Lender capable, in the good faith judgment of such Lender, of performing
its obligations hereunder; and (d) if an Event of Default has occurred and is
continuing, any Person reasonably acceptable to the Agent.

“Eligible In-Transit Inventory” means In-Transit Inventory of a Borrower which
the Agent, in its reasonable credit judgment, determines to be Eligible
In-Transit Inventory. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, In-Transit Inventory shall not, unless the
Required Lenders in their sole discretion elect, constitute Eligible In-Transit
Inventory unless: (a) such In-Transit Inventory would be Eligible Inventory but
for the fact that it is located outside the United States (or is in-transit
within the United States after arriving from overseas and has not yet been
delivered to a Borrower); (b) such In-Transit Inventory is the subject of a
negotiable Document that reflects a Borrower (or, at the request

 

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of the Agent, that reflects the Agent) as the consignee; or (c) each of the
following conditions is satisfied: (i) all of the original Documents evidencing
such Inventory (which Documents shall be negotiable Documents and shall comply
with all of the terms of the applicable Imported Inventory Agreement) are in the
possession, in the United States, of the Agent, the Letter of Credit Issuer, or,
subject to the Agent’s consent, an Eligible Customs Broker, (ii) no default
shall exist under any agreement in effect between the vendor of such Inventory
and any Borrower which would permit such vendor under any applicable law
(including, without limitation, the UCC) to divert, reclaim or stop shipment of
such Inventory, (iii) such Inventory is fully insured by marine cargo or other
similar insurance with such insurance companies, in such amounts and subject to
such deductibles as are satisfactory to the Agent and with respect to which the
Agent has been named as loss payee, (iv) if requested by the Agent, an Imported
Inventory Agreement with respect to such In-Transit Inventory has been executed
by an Eligible Customs Broker and the Borrowers and accepted in writing by the
Agent, (v) such In-Transit Inventory is not in the possession of an Affiliate of
the vendor or supplier of such Inventory, (vi) the customs broker for such
In-Transit Inventory is not an Affiliate of the Obligors and (vii) the Borrowers
have paid for such In-Transit Inventory.

“Eligible Inventory” means Inventory, valued at the lower of cost (on a
first-in, first-out basis) or market, which the Agent, in its reasonable credit
judgment, determines to be Eligible Inventory. Without limiting the discretion
of the Agent to establish other criteria of ineligibility, Eligible Inventory
shall not, unless the Required Lenders in their sole discretion elect, include
any Inventory:

(a) that is not owned by a Borrower;

(b) that is not subject to the Agent’s Liens, which are perfected as to such
Inventory, or that are subject to any other Lien whatsoever (other than the
Liens described in clause (d) of the definition of Permitted Liens provided that
such Permitted Liens (i) are junior in priority to the Agent’s Liens or subject
to Reserves, and (ii) do not impair directly or indirectly the ability of the
Agent to realize on or obtain the full benefit of the Collateral);

(c) that does not consist of finished goods;

(d) that consists of raw materials, work-in-process, samples, prototypes,
supplies, or packing and shipping materials;

(e) that is not in good condition, is unmerchantable, or does not meet all
standards imposed by any Governmental Authority, having regulatory authority
over such goods, their use or sale;

(f) that is not currently either usable or salable, at prices approximating at
least cost, in the normal course of the Borrowers’ business, or that is slow
moving or stale;

(g) that is returned goods, unless such returned goods are in readily saleable
condition and the Agent consents to their inclusion in the Borrowing Base, or
that is obsolete or repossessed or used goods taken in trade;

(h) that is located outside the United States of America (or that is in-transit
from vendors or suppliers), other than Eligible In-Transit Inventory;

(i) that is located in a public warehouse or in possession of a bailee or in a
facility leased by a Borrower, if (i) the warehouseman, bailee or lessor has not
delivered to the Agent, if requested by the Agent, a subordination agreement in
form and substance satisfactory to the Agent or (ii) if a Reserve for rents or
storage charges has not been established for Inventory at that location;

 

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(j) that constitutes (i) pharmaceutical products with an expiration date that is
less than one year after the date of the corresponding Borrowing Base
Certificate or that have been held in inventory by a Borrower for more than 180
days, and (ii) other pharmaceutical goods, and other goods the sale of which is
subject to or requires any license or permit from any Governmental Authority,
which the Agent in its reasonable credit judgment determines to be ineligible;

(k) that contains or bears any Proprietary Rights licensed to a Borrower by any
Person, if the Agent is not satisfied that it may sell or otherwise dispose of
such Inventory in accordance with the terms of the Security Agreement and
Section 10.2 without infringing the rights of the licensor of such Proprietary
Rights or violating any contract with such licensor (and without payment of any
royalties other than any royalties due with respect to the sale or disposition
of such Inventory pursuant to the existing license agreement), and as to which
the applicable Borrower has not delivered to the Agent a consent or sublicense
agreement from such licensor in form and substance acceptable to the Agent if
requested;

(l) that is not reflected in the details of a current perpetual inventory
report;

(m) that is Inventory placed on consignment; or

(n) that is located in a Flood Zone A5, as designated by the Federal Emergency
Management Agency, unless covered by flood insurance.

If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of Eligible Inventory.

“Environmental Claims” means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law, or for a Release or injury to the
environment.

“Environmental Laws” means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, licenses, authorizations and permits of,
and agreements with, any Governmental Authority, in each case relating to
environmental, health and safety matters.

“Environmental Lien” means a Lien in favor of any Governmental Authority for
(a) any liability under Environmental Laws, or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.

“Equipment” means all of any Obligor’s now owned and hereafter acquired
machinery, equipment, furniture, furnishings, fixtures, and other tangible
personal property (except Inventory), including embedded software, motor
vehicles with respect to which a certificate of title has been issued, aircraft,
dies, tools, jigs, molds and office equipment, as well as all of such types of
property leased by any Obligor and all of such Obligor’s rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.

“ERISA” means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

 

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

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

“Event of Default” has the meaning specified in Section 10.1.

“Exchange Act” means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.

“Excluded Collateral” means:

(a) all Titled Collateral,

(b) owned Real Estate,

(c) leasehold interests in Real Estate,

(d) Equipment subject to a purchase money obligation or Capital Lease obligation
permitted under this Agreement to the extent the documents evidencing such
obligation prohibit the imposition of a Lien on the property or asset subject to
such obligation (it being understood that such Equipment shall automatically
cease to constitute Excluded Collateral immediately upon the termination of such
obligation),

(e) any rights of an Obligor in any contract, license, right or other agreement
if under the terms thereof, or any Applicable Law with respect thereto, the
valid grant of a security interest therein to the Agent is prohibited and such
prohibition has not been waived or the consent of the other party to such
contract or license has not been obtained or, under Applicable Law, such
prohibition cannot be waived; provided, however, that the “Excluded Collateral”
shall not be interpreted (i) to apply to any contract, license, right or other
agreement to the extent the applicable prohibition is ineffective or
unenforceable under the UCC (including Sections 9-406 through 9-409 or any other
Applicable Law), or (ii) so as to limit, impair or otherwise affect the Agent’s
unconditional continuing security interest in and Lien upon any rights or
interests of such Obligor in or to moneys or to become due under any such
contract, license, right or other agreement (including any Accounts),

(f) (i) voting equity interests in any Person that is either (A) a “controlled
foreign corporation” under Section 957 of the Internal Revenue Code or (B) a
foreign partnership or other foreign limited liability entity (each Person
meeting the criteria in either clause (A) or clause (B), a

 

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“Foreign Subsidiary”), to the extent (but only to the extent) required to
prevent the Collateral from including more than 66% of all voting equity
interests in such Foreign Subsidiary and (ii) shares of capital stock or other
equity interests in any Foreign Subsidiary of a United States limited
partnership that is an Obligor; and

(g) notwithstanding any other provision of this Agreement, assets as to which
the Agent and the Borrowers shall reasonably determine that the costs (including
any applicable stamp, tangibles or other taxes) and burdens of obtaining a
security interest therein or projection thereof outweigh the value to the Agent
and the Secured Parties of the incremental security afforded thereby

; provided, however, that the Agent may at any time that Availability is less
than the greater of (i) 12.0% of the Maximum Revolver Amount or (ii) $45,000,000
specify that some or all of the items in clauses (a) and (b) above shall no
longer constitute Excluded Collateral and the Obligors shall have a reasonable
time, not to exceed 30 days (it being understood that the Obligors shall deliver
title insurance commitments with respect to owned Real Estate within 30 days
following such request, but the Obligors shall have 60 days to deliver title
insurance policies with respect to such commitments) to comply with the
provisions of this Agreement relating thereto after receipt of such notice;
provided, further, that after the occurrence and during the continuation of an
Event of Default, the Agent may require that any of the foregoing items of
Excluded Collateral become Collateral and the Obligors agree that if the Agent
so requires any of the Excluded Collateral to become Collateral, they will grant
the Agent, for the benefit of itself and the Secured Parties, a first priority
security interest in any such Excluded Collateral.

“Existing Pledge Agreements” means “Pledge Agreements” as defined in the
Existing Credit Agreement.

“Existing Obligors” means, collectively, PSS and each of its Affiliates party to
the Existing Loan Documents.

“Extraordinary Expenses” means all costs, expenses or advances that Agent may
incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise, protection or enforcement of any rights or remedies of
Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or
satisfaction of any taxes, charges or Liens with respect to any Collateral;
(e) any enforcement action; and (f) negotiation and documentation of any
modification, waiver, workout, restructuring or forbearance with respect to any
Loan Documents or Obligations. Such costs, expenses and advances include
transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, legal fees, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees, environmental
study fees, wages and salaries paid to employees of any Obligor or independent
contractors in liquidating any Collateral, and travel expenses.

“FDIC” means the Federal Deposit Insurance Corporation, and any Governmental
Authority succeeding to any of its principal functions.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by

 

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the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any successor thereto.

“Fee Letter” means the fee letter dated as of the Closing Date between the
Agent, the Arranger and the Borrowers’ Agent.

“Financial Statements” means, according to the context in which it is used, the
financial statements referred to in Sections 6.2 and 7.6 or any other financial
statements required to be given to the Lenders pursuant to this Agreement.

“Fiscal Year” means the Obligors’ fiscal year for financial accounting purposes.
The current Fiscal Year of the Obligors will end on March 30, 2012.

“Fixed Assets” means the Equipment and Real Estate of each Obligor.

“Fixed Charge Coverage Ratio” means, as of any fiscal month end, the ratio of
(a) EBITDA to (b) the sum of (i) interest expenses paid in cash (but excluding
any closing, upfront, origination, underwriting or like fees), plus
(ii) unfinanced Capital Expenditures, other than Capital Expenditures
constituting a Permitted Acquisition or other permitted Investment (excluding
(A) any Capital Expenditure financed with Funded Debt (other than the Revolving
Loans), (B) any Capital Expenditure made with all or any portion of the
proceeds, applied within sixty (60) days (or such longer period as may be agreed
to by Agent in Agent’s sole discretion) of receipt thereof, from any Asset
Disposition (other than a disposition of Inventory), (C) any Capital Expenditure
made to replace property lost pursuant to a casualty loss, condemnation or
eminent domain, whether or not the proceeds of such casualty, condemnation or
eminent domain have been received by Obligors so long as prior to the incurrence
of such Capital Expenditure Obligors have notified Agent (1) of their intent to
incur such Capital Expenditure, (2) that they anticipate being reimbursed for
such Capital Expenditure, (3) the amount of such reimbursement and provided
Agent with any other information reasonably requested by the Agent, and (D) any
Capital Expenditure made with all or any portion of the proceeds from the sale
of capital stock or other equity interests of the Obligors provided that such
Capital Expenditure is made within sixty (60) days (or such longer period as may
be agreed to by Agent in is sole discretion) after the date of the receipt of
the initial proceeds from the sale of such capital stock or other equity
interests), plus (iii) payments of principal on Funded Debt scheduled to be made
or actually made during such period, other than prepayments of the Senior
Convertible Notes pursuant to Section 8.14(f) and Permitted SCN Redemptions,
plus (iv) all Distributions made during such period by PSS, other than
Distributions pursuant to clause (f) of the definition of “Permitted
Distributions” and Permitted Stock Redemptions, plus (v) all income taxes paid
during such period in cash, in each case calculated on a consolidated basis for
the Borrowers and their consolidated Subsidiaries for the twelve fiscal month
period then ended.

“Foreign Subsidiary” means any Subsidiary other than a Subsidiary incorporated
or organized in the United States of America or any jurisdiction, state or
territory thereof.

“Fronting Exposure” means a Defaulting Lender’s Pro Rata Share of Letter of
Credit Obligations or Swingline Loans, as applicable, except to the extent
allocated to other Lenders under Section 1.2(k)(iii).

 

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“Full Payment” means with respect to any Obligations, (a) the full and
indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such Obligations are Letter of Credit Obligations or
inchoate or contingent in nature, Cash Collateralization thereof (or delivery of
a standby letter of credit acceptable to Agent in its discretion, in the amount
of required Cash Collateral); and (c) a release of any Claims of Obligors
against Agent, Lenders and Letter of Credit Issuer arising on or before the
payment date. No Loans shall be deemed to have been paid in full until all
Commitments related to such Loans have expired or been terminated.

“Funded Debt” means, as of any date of determination, (a) all principal of Debt
under this Agreement, and, without duplication, (b) (i) Debt for money borrowed,
(ii) Debt, whether or not in any such case the same was for money borrowed,
(A) represented by notes payable, and drafts accepted, that represent extensions
of credit, (B) constituting obligations evidenced by bonds, debentures, notes or
similar instruments, or (C) upon which interest charges are customarily paid or
that was issued or assumed as full or partial payment for property (other than
trade credit that is incurred in the ordinary course of business), (iii) Debt
that constitutes an obligation under a Capital Lease, and (iv) Debt that is such
by virtue of clause (d) of the definition thereof, but only to the extent that
the obligations guaranteed are obligations that would constitute Funded Debt;
provided, however, the amount of Funded Debt on any date of determination shall
be reduced by an amount, not to exceed the outstanding principal amount of
Revolving Loans on such date, equal to the remainder of (1) the net amount of
the Borrowers’ Cash Equivalents (plus collected funds in bank accounts of the
Borrowers at the Bank) as of such date that are subject to the Agent’s perfected
Liens and no prior Liens and that are capable of being liquidated within two
Business Days without any penalty or premium and available for the general
operations of the Borrowers, minus (2) the aggregate outstanding amount of
(y) checks and similar instruments that have been written against the Borrowers’
bank accounts as of such date but have not yet cleared, whether or not such
checks have been mailed or delivered or are being held by a Borrower, plus
(z) automatic clearing house and other transfers that are pending against the
Borrowers’ bank accounts as of such date, it being understood that the
calculation of both items (1) and (2) above shall be made by the Borrowers in
such detail as the Agent may require and shall be subject to the final approval
of the Agent.

“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means generally accepted accounting principles and practices set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date. Notwithstanding anything to the contrary set forth in the
Agreement, all references to GAAP as they relate to monthly financial statements
shall be deemed to refer to GAAP as described in the preceding sentence with the
exception of those non-GAAP practices of the Borrowers consistent with their
historical practices immediately prior to the Closing Date. All calculations
made for the purposes of determining compliance with this Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
applied on a basis consistent with the most recent annual or quarterly Financial
Statements delivered pursuant to Section 6.2 (or, prior to the delivery of the
first Financial Statements pursuant to Section 6.2, consistent with the
Financial Statements as at March 30, 2011); provided, however, that if (a) the
Borrowers shall object to determining such compliance on such basis at the time
of delivery of such Financial Statements due to any change in GAAP or the rules
promulgated with respect thereto after the Closing Date or (b) the Agent or the
Required Lenders shall so object in writing within 90 days after delivery of
such Financial Statements, then such calculations shall be made on a basis
consistent with the most recent Financial Statements delivered by the Borrowers
to the Lenders as to which no such objection shall have been made.

 

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“General Intangibles” means all of each Obligor’s now owned or hereafter
acquired general intangibles, choses in action and causes of action and all
other intangible personal property of each Obligor of every kind and nature
(other than Accounts), including, without limitation, all contract rights,
payment intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to such Obligor in
connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to such Obligor from any Plan
or other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Obligor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Obligor.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

“Guarantor” means each “Guarantor”, as defined in the first paragraph of the
Agreement, together with any hereafter acquired or formed Subsidiary of PSS that
becomes a “Guarantor” after the Closing Date pursuant to Section 8.20 or the
provisions of the definition of “Permitted Acquisition”.

“Guaranty” means, with respect to any Person, all obligations of such Person
which in any manner directly or indirectly guarantee or assure, or in effect
guarantee or assure, the payment or performance of any indebtedness, dividend or
other obligations of any other Person (the “guaranteed obligations”), or assure
or in effect assure the holder of the guaranteed obligations against loss in
respect thereof, including any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obligations or any
property constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.

“Hedge Agreement” means any and all transactions, agreements or documents now
existing or hereafter entered into, which provides for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging any Obligor’s exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.

“Imported Inventory Agreement” means an agreement duly executed by the Agent,
the Borrowers and a customs broker, in form and content acceptable to the Agent,
by which such customs broker agrees to act as the Agent’s bailee for the purpose
of perfecting by possession the Agent’s security interest in original Documents
that are from time to time in such custom broker’s possession, and to carry out
the Agent’s instructions with respect to such original Documents and the
Inventory of the Borrowers evidenced thereby.

“Indemnitees” means Agent Indemnities, Lender Indemnities, Letter of Credit
Issuer Indemnitees and Bank of America Indemnitees.

 

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“Insolvency Proceeding” means any case or proceeding commenced by or against a
Person under any state, federal or foreign law for, or any agreement of such
Person to, (a) the entry of an order for relief under the Bankruptcy Code, or
any other insolvency, debtor relief or debt adjustment law; (b) the appointment
of a receiver, trustee, liquidator, administrator, conservator or other
custodian for such Person or any part of its Property; or (c) an assignment or
trust mortgage for the benefit of creditors.

“Instruments” means all instruments as such term is defined in the UCC, now
owned or hereafter acquired by any Obligor.

“Interest Expense” means, for any fiscal period, the aggregate amount of
interest required to be paid or accrued by the Borrowers and their consolidated
Subsidiaries during such period on all Debt of the Borrowers and their
consolidated Subsidiaries during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capital
Leases or synthetic leases and unused commitment fees, facility fees and similar
fees or expenses in connection with the borrowing of money.

“Interest Period” means, as to any LIBOR Loan, the period commencing on the
Funding Date of such Loan or on the Continuation/Conversion Date on which the
Loan is converted into or continued as a LIBOR Loan, and ending on the date one,
two, three or six months thereafter as selected by a Borrower in its Notice of
Borrowing, in the form attached hereto as Exhibit B, or Notice of
Continuation/Conversion, in the form attached hereto as Exhibit C, provided
that:

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

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

(c) no Interest Period shall extend beyond the Stated Termination Date.

“Interest Rate” means each or any of the interest rates, including the Default
Rate, set forth in Section 2.1.

“In-Transit Inventory” means Inventory that is in transit from a location
outside the United States to a location of a Borrower in the United States.

“Inventory” means all of each Obligor’s now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Obligor’s business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.

“Investment Property” means all of each Obligor’s right title and interest in
and to any and all (a) securities, whether certificated or uncertificated,
(b) securities entitlements, (c) securities accounts, (d) commodity contracts,
or (e) commodity accounts, as each such term is defined in the UCC.

 

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“IRS” means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.

“Latest Projections” means: (a) on the Closing Date and thereafter until the
Agent receives new projections pursuant to Section 6.2(e), the projections of
the Obligors’ financial condition, results of operations, and cash flows, for
the period commencing on March 30, 2011 and ending on March 30, 2016 and
delivered to the Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Agent pursuant to Section 6.2(f).

“Lead Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, solely
in its capacity as sole arranger and sole book runner.

“Lender” and “Lenders” have the meanings specified in the introductory paragraph
hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Agent in its capacity as provider of Swingline Loans, the
Bank to the extent of any Swingline Loan outstanding and any other Person who
hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.

“Lender Indemnitees” means Lenders and their Affiliates and their respective
officers, directors, employees, Affiliates, agents and attorneys.

“Letter of Credit” has the meaning specified in Section 1.3(a).

“Letter of Credit Fee” has the meaning specified in Section 2.6.

“Letter of Credit Issuer” means the Bank or any affiliate of the Bank that
issues any Letter of Credit pursuant to this Agreement.

“Letter of Credit Issuer Indemnitees” means the Letter of Credit Issuer and its
officers, directors, employees, Affiliates, agents and attorneys.

“Letter of Credit Obligations” means, at any date of determination, the sum of
(a) one hundred percent (100%) of the aggregate undrawn face amount of all
outstanding Letters of Credit, plus (b) the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit.

“Letter of Credit Reserve” means the aggregate amount of reserves established by
the Agent from time to time in its reasonable credit judgment in respect of the
Letter of Credit Obligations (which shall in no event exceed the then
outstanding Letter of Credit Obligations).

“Letter of Credit Subfacility” means $20,000,000.

“LIBOR” means, for any Interest Period with respect to a LIBOR Loan, the per
annum rate of interest (rounded up, if necessary, to the nearest 1/8th of 1%),
determined by Agent at approximately 11:00 a.m. (London time) two Business Days
prior to commencement of such Interest Period, for a term comparable to such
Interest Period, equal to (a) the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
designated by Agent); or (b) if BBA LIBOR is not available for any reason, the
interest rate at which Dollar deposits in the approximate amount of the LIBOR
Loan would be offered by Bank of America’s London branch to major banks in the
London interbank Eurodollar market. If the Board of Governors imposes a Reserve
Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing
rate, divided by 1 minus the Reserve Percentage.

 

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“LIBOR Interest Payment Date” means, with respect to a LIBOR Loan, the
Termination Date, the first day of each calendar month while such LIBOR Loan is
outstanding and the last day of each Interest Period applicable to such Loan.

“LIBOR Loans” means all LIBOR Revolving Loans.

“LIBOR Revolving Loan” means a Revolving Loan during any period in which it
bears interest based on LIBOR.

“Lien” means: (a) any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute, or contract, and including a security
interest, charge, claim, or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; (b) to the extent not included under clause (a),
any reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
real property; and (c) any contingent or other agreement to provide any of the
foregoing, except any agreement conditioned on the termination of the
Commitments and the payment in full of the Obligations.

“Loan Account” means the loan account of the Borrowers, which account shall be
maintained by the Agent.

“Loan Documents” means this Agreement, each Note, the Fee Letter, the Trademark
Security Agreement, the Copyright Security Agreement, the Security Agreement,
each Pledge Agreement, and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.

“Loans” means, collectively, all loans and advances provided for in Article 1.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) of the Obligors, taken as a whole, or the Collateral, taken as a
whole; (b) a material impairment of the ability of the Obligors, taken as a
whole, to perform any material obligation under any Loan Document; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Obligor of any Loan Document to which it is a party.

“Material Agreement” means a contract or agreement, the loss or cancellation of
which could reasonably be expected to have a Material Adverse Effect.

“Material Subsidiary” means, as of the end of any fiscal quarter, any Subsidiary
of the Borrowers (a) whose consolidated EBITDA for the period of four
(4) consecutive fiscal quarters ending on such date exceed five percent (5%) of
consolidated EBITDA of the Borrowers and their consolidated Subsidiaries for
such period or (b) that owns five percent (5%) of consolidated total assets of
the Borrowers and their consolidated Subsidiaries on a consolidated basis.

“Maximum Revolver Amount” means $300,000,000, subject to increase up to
$400,000,000 as set forth in Section 1.2(j).

 

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“Mortgages” means any and all of the mortgages, deeds of trust, deeds to secure
debt, assignments and other instruments executed and delivered by any Obligor to
or for the benefit of the Agent by which the Agent acquires the Agent’s Liens on
the Real Estate, and all amendments, modifications and supplements thereto.

“Multi-employer Plan” means a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Obligor or any
ERISA Affiliate.

“Net Amount of Eligible Accounts” means, at any time, the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed.

“Net Cash Proceeds” shall mean, with respect to any sale, lease, transfer,
casualty loss or other disposition or loss of assets by any Borrower Party or
any issuance by any Obligor of any capital stock or other equity interests or
the incurrence by any Obligor of any Debt (other than the Obligations), the
aggregate amount of cash received for such assets or capital stock or other
equity interests, or as a result of such Debt, net of taxes payable by such
Borrower Party as a result of any such event and net of reasonable and customary
costs and expenses actually incurred in connection therewith.

“Net Orderly Liquidation Value” means the net orderly liquidation value of the
Inventory, as reflected in the most recent Appraisal received by the Agent in
accordance with Section 8.4(c).

“Note” shall mean each Revolving Note.

“Notice of Borrowing” has the meaning specified in Section 1.2(b).

“Notice of Continuation/Conversion” has the meaning specified in Section 2.2(b).

“Noticed Hedges” means Secured Bank Product Obligations arising under a Hedging
Agreement.

“Obligations” means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by any Obligor to the Agent
and/or any Lender, arising under or pursuant to this Agreement or any of the
other Loan Documents, whether or not evidenced by any note, or other instrument
or document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct
or indirect, absolute or contingent, due or to become due, primary or secondary,
as principal or guarantor, and including all principal, interest, charges,
expenses, fees, attorneys’ fees, filing fees and any other sums chargeable to
any Obligor hereunder or under any of the other Loan Documents. “Obligations”
includes, without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit, and
(b) Secured Bank Product Obligations.

“Obligor” means any Borrower or any Guarantor, and “Obligors” means the
Borrowers and the Guarantors, collectively.

“OSHA” means the Occupational Safety and Hazard Act of 1970.

 

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“Other Taxes” means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.

“Overadvance” has the meaning specified in Section 1.2(h).

“Overadvance Loan” means a Base Rate Revolving Loan made when an Overadvance
exists or is caused by the funding thereof.

“Participant” means any Person who shall have been granted the right by any
Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001).

“Payment Conditions” means, with respect to the consummation of a Permitted
Acquisition, a Permitted Distribution, Permitted SCN Redemption, a Permitted
Stock Redemption, a prepayment, an Investment permitted pursuant to clause
(s) of the definition thereof, a Permitted Asset Disposition or other
transaction or event set forth herein that is subject to satisfaction of the
“Payment Conditions” (each, a “Permitted Transaction”), each of the following
conditions: (a) no Default or Event of Default has occurred and is continuing or
would immediately result from the consummation of the Permitted Transaction,
(b) Average Availability for the 60 day period immediately preceding such
Permitted Transaction calculated on a pro forma basis assuming such Permitted
Transaction occurred on the first day of such period (including any Loans made
hereunder to finance such Permitted Transaction and repayments of the Loans with
proceeds of such Permitted Transaction) shall be greater than or equal to the
greater of (i) 15% of the Maximum Revolver Amount and (ii) $45,000,000,
(c) Availability, on the date of such Permitted Transaction, immediately after
giving effect to the consummation of such Permitted Transaction (including any
Loans made hereunder to finance such Permitted Transaction and repayments of the
Loans with proceeds of such Permitted Transaction) shall be greater than or
equal to the greater of (i) 15% of the Maximum Revolver Amount and
(ii) $45,000,000, (d) after giving effect to the consummation of such Permitted
Transaction, the Borrowers are in compliance with the financial covenant set
forth in Section 8.23 on a pro forma basis (it being understood that this
requirement shall apply whether or not such financial covenant would otherwise
be effective in accordance with its terms); provided, that such financial
covenants shall be measured as of the most recently ended fiscal month for which
the Borrowers have delivered the financial statements required under
Section 6.2(b) or (c), as the case may be, for the twelve fiscal month period
then ended and (e) each Borrower and each Guarantor shall be Solvent before and
after giving effect to such Permitted Transaction.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Obligor sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
Multi-employer Plan has made contributions at any time during the immediately
preceding five (5) plan years.

“Permitted Acquisition” means an Acquisition in the same or a similar line of
business to that conducted by the Obligors (the “Target”) so long as: (a) the
Obligors, in the case of an Acquisition involving consideration (excluding
consideration in the form of equity interests) in excess of $50,000,000 shall
provide the Agent notice of the proposed Acquisition, and such available pro
forma and historical financial statements and other information and documents
relating to the proposed Acquisition as the Agent may reasonably

 

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request, at least 5 days prior to the date of the consummation of the proposed
Acquisition; (b) the Payment Conditions are satisfied; (c) such acquisition does
not involve a “hostile” takeover or tender offer and shall have been approved by
the Target’s board of directors (or equivalent governing body); (d) a
Responsible Officer delivers to the Agent a certificate certifying that the
Payment Conditions are satisfied; (e) no Obligor shall, as a result of or in
connection with any such acquisition assume, or incur any direct or contingent
liabilities (whether relating to environmental, tax, litigation or other
matters) that could reasonably be expected to have a Material Adverse Effect,
(f) all material approvals from Governmental Authorities and other third parties
necessary in connection with such acquisition shall have been obtained and shall
be in full force and effect, (g) in connection with an acquisition of the equity
interests in any Target, all Liens on property of such Target shall be
terminated unless permitted pursuant to the Loan Documents, and in connection
with an acquisition of the assets of any Target, all Liens on such assets shall
be terminated unless permitted pursuant to the Loan Documents and (h) if the
Target will become a Subsidiary of a Borrower in connection with such
acquisition, the Borrowers and the Target shall cause the Target to become a
Borrower (or, if the Agent requires, a Guarantor) hereunder and otherwise comply
with Section 8.32. For purposes of determining whether the Payment Conditions
are satisfied and for all other purposes under the Agreement, unless otherwise
agreed to by Agent in writing, no assets of the Target shall be included in the
calculation of the Borrowing Base or Availability until the Agent has completed
a field examination satisfactory to it with respect to the Target and its assets
(it being understood that, notwithstanding the completion of a satisfactory
field examination, the Agent shall have the right, in its reasonable credit
judgment, to establish lower advance rates and/or reserves against the Accounts
and Inventory of the Target and/or to elect not to include any such Accounts or
Inventory as Eligible Accounts or Eligible Inventory).

“Permitted Asset Disposition” means, as long as no Default or Event of Default
exists and, during a Dominion Trigger Period, all Net Cash Proceeds are remitted
to the Agent to be applied to the Obligations in accordance with the provisions
of Section 3.1(d), an Asset Disposition that is

(a) a sale of Inventory in the ordinary course of its business,

(b) a sale or other disposition of items of Equipment or other Fixed Assets in
the ordinary course of business that are obsolete or no longer useable by the
Obligors in their business with an orderly liquidation value not to exceed
$5,000,000 in the aggregate in any Fiscal Year,

(c) an issuance of equity securities (excluding equity securities which require
mandatory redemption or repurchase by PSS except at a time when all Obligations
have been repaid in full) by PSS,

(d) a sale of Cash Equivalents and investments described under clauses
(d) through (j), (l), (n) and (q) of the definition of Restricted Investments,
in each case for fair value,

(e) an Asset Disposition resulting from casualties and condemnations,

(f) an Asset Disposition among Obligors,

(g) a merger or consolidation of any Subsidiary into an Obligor where such
Obligor is the surviving entity,

(i) a merger or consolidation of any Subsidiary of an Obligor with any Person
(other than an Obligor) in order to effectuate a Permitted Acquisition if
(i) such Subsidiary shall be the surviving entity, and (ii) the Obligors comply
with the requirements set forth in the definition of Permitted Acquisition,

 

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(j) a dissolution, liquidation or winding-ups of any Subsidiary of a Borrower
that is not an Obligor,

(k) an asset or stock sale or other disposition not related to the core business
of the Borrowers conducted on the Closing Date so long as such assets were
acquired by the Borrowers or a Subsidiary pursuant to a Permitted Acquisition
and the aggregate proceeds of all such sales and dispositions do not exceed
$10,000,000 in any Fiscal Year,

(l) a sale of assets in connection with any sale and leaseback transaction
permitted under Section 8.19,

(m) a sale, lease, transfer, assignment or other disposition of assets (other
than in connection with a casualty or condemnation or a securitization
transaction) of the Borrowers or any of their Subsidiaries to any other Person
so long as the consideration received consists of cash and the fair market value
of all property disposed of pursuant to this clause (m) does not exceed
$5,000,000 in the aggregate in any Fiscal Year,

(n) an Asset Disposition by a Foreign Subsidiary, and

(o) an Asset Disposition (other than in connection with a casualty or
condemnation or a securitization transaction) of the Borrowers or any of their
Subsidiaries to any other Person so long as (i) so long as no Default or Event
of Default has occurred and is continuing or would immediately result from the
consummation of such Asset Disposition, (ii) Availability, on the date of such
Asset Disposition, immediately after giving effect to the consummation of such
Asset Disposition shall be greater than or equal to $75,000,000, (iii) Obligors
have demonstrated that, after giving effect to the consummation of such Asset
Disposition, the Fixed Charge Coverage Ratio as of the most recent fiscal
quarter end for which Financial Statements have been (or were required to be)
delivered hereunder for the twelve fiscal months then ended was at least 1.25 to
1.00.

“Permitted Debt” has the meaning set forth in Section 8.13.

“Permitted Distributions” means: (a) Distributions to any Obligor by its
Subsidiaries; (b) repurchases of equity securities and equity rights, from
former or departing officers, directors and employees not to exceed $5,000,000
in the aggregate in any Fiscal Year; (c) Permitted Stock Redemptions;
(d) Upstream Payments; (e) Distributions funded with proceeds received from a
concurrent issuance of new common capital stock or other equity interests of an
Obligor or Subsidiary (other than any such issuance to such Obligor or
Subsidiary); (f) any other Distribution made by any Obligor if the Payment
Conditions are satisfied.

“Permitted Liens” means:

(a) Liens for taxes not delinquent or statutory Liens for taxes in an amount not
to exceed $2,500,000 provided that the payment of such taxes which are due and
payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on the Obligors’ books and records and a stay of enforcement of any
such Lien is in effect;

(b) the Agent’s Liens;

(c) Liens consisting of deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under worker’s
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the

 

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repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

(d) Liens securing the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that such Liens secure
only amounts which are not yet due and payable (or, if due and payable, are
unfiled and no other action has been taken to enforce the same) or are being
contested in good faith by appropriate proceedings diligently pursued and for
which adequate reserves determined in accordance with GAAP have been established
(and as to which the property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);

(e) Liens constituting encumbrances in the nature of leases, reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract from the
value of the Real Estate or materially interfere with its use in the ordinary
conduct of the applicable Obligor’s business;

(f) Liens arising from judgments and attachments in connection with court
proceedings (or bond securing same) provided that the attachment or enforcement
of such Liens would not result in an Event of Default hereunder and such Liens
are being contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material Property is subject to a material risk of
loss or forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;

(g) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties not yet due and payable in connection the
importation of goods;

(h) Liens securing Refinancings permitted under this Agreement limited to the
property securing the Debt subject to the Refinancing;

(i) Liens consisting of limitations on dispositions of property arising under
contracts for Asset Dispositions on the property subject to the Asset
Disposition pending the closing of such Asset Disposition; and

(j) Liens in cash or Cash Equivalents in an aggregate amount at any time not to
exceed $250,000 as security for the Obligors’ obligations with respect to Bank
Products.

“Permitted SCN Redemptions” means cash redemptions or conversions of Senior
Convertible Notes so long as the Payment Conditions are satisfied and a
Responsible Officer delivers to the Agent a certificate stating that the Payment
Conditions are satisfied.

“Permitted Stock Redemptions” means (a) redemptions of capital stock (or
warrants or options to purchase same) of PSS or other Obligors other than
general redemptions or purchases in the open market not to exceed $5,000,000 in
the aggregate per Fiscal Year and (b) other redemptions of capital stock of PSS
so long as the Payment Conditions are satisfied and a Responsible Officer
delivers to the Agent a certificate stating that the Payment Conditions are
satisfied; provided, that, in the case of a series of redemptions over
consecutive Business Days, unless otherwise required by the Agent, the Borrowers
shall only be required to deliver the foregoing certificate as of the first date
of such series of redemptions (such certificate to be delivered on the first
date of such series of redemptions) and as of the last date of such series of
redemptions (such certificate to be delivered within two Business Days after the
last date of such series of redemptions).

 

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“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Obligor sponsors or maintains or to which any Obligor makes, is
making, or is obligated to make contributions and includes any Pension Plan.

“Pledge Agreement” means each Pledge Agreement dated on or about the Closing
Date pursuant to which an Obligor pledges to the Agent, for the benefit of
itself and the Lenders, 100% of the capital stock or other equity interests of
each Subsidiary owned by such Obligor.

“Prime Rate” means the rate of interest announced by Bank of America from time
to time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.

“Proprietary Rights” means all of any Obligor’s now owned and hereafter arising
or acquired: licenses, franchises, permits, patents, patent rights, copyrights,
works which are the subject matter of copyrights, trademarks, service marks,
trade names, trade styles, patent, trademark and service mark applications
(except for United States “intent to use” applications filed pursuant to Section
of the Lanham Act, unless and until an Amendment to Allege Use or a Statement of
Use under Sections 1(c) and 1(d) of said Act has been filed), and all licenses
and rights related to any of the foregoing, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.

“Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a
percentage), the numerator of which is the amount of such Lender’s Commitment
and the denominator of which is the sum of the amounts of all of the Lenders’
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders, in each case giving effect to a Lender’s participation in
Swingline Loans and Agent Advances.

“Real Estate” means all of each Obligor’s now or hereafter owned or leased
estates in real property, including, without limitation, all fees, leaseholds
and future interests, together with all of each Obligor’s now or hereafter owned
or leased interests in the improvements thereon, the fixtures attached thereto
and the easements appurtenant thereto.

“Real Estate Financing” means Funded Debt of the Obligors that is either
unsecured or secured only by Liens on Real Estate owned by the Obligors or their
Subsidiaries.

“Refinance” means, in respect of any security or Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue a security
or Debt in exchange or replacement for, such security or Debt in whole or in
part. “Refinanced” and “Refinancing” shall have correlative meanings.

 

27

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“Release” means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property other than in
accordance with Environmental Laws.

“Reportable Event” means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.

“Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate
more than 50%; provided, however, that the Commitments and Loans of any
Defaulting Lender shall be excluded from such calculation.

“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

“Reserve Percentage” means the reserve percentage (expressed as a decimal,
rounded up to the nearest 1/8th of 1%) applicable to member banks under
regulations issued by the Board of Governors for determining the maximum reserve
requirement for Eurocurrency liabilities.

“Reserves” means reserves that limit the availability of credit hereunder,
consisting of reserves against Availability, the Maximum Revolver Amount,
Eligible Accounts or Eligible Inventory, established by the Agent from time to
time in the Agent’s reasonable credit judgment. Without limiting the generality
of the foregoing, the following reserves shall be deemed to be a reasonable
exercise of the Agent’s credit judgment: (a) Bank Products Reserves, (b) Letter
of Credit Reserves, (c) the Senior Convertible Notes Reserve, (d) reserves for
rent at leased locations and storage charges at warehouse locations (only if the
Agent has not received a landlord’s or warehouseman’s waiver or subordination in
form and substance satisfactory to the Agent), (e) Inventory shrinkage reserves,
and (F) dilution reserves.

“Responsible Officer” means the chief executive officer or the president of PSS,
or any other officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants and the preparation of
the Borrowing Base Certificate, a Designated Financial Officer.

“Restricted Investment” means, as to each Obligor, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of equity interests or assets of another Person, (b) a
loan, advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or interest in, another Person,
or (c) any Acquisition (each an “Investment”), except the following:

(a) acquisitions of Equipment to be used in the business of such Obligor so long
as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder;

(b) acquisitions of Inventory, Real Estate and Proprietary Rights in the
ordinary course of business of such Obligor;

(c) acquisitions of assets (including assets received in connection with the
settlement of Accounts with bankrupt or insolvent Account Debtors) acquired in
the ordinary course of business of such Obligor, but in any event excluding
acquisitions of all or a substantial portion of the assets or equity interests
of another Person;

 

28

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(d) direct obligations of the United States of America, or any agency thereof,
or obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof;

(e) acquisitions of certificates of deposit maturing within one year from the
date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with (i) any
Lender, (ii) any bank or trust company organized under the laws of the United
States of America or any state thereof having capital and surplus aggregating at
least $100,000,000, or (iii) any bank having one of the two highest ratings from
both Moody’s Investors Service, Inc. and Standard & Poor’s Corporation;

(f) acquisitions of commercial paper given a rating of “A2” or better by
Standard & Poor’s Corporation or “P2” or better by Moody’s Investors Service,
Inc. and maturing not more than 90 days from the date of creation thereof;

(g) repurchase agreements with a bank or trust company (including any of the
Lenders that are banks) or recognized securities dealer having capital and
surplus in excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the applicable Borrower or
any other Obligor shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair
market value of at least 100% of the amount of the repurchase obligations;

(h) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof or which the holder has the right to require the issuer to repurchase at
a price greater than or equal to the principal amount thereof within one year
from the date of acquisition and, at the time of acquisition, having one of the
two highest ratings obtainable from both Standard & Poor’s Corporation and
Moody’s Investors Service, Inc.;

(i) Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
investments of the character described in the foregoing clauses (d) through (h);

(j) other liquid Investments with a maturity within 60 days after the
acquisition thereof so long as the aggregate outstanding amount of such liquid
Investments (net of return of such Investments through repayment of principal,
return of capital or sale) does not exceed $10,000,000 at any time;

(k) Hedge Agreements;

(l) investments in cash collateral for Letter of Credit Obligations, in each
case deposited with the Agent as provided in this Agreement;

(m) Permitted Acquisitions;

(n) Investments existing as of the Closing Date and set forth on Schedule 1.2;

(o) Investments by an Obligor in another Obligor;

(p) advances to officers, directors and employees (i) existing as of the Closing
Date in an aggregate amount not to exceed $250,000, (ii) for moving, travel and
other expenses (including commission draws) incurred in the ordinary course of
business consistent with the Borrowers’ past practices, and (iii) arising after
the Closing Date for other purposes in an aggregate outstanding amount not to
exceed $500,000;

 

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(q) Investments consisting of Guarantees otherwise permitted under Section 8.12;

(r) Investments consisting of consideration received in Asset Dispositions
permitted under Section 8.9;

(s) Investments in Foreign Subsidiaries not to exceed in the aggregate
$5,000,000 per Fiscal Year; and

(t) any Investment made by an Obligor if the Payment Conditions are satisfied.

“Revolving Loans” has the meaning specified in Section 1.2 and includes each
Overadvance, Agent Advance and Swingline Loan.

“Revolving Note” a promissory note executed by Borrowers in favor of a Lender in
the form of Exhibit F, in the amount of such Lender’s Commitment.

“Secured Bank Product Obligations” means Bank Product Debt owing to a Secured
Bank Product Provider, up to the maximum amount (in the case of any Secured Bank
Product Provider other than Bank of America and its Affiliates) specified by
such provider in writing to Agent pursuant to a notice in the form of Exhibit E,
which amount may be established or increased (by further written notice to Agent
from time to time) as long as no Default or Event of Default exists and no
Overadvance would result from establishment of a Bank Product Reserve for such
amount and all other Secured Bank Product Obligations (provided that during the
existence of a Default, Event of Default or Overadvance such amount may be
increased solely by reason of fluctuations arising from mark to market
exposure).

“Secured Bank Product Provider” means (a) Bank of America or any of its
Affiliates; and (b) any other Lender or Affiliate of a Lender that is providing
a Bank Product, provided such provider delivers written notice to Agent, in form
and substance satisfactory to Agent, by the later of the Closing Date or 10
Business Days following creation of the Bank Product, (i) describing the Bank
Product and setting forth the maximum amount to be secured by the Collateral,
and (ii) agreeing to be bound by Section 13.21.

“Secured Parties” means Agent, Letter of Credit Issuer, Lenders and Secured Bank
Product Providers.

“Senior Convertible Notes” means those certain 3.125% Convertible Senior Notes
by PSS due 2014, in the aggregate original principal amount of up to
$230,000,000, issued pursuant to the Senior Convertible Notes Indenture.

“Senior Convertible Notes Indenture” means that certain Indenture dated
August 4, 2008, between PSS, as issuer, and U.S. Bank National Association, as
trustee, that provides for the issuance of the Senior Convertible Notes.

“Senior Convertible Notes Reserve” means (a) for the period from the Closing
Date through the date that is ninety (90) days prior to August 1, 2014, the
current stated maturity of the Senior Convertible Notes, a reserve in the amount
of $0, and (b) for the period from and including the date that is (90) days
prior to August 1, 2014, the current stated maturity of the Senior Convertible
Notes, a reserve in the amount of the outstanding principal amount of the Senior
Convertible Notes and the accrued interest thereon on such date.

 

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“Settlement” and “Settlement Date” have the meanings specified in
Section 1.2(k)(i)(B).

“Solvent” means, when used with respect to any Person, that at the time of
determination:

(a) the assets of such Person, at a fair valuation, are in excess of the total
amount of its debts (including contingent liabilities); and

(b) the present fair saleable value of its assets is greater than its probable
liability on its existing debts as such debts become absolute and matured; and

(c) it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and

(d) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

“Specified Payment Conditions” means, with respect to the incurrence of Funded
Debt under Section 8.13(j), each of the following conditions: (a) no Default or
Event of Default has occurred and is continuing or would immediately result from
the incurrence of such Funded Debt, (b) Average Availability for the 60 day
period immediately preceding the incurrence of such Funded Debt calculated on a
pro forma basis assuming such Funded Debt was incurred on the first day of such
period (including any repayments of the Loans with proceeds of such Funded Debt)
shall be greater than or equal to $75,000,000, (c) Availability, on the date of
the incurrence of such Funded Debt, immediately after giving effect to the
incurrence of such Funded Debt (including any repayments of the Loans with
proceeds of such Funded Debt) shall be greater than or equal to $75,000,000,
(d) after giving effect to the incurrence of such Funded Debt, on a pro forma
basis, the Borrowers shall have demonstrated that the Fixed Charge Coverage
Ratio as of the most recent fiscal month end for which Financial Statements have
been (or were required to be) delivered hereunder for the twelve fiscal months
then ended was at least 1.25 to 1.00 and (e) each Borrower and each Guarantor
shall be Solvent before and after giving effect to the incurrence of such Funded
Debt.

“Stated Termination Date” means November 16, 2016.

“Subsidiary” of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a “Subsidiary” refer to a Subsidiary of the Borrowers.

“Supporting Letter of Credit” has the meaning specified in Section 1.3(g).

“Supporting Obligations” means all supporting obligations as such term is
defined in the UCC.

“Swingline Loan” any Borrowing of Base Rate Revolver Loans funded with Agent’s
funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

 

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“Taxes” means any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by the Agent’s or each Lender’s
net income in any the jurisdiction (whether federal, state or local and
including any political subdivision thereof) under the laws of which such Lender
or the Agent, as the case may be, is organized or maintains a lending office;
provided, however, that the term “Taxes” shall not include “Other Taxes”.

“Termination Date” means the earliest to occur of (a) the Stated Termination
Date, (b) the date the Agreement is terminated either by the Borrowers pursuant
to Section 3.2 or by the Required Lenders pursuant to Section 10.2, and (c) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of this Agreement.

“Titled Collateral” means motor vehicles, trucks, trailers, tractors and
automobiles.

“Trademark Agreement” means the Second Amended and Restated Conditional
Assignment and Trademark Security Agreement, dated as of the date hereof,
executed and delivered by the Obligors to the Agent to evidence and perfect the
Agent’s Liens in each Obligor’s present and future patents, trademarks, and
related licenses and rights.

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

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

“Unused Letter of Credit Subfacility” means an amount equal to the Letter of
Credit Subfacility minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus, without duplication, (b) the aggregate
unpaid reimbursement obligations with respect to all Letters of Credit.

“Unused Line Fee” has the meaning specified in Section 2.5.

“Upstream Payment” means a Distribution by a Subsidiary of an Obligor to such
Obligor.

Accounting Terms. Any accounting term used in the Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP applied on a basis consistent with the most recent audited
Financial Statements of Borrowers delivered to the Agent before the Closing
Date, and all financial computations in the Agreement shall be computed, unless
otherwise specifically provided therein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the Financial Statements, except for any change required or
permitted by GAAP if Borrowers’ certified public accountants concur in such
change, the change is disclosed to Agent, and Section 8.23 is amended in a
manner satisfactory to Required Lenders to take into account the effects of the
change.

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

 

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(b) The words “hereof,” “herein,” “hereunder” and similar words refer to the
Agreement as a whole and not to any particular provision of the Agreement; and
Subsection, Section, Schedule and Exhibit references are to the Agreement unless
otherwise specified.

(c) (i) The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.

(ii) The term “including” is not limiting and means “including without
limitation.”

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

(iv) The word “or” is not exclusive.

(d) Unless otherwise expressly provided herein, (i) references to agreements
(including the Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or regulation are
to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

(e) The captions and headings of the Agreement and other Loan Documents are for
convenience of reference only and shall not affect the interpretation of the
Agreement.

(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

(g) For purposes of Section 10.1, a breach of the financial covenant contained
in Sections 8.23 shall be deemed to have occurred as of any date of
determination thereof by the Agent or as of the last day of any specified
measuring period, regardless of when the Financial Statements reflecting such
breach are delivered to the Agent.

(h) The Agreement and the other Loan Documents are the result of negotiations
among and have been reviewed by counsel to the Agent, each Obligor and the other
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Lenders or the Agent merely because of the Agent’s or
Lenders’ involvement in their preparation.

 

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SCHEDULE 1.1

COMMITMENTS

 

Lender

   Commitment      Pro Rata Share  

Bank of America, N.A.

   $ 100,000,000         33.34 % 

Wells Fargo Bank, National Association

   $ 55,000,000         18.33 % 

JPMorgan Chase Bank, N.A.

   $ 55,000,000         18.33 % 

U.S. Bank National Association

   $ 30,000,000         10.00 % 

SunTrust Bank

   $ 30,000,000         10.00 % 

Branch Banking and Trust Company

   $ 30,000,000         10.00 % 

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EXHIBIT A

FORM OF BORROWING BASE CERTIFICATE

See attached. *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

-2-

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EXHIBIT B

NOTICE OF BORROWING

Date:             , 20    

 

To: Bank of America, N.A. as Agent for the Lenders who are parties to the Second
Amended and Restated Credit and Security Agreement dated as of November 16, 2011
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit and Security Agreement”) among PSS World Medical, Inc., a Florida
corporation (“Borrowers’ Agent”), and certain of its Subsidiaries, as borrowers,
certain other Subsidiaries, as Guarantors, certain Lenders which are parties
thereto, and Bank of America, N.A., as Agent

Ladies and Gentlemen:

The undersigned, being the Borrowers’ Agent under the Credit and Security
Agreement, refers to the Credit and Security Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably of the Borrowing specified below:

 

  1. The Business Day of the proposed Borrowing is             , 20    .

 

  2. The aggregate amount of the proposed Borrowing is $        .

 

  3. The Borrowing is to be comprised of $         of Base Rate and $         of
LIBOR Loans.

 

  4. The duration of the Interest Period for the LIBOR Loans, if any, included
in the Borrowing shall be          months.

The undersigned hereby certifies, on behalf of all of the Borrowers, that the
following statements are true on the date hereof, and will be true on the date
of the proposed Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:

(a) The representations and warranties of the Obligors contained in the Credit
and Security Agreement are true and correct in all material respects on and as
of the date of the proposed Borrowing as though made on and as of such date,
other than any such representation or warranty which relates to a specified
prior date and except to the extent the Agent and the Lenders have been notified
in writing by the Obligors that any representation or warranty is not correct
and the Required Lenders have explicitly waived in writing compliance with such
representation or warranty;

(b) No Default or Event of Default has occurred and is continuing, or would
result from such proposed Borrowing;

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(c) No event has occurred and is continuing, or would result from such proposed
Borrowing, which has had or would have a Material Adverse Effect;

(d) As of the date hereof, before and after giving effect to the proposed
Borrowing, each of the Obligors is Solvent; and

(e) The proposed Borrowing will not exceed Availability.

 

PSS WORLD MEDICAL, INC. By:  

 

Name:  

 

Title:  

 

 

-2-

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EXHIBIT C

NOTICE OF CONTINUATION/CONVERSION

Date:             , 20    

 

To: Bank of America, N.A. as Agent for the Lenders to the Second Amended and
Restated Credit and Security Agreement dated as of November 16, 2011 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit and Security Agreement”) among PSS World Medical, Inc., a Florida
corporation (“Borrowers’ Agent”), and certain of its Subsidiaries, as borrowers,
certain other Subsidiaries, as Guarantors, certain Lenders which are parties
thereto, and Bank of America, N.A., as Agent

Ladies and Gentlemen:

The undersigned, being the Borrowers’ Agent, refers to the Credit and Security
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably of the [conversion] [continuation] of the
Loans specified herein, that:

 

  1. The Continuation/Conversion Date is             , 20    .

 

  2. The aggregate amount of the Loans to be [converted] [continued] is
$        .

 

  3. The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base
Rate] Loans.

 

  4. The duration of the Interest Period for the LIBOR Loans included in the
[conversion] [continuation] shall be          months.

The undersigned hereby certifies, on behalf of all the Borrowers, that the
following statements are true on the date hereof, and will be true on the
proposed Continuation/Conversion Date, before and after giving effect thereto
and to the application of the proceeds therefrom:

(a) No Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation]; and

(b) The proposed [conversion] [continuation] will not exceed Availability.

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PSS WORLD MEDICAL, INC. By:  

 

Name:  

 

Title:  

 

 

-2-

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EXHIBIT D

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”)
dated as of             , 20     is made between                      (the
“Assignor”) and                      (the “Assignee”).

RECITALS

WHEREAS, the Assignor is party to that certain Second Amended and Restated
Credit and Security Agreement dated as of November 16, 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit and
Security Agreement”) among PSS World Medical, Inc., a Florida corporation, and
certain of its Subsidiaries, as borrowers (the “Borrowers”), certain other
Subsidiaries, as Guarantors, the several financial institutions from time to
time party thereto (including the Assignor, the “Lenders”), and Bank of America,
N. A., as agent for the Lenders (the “Agent”). Any terms defined in the Credit
and Security Agreement and not defined in this Assignment and Acceptance are
used herein as defined in the Credit and Security Agreement;

WHEREAS, as provided under the Credit and Security Agreement, the Assignor has
committed to making Loans (the “Committed Loans”) to the Borrowers in an
aggregate amount not to exceed $         (the “Commitment”);

WHEREAS, the Assignor has made Committed Loans in the aggregate principal amount
of $         to the Borrowers;

WHEREAS, [the Assignor has acquired a participation in its pro rata share of the
Lenders’ liabilities under Letters of Credit in an aggregate principal amount of
$         (the “L/C Obligations”)] [no Letters of Credit are outstanding under
the Credit and Security Agreement]; and

WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit and Security Agreement
in respect of its Commitment, together with a corresponding portion of each of
its outstanding Committed Loans and L/C Obligations, in an amount equal to
$         (the “Assigned Amount”) on the terms and subject to the conditions set
forth herein and the Assignee wishes to accept assignment of such rights and to
assume such obligations from the Assignor on such terms and subject to such
conditions;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

1. Assignment and Acceptance.

(a) Subject to the terms and conditions of this Assignment and Acceptance,
(i) the Assignor hereby sells, transfers and assigns to the Assignee, and
(ii) the Assignee hereby purchases, assumes and undertakes from the Assignor,
without recourse and without representation or warranty (except as provided in
this Assignment and Acceptance)     % (the “Assignee’s Percentage Share”) of
(A) the Commitment, the Committed Loans and the L/C Obligations of the Assignor
and (B) all related rights, benefits, obligations, liabilities and indemnities
of the Assignor under and in connection with the Credit and Security Agreement
and the Loan Documents.

(b) With effect on and after the Effective Date (as defined in Section 5
hereof), the Assignee shall be a party to the Credit and Security Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit and Security Agreement, including the requirements
concerning confidentiality and the payment of indemnification, with a Commitment
in an amount equal to the Assigned Amount. The Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit and Security Agreement are required to be

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performed by it as a Lender. It is the intent of the parties hereto that the
Commitment of the Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned Amount and the Assignor shall relinquish its rights
and be released from its obligations under the Credit and Security Agreement to
the extent such obligations have been assumed by the Assignee; provided,
however, the Assignor shall not relinquish its rights under Sections 3.7, 4.1,
4.3 and 15.11 of the Credit and Security Agreement to the extent such rights
relate to the time prior to the Effective Date.

(c) After giving effect to the assignment and assumption set forth herein, on
the Effective Date the Assignee’s Commitment will be $        .

(d) After giving effect to the assignment and assumption set forth herein, on
the Effective Date the Assignor’s Commitment will be $        .

2. Payments.

(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $        , representing the
Assignee’s Pro Rata Share of the principal amount of all Committed Loans.

(b) The Assignee further agrees to pay to the Agent a processing fee in the
amount specified in Section 12.2(a) of the Credit and Security Agreement.

3. Reallocation of Payments.

Any interest, fees and other payments accrued to the Effective Date with respect
to the Commitment, and Committed Loans and L/C Obligations shall be for the
account of the Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned Amount shall be for the
account of the Assignee. Each of the Assignor and the Assignee agrees that it
will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.

4. Independent Credit Decision.

The Assignee (a) acknowledges that it has received a copy of the Credit and
Security Agreement and the Annexes, Schedules and Exhibits thereto, together
with copies of the most recent financial statements of the Borrowers, and such
other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and
Acceptance; and (b) agrees that it will, independently and without reliance upon
the Assignor, the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit and
Security Agreement.

5. Effective Date; Notices.

(a) As between the Assignor and the Assignee, the effective date for this
Assignment and Acceptance shall be             , 20     (the “Effective Date”);
provided that the following conditions precedent have been satisfied on or
before the Effective Date:

(i) this Assignment and Acceptance shall be executed and delivered by the
Assignor and the Assignee;

[(ii) the consent of the Agent [and the Borrowers’ Agent] required for an
effective assignment of the Assigned Amount by the Assignor to the Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;]

(iii) the Assignee shall pay to the Assignor all amounts due to the Assignor
under this Assignment and Acceptance;

 

-2-

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

[(iv) the Assignee shall have complied with Section 12.2 of the Credit and
Security Agreement (if applicable);]

(v) the processing fee referred to in Section 2(b) hereof and in Section 12.2(a)
of the Credit and Security Agreement shall have been paid to the Agent; and

(b) Promptly following the execution of this Assignment and Acceptance, the
Assignor shall deliver to the Borrowers’ Agent and the Agent for acknowledgment
by the Agent, a Notice of Assignment in the form attached hereto as Schedule 1.

6. [Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]

(a) The Assignee hereby appoints and authorizes the Assignor to take such action
as agent on its behalf and to exercise such powers under the Credit and Security
Agreement as are delegated to the Agent by the Lenders pursuant to the terms of
the Credit and Security Agreement.

(b) The Assignee shall assume no duties or obligations held by the Assignor in
its capacity as Agent under the Credit and Security Agreement.]

7. Withholding Tax.

The Assignee (a) represents and warrants to the Lender, the Agent and the
Borrowers that under applicable law and treaties no tax will be required to be
withheld by the Lender with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Borrowers’ Agent prior to the time that the Agent or Borrowers are required
to make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal
Revenue Service Form W-8BEN (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms W-8ECI or W-8BEN upon the expiration of any previously delivered form
or comparable statements in accordance with applicable U.S. law and regulations
and amendments thereto, duly executed and completed by the Assignee, and
(c) agrees to comply with all applicable U.S. laws and regulations with regard
to such withholding tax exemption.

8. Representations and Warranties.

(a) The Assignor represents and warrants that (i) it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any Lien or other adverse claim; (ii) it is duly organized and
existing and it has the full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any
other documents required or permitted to be executed or delivered by it in
connection with this Assignment and Acceptance and to fulfill its obligations
hereunder; (iii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance, and apart
from any agreements or undertakings or filings required by the Credit and
Security Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and
(iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors’ rights and
to general equitable principles.

(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit and Security Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit and Security Agreement or any other instrument or document
furnished pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the

 

-3-

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

solvency, financial condition or statements of any Borrower or any other
Obligor, or the performance or observance by any Borrower or any other Obligor,
of any of its respective obligations under the Credit and Security Agreement or
any other instrument or document furnished in connection therewith.

(c) The Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance; and apart from any
agreements or undertakings or filings required by the Credit and Security
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; (iii) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors’ rights and to
general equitable principles; and (iv) it is an Eligible Assignee.

9. Further Assurances.

The Assignor and the Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to the Borrowers or the Agent, which may be required in connection
with the assignment and assumption contemplated hereby.

10. Miscellaneous.

(a) Any amendment or waiver of any provision of this Assignment and Acceptance
shall be in writing and signed by the parties hereto. No failure or delay by
either party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof and any waiver of any breach of the provisions of
this Assignment and Acceptance shall be without prejudice to any rights with
respect to any other or further breach thereof.

(b) All payments made hereunder shall be made without any set-off or
counterclaim.

(c) The Assignor and the Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.

(d) This Assignment and Acceptance may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA. The Assignor and the Assignee
each irrevocably submits to the non-exclusive jurisdiction of any state court
sitting in the State of Georgia or any federal court sitting in the Northern
District of Georgia over any suit, action or proceeding arising out of or
relating to this Assignment and Acceptance and irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such state or federal court. Each party to this Assignment and Acceptance hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.

(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AND SECURITY AGREEMENT, ANY RELATED
DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).

 

-4-

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

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.

 

[ASSIGNOR] By:  

 

Name:  

 

Title:  

 

Address:  

 

[ASSIGNEE] By:  

 

Name:  

 

Title:  

 

Address:  

 

 

-5-

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

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

NOTICE OF ASSIGNMENT AND ACCEPTANCE

            , 20    

Bank of America, N.A.

300 Galleria Parkway, Suite 800

Atlanta, GA 30339

Attn: Account Executive

[PSS World Medical, Inc.

4345 Southpoint Boulevard

Jacksonville, FL 32216]

Ladies and Gentlemen:

We refer to the Second Amended and Restated Credit and Security Agreement dated
as of November 16, 2011 (as amended, restated, supplemented or otherwise
modified from time to time the “Credit and Security Agreement”) among PSS World
Medical, Inc., a Florida corporation, and certain of its Subsidiaries, as
borrowers, certain other Subsidiaries, as Guarantors, the Lenders referred to
therein, and Bank of America, N. A., as agent for the Lenders (the “Agent”).
Terms defined in the Credit and Security Agreement are used herein as therein
defined.

1. We hereby give you notice of, and request your consent to, the assignment by
                    (the “Assignor”) to                     (the “Assignee”) of
    % of the right, title and interest of the Assignor in and to the Credit and
Security Agreement (including the right, title and interest of the Assignor in
and to the Commitments of the Assignor, all outstanding Loans made by the
Assignor and the Assignor’s participation in the Letters of Credit pursuant to
the Assignment and Acceptance Agreement attached hereto (the “Assignment and
Acceptance”). We understand and agree that the Assignor’s Commitment, as of ,
20    , is $        , the aggregate amount of its outstanding Loans is
$        , and its participation in L/C Obligations is $        .

2. The Assignee agrees that, upon receiving the consent of the Agent to such
assignment, the Assignee will be bound by the terms of the Credit and Security
Agreement as fully and to the same extent as if the Assignee were the Lender
originally holding such interest in the Credit and Security Agreement.

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

3. The following administrative details apply to the Assignee:

 

  (A) Notice Address:

Assignee name:                                               

Address:                                                          

                                                     

                                                     

Attention:                                                        

Telephone: (    )                                              

Telecopier: (    )                                              

Telex (Answerback):                                     

 

  (B) Payment Instructions:

 

Account No.:                                            At:   
                                                                               
                                              Reference:   
                                        Attention:   
                                       

4. You are entitled to rely upon the representations, warranties and covenants
of each of the Assignor and Assignee contained in the Assignment and Acceptance.

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.

 

Very truly yours,

[NAME OF ASSIGNOR]

By:

 

 

Name:

 

 

Title:

 

 

[NAME OF ASSIGNEE]

By:

 

 

Name:

 

 

Title:

 

 

 

-7-

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

ACKNOWLEDGED AND ASSIGNMENT

CONSENTED TO:

BANK OF AMERICA, N. A., as Agent

By:

 

 

Name:

 

 

Title:

 

 

[PSS WORLD MEDICAL, INC.

By:

 

 

Name:

 

 

Title:

 

]

 

-8-

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EXHIBIT E

FORM OF NOTICE REGARDING BANK PRODUCT OBLIGATIONS

[Date]

VIA FACSIMILE AND FEDEX

Bank of America, N.A.,

    as the Agent

300 Galleria Parkway

Suite 800

Atlanta, GA 30339

Attention: Mr. John M. Olsen

Facsimile No.: (404) 607-3277

Re: PSS World Medical, Inc.

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Credit Agreement
dated as of November 16, 2011 (as amended, restated supplemented or otherwise
modified from time to time, the “Credit and Security Agreement”) among PSS World
Medical, Inc., a Florida corporation (“PSS”), certain Subsidiaries of PSS, as
Borrowers, certain other Subsidiaries of PSS, as Guarantors, the Lenders party
thereto from time to time, and Bank of America, N.A., as agent for the Lenders
(in such capacity, the “Agent”). All capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit and Security Agreement.

Pursuant to the terms of the Credit and Security Agreement, [INSERT NAME OF
LENDER OR AFFILIATE OF LENDER] hereby notifies the Agent that (a) [INSERT NAME
OF LENDER OR AFFILIATE OF LENDER] has extended Bank Products to a Borrower or a
Subsidiary and (b) that the amount of the Bank Products so extended is
$[        ] on the date hereof. Pursuant to the terms of the Credit and Security
Agreement, [INSERT NAME OF LENDER OR AFFILIATE OF LENDER] hereby requests that
the Agent acknowledge such notice and agree that $[        ] of such Bank
Products will constitute “Secured Bank Product Obligations” under and for
purposes of the Credit and Security Agreement, will constitute “Obligations”
under and for purposes of the Credit and Security Agreement and, at the Agent’s
discretion, will be included in the Bank Product Reserve established by the
Agent.

By its signature below, the Agent hereby acknowledges such notice and agrees
that $[        ] of Bank Products provided by [INSERT NAME OF LENDER OR
AFFILIATE OF LENDER] will constitute “Secured Bank Product Obligations” under
and for purposes of the Credit and Security Agreement, will constitute
“Obligations” under and for purposes of the Credit and Security Agreement and,
at the Agent’s discretion, will be included in the Bank Product Reserve.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

1

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

Very truly yours, [INSERT NAME OF APPLICABLE LENDER OR AFFILIATE OF LENDER] By:
 

 

Name:   Title:  

 

ACCEPTED AND AGREED TO BY:

BANK OF AMERICA, N.A., as Agent

By:

 

 

Name:

 

Title:

 

 

2

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

SCHEDULE 1.2

Existing Investments

 

1. See Schedule 7.7.

2. Pathway Health Services, Inc. – Convertible Note in the amount of $3,280,000.

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

SCHEDULE 7.3

Organization and Qualifications

 

Name of Obligor

 

Qualified Jurisdictions

PSS World Medical, Inc.

  All 50 states

DS Holdings, Inc.

  FL/DE

Gulf South Medical Supply, Inc.

  DE

Linear Holdings, LLC

  FL/DE

Physician Sales & Service, Inc.

  FL

PSS Holding, Inc.

  FL

PSS Service, Inc.

  FL

Theratech, Inc.

  FL/TN

ThriftyMed, Inc.

  FL

WorldMed Shared Services, Inc.

  FL

ProClaim, Inc.

  FL/TN

Cascade Medical Supply, Inc.

  FL/WA

Ancillary Management Solutions, Inc.

  FL/TN

DSRx, Inc.

  CA

Dispensing Solutions Acquisition Corp.

  FL/CA

Dispensing Solutions, Inc.

  FL/DE

POC Management Group, LLC

  FL/CA

Stat Rx USA, LLC

  FL/DE

Linear Medical Solutions, LLC

  FL/DE

ClaimOne, LLC

  FL/DE

BottomLine Medical Solutions, LLC

  FL/DE

Scrip Pak, LLC

  FL

Physician Sales & Service Limited Partnership

  FL

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

SCHEDULE 7.4

Corporate Name; Prior Transactions

 

Name of Obligor

 

Other Legal or

Trade Names

 

Mergers/Acquisition

PSS World Medical, Inc.   Physician Sales & Service; Physician Sales and
Service; Southern Anesthesia & Surgical; Medsol; Southern Anesthesia & Surgical,
Inc.; Activus Merger Sub, Inc.   4UOrtho, LLC; Activus Healthcare Solutions,
Inc.; CASAD Surgical Supply Co., Inc.; Cascade Medical Supply, Inc.; Controlled
Healthcare, LLC; DS Holdings, Inc.; Elite Medical Supply, LLC; FVS Holdings,
Inc.; Linear Holdings, LLC; McNaMed, Inc.; MediGen, LLC; Medsol, Inc.; Scenic
Medical, Inc.; Theratech, Inc.; Western New York Surgical Supply, Inc. DS
Holdings, Inc.   None   None Gulf South Medical Supply, Inc.   Medex USA   MedEx
USA, Inc.; Northwest Medical, Inc.; Pathway Health Services, Inc.; Star Medical,
Inc. (d/b/a Pacific Northwest Medical); Standard Medical Supply, Inc. Linear
Holdings, LLC   None   None Physician Sales & Service, Inc.   None   None PSS
Holding, Inc.   None   None PSS Service, Inc.   None   None Theratech, Inc.  
None   None ThriftyMed, Inc.   None   None WorldMed Shared Services, Inc.   PSS
World Medical Shared Services, Inc.; Gulf South Medical Shared Services, Inc.  
None ProClaim, Inc.   None   None Cascade Medical Supply, Inc.   None   None
Ancillary Management Solutions, Inc.   None   None DSRx, Inc.   None   None
Dispensing Solutions Acquisition Corp.   None   None Dispensing Solutions, Inc.
  None   None POC Management Group, LLC   None   None Stat Rx USA, LLC   None  
Stat Rx USA LLC Linear Medical Solutions, LLC   None   None ClaimOne, LLC   None
  None BottomLine Medical Solutions, LLC   None   BottomLine Medical, Inc. Scrip
Pak, LLC   None   None Physician Sales & Service Limited Partnership   None  
None

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

SCHEDULE 7.5

Subsidiaries and Affiliates

 

Name of

Subsidiary or Affiliate

  

Jurisdiction of
Organization of
Subsidiary or Affiliate

  

Relationship to PSS/

Owned by

  

Percentage
of Entity
Owned

DS Holdings, Inc.    DE    PSS World Medical, Inc.    100% Gulf South Medical
Supply, Inc.    DE    PSS World Medical, Inc.    100% Linear Holdings, LLC    DE
   PSS World Medical, Inc.    100% Physician Sales & Service, Inc.    FL    PSS
World Medical, Inc.    100% PSS Holding, Inc.    FL    PSS World Medical, Inc.
   100% PSS Service, Inc.    FL    PSS World Medical, Inc.    100% Theratech,
Inc.    TN    PSS World Medical, Inc.    100% ThriftyMed, Inc.    FL    PSS
World Medical, Inc.    100% WorldMed Shared Services, Inc.    FL    PSS World
Medical, Inc.    100% PSS/Gulf South Employee Relief Fund, Inc.    FL    PSS
World Medical, Inc.    100% PSS/Gulf South Medical Supply Relief Fund, Inc.   
FL    PSS World Medical, Inc.    100% PSS/WM Employee Education Fund, Inc.    FL
   PSS World Medical, Inc.    100% ProClaim, Inc.    TN    Gulf South Medical
Supply, Inc.    100% Cascade Medical Supply, Inc.    WA    Gulf South Medical
Supply, Inc.    100% Ancillary Management Solutions, Inc.    TN    ProClaim,
Inc.    100% DSRx, Inc.    CA    DS Holdings, Inc.    100% Dispensing Solutions
Acquisition Corp.    CA    DS Holdings, Inc.    100% Dispensing Solutions, Inc.
   DE    DS Holdings, Inc.    100% POC Management Group, LLC    CA    Dispensing
Solutions, Inc.    100% Stat Rx USA, LLC    DE    Linear Holdings, LLC    100%
Linear Medical Solutions, LLC    DE    Linear Holdings, LLC    100% ClaimOne,
LLC    DE    Linear Holdings, LLC    100% BottomLine Medical Solutions, LLC   
DE    Linear Holdings, LLC    100% Scrip Pak, LLC    FL    Stat Rx USA, LLC   
100% Physician Sales & Service Limited Partnership    FL    PSS Holding, Inc.   
99% Physician Sales & Service Limited Partnership    FL    PSS World Medical,
Inc.    1% PSS Global Sourcing Limited    Thailand    *    * PSS Global Sourcing
Limited    Thailand    *    * PSS Global Sourcing Limited    Thailand    *    *
PSS Global Holdings    Bermuda    *    *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

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

 

Name of

                 Subsidiary or Affiliate

 

Jurisdiction of

Organization of
Subsidiary or Affiliate

 

Relationship to PSS/

Owned by

 

Percentage

of Entity

Owned

PSS Global Holdings

 

Bermuda

 

*

 

*

PSS Southeast Asia Limited

 

Malaysia

 

*

 

*

PSS Global Sourcing

Hong Kong Limited

 

Hong Kong

 

*

 

*

PSS HK1 Limited

 

Hong Kong

 

*

 

*

PSS Global Sourcing Limited

 

Hong Kong

 

*

 

*

PSS Global Sourcing CBT

 

China

 

*

 

*

PSS China Sourcing Limited

 

Hong Kong

 

*

 

*

PSS China Sourcing Shanghai

Rep Office

 

China

 

*

 

*

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

2

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SCHEDULE 7.7

Capitalization

 

Obligor

  

Number of

Authorized

Shares, Etc.

  

Type of

Stock

   Number of
Outstanding
Shares, Etc.    

Names of the record and
beneficial owners of all such
shares

DS Holdings, Inc.    3,000,000    Preferred      2,690      PSS World Medical,
Inc.    30,000,000    Common      3,887,950      Gulf South Medical Supply, Inc.
   1,000    Common      100      PSS World Medical, Inc. Linear Holdings, LLC   
N/A    Units      100      PSS World Medical, Inc. Physician Sales & Service,
Inc.    7,000    Common      100      PSS World Medical, Inc. PSS Holding, Inc.
   1,000    Common      100      PSS World Medical, Inc. PSS Service, Inc.   
1,000    Common      100      PSS World Medical, Inc. Theratech, Inc.    5,000
   Common      2,500      PSS World Medical, Inc. ThriftyMed, Inc.    7,000   
Common      100      PSS World Medical, Inc. WorldMed Shared Services, Inc.   
10,000    Common      1,000      PSS World Medical, Inc. ProClaim, Inc.    1,000
   Common      1,000      Gulf South Medical Supply, Inc. Cascade Medical
Supply, Inc.    50,000    Common      19,375      Gulf South Medical Supply,
Inc. Ancillary Management Solutions, Inc.    1,000    Common      1,000     
ProClaim, Inc. DSRx, Inc.    100,000    Common      10,000      DS Holdings,
Inc. Dispensing Solutions Acquisition Corp.    100,000    Common      10,000   
  DS Holdings, Inc. Dispensing Solutions, Inc.    100,000    Common      10,000
     DS Holdings, Inc. POC Management Group, LLC    N/A    Units      100     
Dispensing Solutions, Inc. Stat Rx USA, LLC    N/A    Units      100      Linear
Holdings, LLC Linear Medical Solutions, LLC    N/A    Units      100      Linear
Holdings, LLC ClaimOne, LLC    N/A    Units      100      Linear Holdings, LLC
BottomLine Medical Solutions, LLC    N/A    Units      100      Linear Holdings,
LLC Scrip Pak, LLC    N/A    Units      100      Stat Rx USA, LLC Physician
Sales & Service Limited Partnership    N/A    Limited Partnership Interest     
99 %    PSS Holding, Inc.            1 %    PSS World Medical, Inc.

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

SCHEDULE 7.9

Debt

 

FUNDED DEBT

 

Liens Securing Debt

Senior Convertible Notes

 

None

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

SCHEDULE 7.11

Real Estate; Leases

Obligor and Subsidiary Owned Real Estate: None.

 

Branch

  

Lessee/Sublessee Obligor

  

Location of Leased or Subleased

Real or Personal Property

8052    Cascade Medical Supply, Inc.   

Redmond Heights Tech Center

14727 NE 87th St.

Redmond, WA 98502

8053    Cascade Medical Supply, Inc.   

10424 West Aero Road, Ste. G

Spokane, WA 99224

1703    ClaimOne LLC   

6500 Bowden Rd.

Jacksonville, FL 32216

1701    Dispensing Solutions, Inc.   

2727 S Susan St.

Santa Ana, CA 92704

8055    Dispensing Solutions, Inc.   

700 Churchhill Court, Ste. 110

Woodstock, GA 30188

8001    Gulf South Medical Supply Inc.   

4291 Pell Dr.

Sacramento, CA 95838

8002    Gulf South Medical Supply Inc.   

1400 AIP Dr.

Harrisburg, PA 17057

8003    Gulf South Medical Supply Inc.   

4349 Duraform Ln.

Windsor, WI 53598

8003    Gulf South Medical Supply Inc.   

2218 Traux Blvd

Eau Claire, WI 54703

8004    Gulf South Medical Supply Inc.   

510 N. Peachtree Rd.

Mesquite, TX 75149

8005    Gulf South Medical Supply Inc.   

173 E. Market Ridge Dr.

Jackson, MS 39157

8006    Gulf South Medical Supply Inc.   

8220 Troon Circle

Austell, GA 30168

8009    Gulf South Medical Supply Inc.   

2151 Proforma St.

Ontario, CA 91761

8011    Gulf South Medical Supply Inc.   

915 Taylor Rd.

Gahanna, OH 43230

8012    Gulf South Medical Supply Inc.   

2501 Investors Row, Ste. 1000

Orlando, FL 32837

8013    Gulf South Medical Supply Inc.   

1704 B St. NW, Ste. 120

Auburn, WA 98001

8019    Gulf South Medical Supply Inc.   

12 N. Wentworth Ave.

Londonderry, NH 03053

8022    Gulf South Medical Supply Inc.   

9301 Globe Center Dr., Ste. 100

Morrisville, NC 27560

8031    Gulf South Medical Supply Inc.   

3602 W. Holland Ave.

Fresno, CA 93722

8043    Gulf South Medical Supply Inc.   

7735 S. 134th St., Ste. 105 & 109

Omaha, NE 68138

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

Branch

  

Lessee/Sublessee Obligor

  

Location of Leased or Subleased

Real or Personal Property

8055    Gulf South Medical Supply Inc.   

10424 West Aero Rd., Ste. G

Spokane, WA 99224

8056    Gulf South Medical Supply Inc.   

3601 Southeast Columbia Way Building 51, Ste. 260

Vancouver, WA 98661

8057    Gulf South Medical Supply, Inc. (Medex)   

5400 NW 35th Terrace, Ste. 101C

Fort Lauderdale, FL 33309

8063    Gulf South Medical Supply Inc.   

1826 Executive Drive

Indianapolis, IN 46241

—    Gulf South Medical Supply Inc.    Handheld scanners in various locations
1701    Linear Medical Solutions, LLC   

3333 Hendricks Ave.

Jacksonville, FL 32207

2025    Physician Sales & Service Limited Partnership   

3125 N. Great Southwest Pkwy, Ste. 200

Grand Prairie, TX 75050

2027    Physician Sales & Service Limited Partnership   

15550 Vickery Dr., Ste. 200

Houston, TX 77032

2029    Physician Sales & Service Limited Partnership   

6601 Guada Coma Dr., Ste. 250

Schertz, TX 78154

2070    Physician Sales & Service Limited Partnership   

530 32nd St.

Lubbock, TX 79404

1401    ProClaim (Office)   

720 Cool Springs Blvd., Ste. 600

Franklin, TN 37067

1006    PSS World Medical, Inc.   

301 Gillis Dr.

Orlando, FL 32824

1006    PSS World Medical, Inc.   

122-6 Hamilton Park Dr.

Tallahassee , FL 32304

1006    PSS World Medical, Inc.   

1455 SW 6th Ct. Building 1406

Pompano Beach, FL 33069

1011    PSS World Medical, Inc.   

4105 Royal Dr., Ste. 108, 600, 700 & 800

Kennesaw, GA 30144

1011    PSS World Medical, Inc.   

PSS Chattanooga

5959 Shallowford Rd.

Chattanooga, TN

1011    PSS World Medical, Inc.   

627 American Glass Way, Ste. C

Knoxville, TN 37932

1011    PSS World Medical, Inc.   

1420 Donelson Pike, Ste. A9

Nashville, TN

1011    PSS World Medical, Inc.   

PSS Birmingham

7654 Commerce Lane, Ste. A

Trussville, AL 35173

1016    PSS World Medical, Inc.   

150 Canvasback Dr.

St. Rose, LA 70123

1021    PSS World Medical, Inc.   

5950 Freeport Ave.

Memphis, TN 38141

1021    PSS World Medical, Inc.   

25 Collins Industrial Pl., Bldg 1, Ste. A

Little Rock, AR 72113

1028    PSS World Medical, Inc.   

1938 Malvern Ave.

Fullerton, CA 92833

1028    PSS World Medical, Inc.   

3330 Sunrise Ave., Ste. 108

Las Vegas, NV 89101

 

2

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

Branch

  

Lessee/Sublessee Obligor

  

Location of Leased or Subleased

Real or Personal Property

1028    PSS World Medical, Inc.   

PSS Chatsworth

21732 Marilla St.

Chatsworth, CA 91311

1028    PSS World Medical, Inc.   

PSS San Diego

12310World Trade Dr., Ste. 105

San Diego, CA 92128

1031    PSS World Medical, Inc.   

1816 West Pointe Dr.

Charlotte, NC 28214

1031    PSS World Medical, Inc.   

9301 Globe Center Dr., Ste. 125

Morrisville, NC 27560

1031    PSS World Medical, Inc.   

1281 1st St., South

Columbia, SC 29209

1033    PSS World Medical, Inc.   

3103 Broadway Rd., Ste. 100

Phoenix, AZ 85040

1045    PSS World Medical, Inc.   

1950 Ruffin Mill Rd.

Colonial Heights, VA 23150

1045    PSS World Medical, Inc.   

206 Research Dr.

Chesapeake , VA 23320

1045    PSS World Medical, Inc.   

VA, Longwood Business Center

230 Industrial Dr.

Spotsylvania, VA 22408

1045    PSS World Medical, Inc.   

9730 Martin Luther King Jr. Hwy

Lanham, MD 20706

1047    PSS World Medical, Inc.   

1671 East Kansas City Rd.

Olathe, KS 66215

1047    PSS World Medical, Inc.   

PSS St. Louis

94 MB Corporate Park Ct.

St Charles, MO 63301

1049    PSS World Medical, Inc.   

970 Riverside Pkwy, Ste. 60 & 90

West Sacramento, CA 95605

1049    PSS World Medical, Inc.   

37310 Cedar Blvd., Ste. G

Newark,CA 94560

1050    PSS World Medical, Inc.   

11175 E. 55th Ave., Ste. 106

Denver, CO 80239

1053    PSS World Medical, Inc.   

300 Airport Road, Unit 2

Elgin, IL 60123

1053    PSS World Medical, Inc.   

27754 W. Bluegrass Dr., Unit C

Channahon, IL 60410

1053    PSS World Medical, Inc.   

W228 S6944

Enterprise Drive, Unit 107

Big Bend, WI 53103

1056    PSS World Medical, Inc.   

5150 Interchange Way, Ste. B

Louisville, KY 40229

1056    PSS World Medical, Inc.   

PSS Cincinnati (Hamilton)

5209 Mulhauser Rd.

Hamilton, OH 45011

1057    PSS World Medical, Inc.   

12999 Wilfred Ln.

Rogers, MN 55374

 

3

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

Branch

  

Lessee/Sublessee Obligor

  

Location of Leased or Subleased

Real or Personal Property

1058    PSS World Medical, Inc.   

4 Thatcher Ln.

Wareham, MA 02571

1058    PSS World Medical, Inc.   

16 Walker Way

Albany, NY 12205

1059    PSS World Medical, Inc.   

208 Passaic Ave.

Fairfield, NJ 07004

1059    PSS World Medical, Inc.   

1800 TT Mearns Rd

Warminster, PA 18974

1059    PSS World Medical, Inc.   

425 Lexington Ave.

West Babylon, NY

1060    PSS World Medical, Inc.   

520 West Park Rd.

Pittsburg, PA 15221

1060    PSS World Medical, Inc.   

895 Highland Rd.

Macedonia, OH 44056

1060    PSS World Medical, Inc.   

PSS Troy, MI

21022 Bridge St.

Southfield, MI 48033

1063    PSS World Medical, Inc.   

2444 Innovation Way

Rochester, NY 14624

1066    PSS World Medical, Inc.   

3044 South 1030 West, Ste. 201

Salt Lake City, UT 84119

1069    PSS World Medical, Inc.   

1704 B St. NW, Ste. 120

Auburn, WA 98001

1080    PSS World Medical, Inc.   

99-994 Iwena St.

Aiea, HI 96701

1086    PSS World Medical, Inc.   

4601 Bulls Bay Hwy, Bldg. 200

Jacksonville, FL 32219

1087    PSS World Medical, Inc. (SAS)   

1 Southern Court

West Columbia, SC 29169

1821    PSS World Medical, Inc. (SAS)   

1 Southern Court

West Columbia, SC 29169

1527    PSS World Medical, Inc. (GSMSFieldSupp)   

4345 Southpoint Blvd.

Jacksonville, FL 32216

1527    PSS World Medical, Inc. (PSSFieldSupp)   

4345 Southpoint Blvd.

Jacksonville, FL 32216

1527    PSS World Medical, Inc.   

4190 Belfort Rd.

Jacksonville, FL 32216

1601    PSS World Medical, Inc.   

6035 W. Gross Point Rd.

Niles, IL 60714

2025    PSS World Medical, Inc.   

9920-C E. 55th St.

Tulsa, OK 74136

8945    PSS World Medical, Inc.   

4601 Bulls Bay Hwy, Building 200

Jacksonville, FL 32219

9970    PSS World Medical, Inc.   

8220 Troon Circle

Austell, GA 30168

9971    PSS World Medical, Inc.   

4601 Bulls Bay Hwy, Building 200

Jacksonville, FL 32219

 

4

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

Branch

  

Lessee/Sublessee Obligor

  

Location of Leased or Subleased

Real or Personal Property

9975    PSS World Medical, Inc.   

1930 W Malvern Ave.

Fullerton, CA 92833

—    PSS World Medical, Inc.    Inventory in customer’s possession Not Billed as
of 9/30/2011 1702    Stat Rx USA, LLC   

2481 Hilton Drive, Ste. 4

Gainesville, GA 30501

1712    Theratech, Inc.   

1109 Myatt Blvd

Madison, TN 37115

 

5

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

SCHEDULE 7.12

Proprietary Rights

All Proprietary Rights: See Schedule 7.31.

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

SCHEDULE 7.13

Trade Names

 

Obligor/Subsidiary

  

Trade Name, Etc.

PSS World Medical, Inc.    Physician Sales & Service; Physician Sales and
Service; Southern Anesthesia & Surgical; Medsol; Southern Anesthesia & Surgical,
Inc.; Activus Merger Sub, Inc. DS Holdings, Inc.    None Gulf South Medical
Supply, Inc.    Medex USA Linear Holdings, LLC    None Physician Sales &
Service, Inc.    None PSS Holding, Inc.    None PSS Service, Inc.    None
Theratech, Inc.    None ThriftyMed, Inc.    None WorldMed Shared Services, Inc.
   PSS World Medical Shared Services, Inc.; Gulf South Medical Shared Services,
Inc. ProClaim, Inc.    None Cascade Medical Supply, Inc.    None Ancillary
Management Solutions, Inc.    None DSRx, Inc.    None Dispensing Solutions
Acquisition Corp.    None Dispensing Solutions, Inc.    None POC Management
Group, LLC    None Stat Rx USA, LLC    None Linear Medical Solutions, LLC   
None ClaimOne, LLC    None BottomLine Medical Solutions, LLC    None Scrip Pak,
LLC    None Physician Sales & Service Limited Partnership    None

PSS Global Sourcing Limited

  

None

PSS Global Holdings

  

None

PSS Southeast Asia Limited

  

None

PSS Global Sourcing Hong Kong Limited

  

None

PSS HK1 Limited

  

None

PSS Global Sourcing Limited

  

None

PSS Global Sourcing CBT

  

None

PSS China Sourcing Limited

  

None

PSS China Sourcing Shanghai Rep Office

  

None

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

SCHEDULE 7.14

Litigation

NONE.

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

SCHEDULE 7.15

Labor Disputes

None.

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

SCHEDULE 7.16

Environmental Laws

NONE.

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

SCHEDULE 7.26

Material Agreements

 

1. Senior Convertible Notes Indenture

2. Senior Convertible Notes

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

SCHEDULE 7.27

Bank Accounts

 

Owner/ Obligor

 

Bank/Financial

Institution

 

Account

Number

 

Account Type

 

Account

Purpose

Ancillary Management Solutions, Inc.   Bank of America, N.A.   *   Company
Deposits   Cash Deposits BottomLine Medical Solutions, LLC   American Enterprise
Bank of Florida   *   Bottom Line   Cash Deposits Cascade Medical Supply, Inc.  
Bank of America, N.A.   *   Company Deposits   Cash Deposits ClaimOne, LLC  
American Enterprise Bank of Florida   *   Company Deposits   Cash Deposits
ClaimOne, LLC   Bank of America, N.A.   *   BottomLine\Keltman Dispensing Fees  
Controlled Disbursement Dispensing Solutions, Inc.   USAmeribank   *   Company
Checking   Operating Dispensing Solutions, Inc.   Union Bank   *   Company
Checking   Operating Dispensing Solutions, Inc.   Union Bank   *   Company FSA  
Flex Spending Acct Dispensing Solutions, Inc.   Union Bank   *   PMG Checking  
Operating DS Holdings, Inc.   USAmeribank   *   Escrow   Cash Collateral Gulf
South Medical Supply, Inc.   Bank of America, N.A.   *   Master Depository  
Cash Deposits Gulf South Medical Supply, Inc.   Bank of America, N.A.   *  
Lockbox Deposits   Cash Deposits Gulf South Medical Supply, Inc.   Bank of
America, N.A.   *   Wires Deposits   Cash Deposits Gulf South Medical Supply,
Inc.   Bank of America, N.A.   *   Sales Tax Disbursements   Disbursement: ACH
Gulf South Medical Supply, Inc.   Bank of America, N.A.   *   MedEx USA Deposits
  Cash Deposits Gulf South Medical Supply, Inc.   Bank of America, N.A.   *  
MedEx USA Disbursements   Controlled Disbursement Gulf South Medical Supply,
Inc.   Bank of America, N.A.   *   Depository   AR Deposits Linear Medical
Solutions, LLC   American Enterprise Bank of Florida   *   Linear Medical
Solutions, Inc. Deposits \ Dispensing Fee Disbursements   Operating Physicians
Sales & Service Limited Partnership   Bank of America, N.A.   *   PSS - Houston
- Cash / ACHs   Cash Deposits Physicians Sales & Service Limited Partnership  
Bank of America, N.A.   *   PSS - Dallas - Cash / ACHs   Cash Deposits

 

*

Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission

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

Physicians Sales & Service Limited Partnership   Bank of America, N.A.   *  
Physicians Sales & Services LP - Lockbox   Lockbox ProClaim, Inc.   Bank of
America, N.A.   *   Company Deposits   Cash Deposits PSS World Medical, Inc.  
Bank of America, N.A.   *   WM Master Cash   Cash Deposits PSS World Medical,
Inc.   Bank of America, N.A.   *   WM RDS   Cash Deposits PSS World Medical,
Inc.   Bank of America, N.A.   *   WM Holdback Acct   Cash Deposits PSS World
Medical, Inc.   Bank of America, N.A.   *   Company PAC   Cash Deposits PSS
World Medical, Inc.   Bank of America, N.A.   *   Payroll Tax   Disbursement:
ACH PSS World Medical, Inc.   Bank of America, N.A.   *   AP Checks  
Disbursement: Checks PSS World Medical, Inc.   Bank of America, N.A.   *   AP
Checks   Disbursement: Checks PSS World Medical, Inc.   Bank of America, N.A.  
*   Payroll Disbursement   Disbursement: Checks PSS World Medical, Inc.   Bank
of America, N.A.   *   Master Disbursement   Disbursement: Wires PSS World
Medical, Inc.   Bank of America, N.A.   *   Flex Spending   PSS World Medical,
Inc.   Bank of America, N.A.   *   WM Travel   Cash Deposits PSS World Medical,
Inc.   Bank of America, N.A.   *   Master Concentration   Cash Deposits PSS
World Medical, Inc.   Bank of America, N.A.   *   Deposit Allocations   Cash
Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   Physicians Sales
& Services - Lockbox   Lockbox PSS World Medical, Inc.   Bank of America, N.A.  
*   4 U Doctors   Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.
  *   PSS - Northeast - Cash / ACHs   Cash Deposits PSS World Medical, Inc.  
Bank of America, N.A.   *   PSS - New England - Cash / ACHs   Cash Deposits PSS
World Medical, Inc.   Bank of America, N.A.   *   PSS - Rochester - Cash / ACHs
  Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS -
Great Lakes - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of
America, N.A.   *   PSS - West Texas - Cash / ACHs   Cash Deposits PSS World
Medical, Inc.   Bank of America, N.A.   *   PSS - San Antonio - Cash / ACHs  
Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS - Mid
South - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America,
N.A.   *   PSS - Atlanta - Cash / ACHs   Cash Deposits PSS World Medical, Inc.  
Bank of America, N.A.   *   PSS - Richmond - Cash / ACHs   Cash Deposits PSS
World Medical, Inc.   Bank of America, N.A.   *   PSS - Chicago - Cash / ACHs  
Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS - River
Cities - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America,
N.A.   *   PSS - Heartland - Cash / ACHs   Cash Deposits

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

2

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

 

PSS World Medical, Inc.   Bank of America, N.A.   *   PSS - Salt Lake - Cash /
ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS -
Denver - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America,
N.A.   *   PSS - Minneapolis - Cash / ACHs   Cash Deposits PSS World Medical,
Inc.   Bank of America, N.A.   *   PSS - Orlando - Cash / ACHs   Cash Deposits
PSS World Medical, Inc.   Bank of America, N.A.   *   PSS - Charlotte - Cash /
ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS -
New Orleans - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of
America, N.A.   *   PSS - Southern California - Cash / ACHs   Cash Deposits PSS
World Medical, Inc.   Bank of America, N.A.   *   PSS - Seattle - Cash / ACHs  
Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS -
Phoenix - Cash / ACHs   Cash Deposits PSS World Medical, Inc.   Bank of America,
N.A.   *   PSS - Northern California - Cash / ACHs   Cash Deposits PSS World
Medical, Inc.   Bank of America, N.A.   *   PSS - Hawaii - Cash / ACHs   Cash
Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   PSS - Marketing  
Cash Deposits PSS World Medical, Inc.   Bank of America, N.A.   *   SAS -
Southern Anastesia   Cash Deposits PSS World Medical, Inc.   Bank of America,
N.A.   *   SAS - Southern Anastesia   Cash Deposits PSS World Medical, Inc.  
Bank of America, N.A.   *   Depository   AR Deposits PSS World Medical, Inc.  
HSBC   *   WM Inc   Cash Deposits PSS World Medical, Inc.   Merrill Lynch,
Pierce, Fenner & Smith Incorporated   *   Money Market Account   Investments
Stat Rx**   American Enterprise Bank of Florida   *   Stat RX   Cash Deposits
Stat Rx USA, LLC   Bank of America, N.A.   *   Stat RX   Cash Deposits
Theratech, Inc.   First Tennesse Bank   *   Company Savings   Savings Theratech,
Inc.   First Tennesse Bank   *   Company Main Account   Operating

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

** NOTE: STAT RX’S ACCOUNT WITH AMERICAN ENTERPRISE BANK IS IN THE PROCESS OF
EITHER BEING CLOSED OR CONVERTED TO STAT RX USA, LLC.

 

3

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

SCHEDULE 7.30

Chief Executive Office; Locations of Collateral; Other Places of Business

Part I.

 

Obligor

 

Chief Executive Office

 

Location of

Books and

Records

PSS World Medical, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Theratech, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Gulf South Medical Supply, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

DS Holdings, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

WorldMed Shared Services, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Linear Holdings, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

PSS Holding, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

ProClaim, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Cascade Medical Supply, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

DSRx, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Dispensing Solutions Acquisition Corp.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Dispensing Solutions, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Linear Medical Solutions, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Stat Rx USA, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

ClaimOne, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

BottomLine Medical Solutions, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Physician Sales & Service Limited Partnership

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Ancillary Management Solutions, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

POC Management Group, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Scrip Pak, LLC

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

Physician Sales & Service, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

ThriftyMed, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

PSS Service, Inc.

  4345 Southpoint Blvd., Jacksonville, FL 32216   Same

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

Part II.

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 8052   Cascade Medical Supply, Inc.  

Redmond Heights Tech Center

14727 NE 87th St.

Redmond, WA 98502

  

RREEF AMERICA REIT II CORP. KK

Redmond Heights Tech Center

1600 Christensen Rd., Ste. 101

Tukwila, WA 98188

   * 8053   Cascade Medical Supply, Inc.  

10424 West Aero Road, Ste. G

Spokane, WA 99224

  

Alvin J Wolff Management Co

220W Main Ave

Spokane, Washington 99201

   *

 

8055

 

 

Gulf South Medical Supply, Inc.

        1703   ClaimOne LLC  

6500 Bowden Rd.

Jacksonville, FL 32216

  

Chris Gaston

ClaimOne, LLC

Jacksonville FL 32241

   * 1701   Dispensing Solutions, Inc.  

2727 S Susan St.

Santa Ana, CA 92704

  

Bonerts Incorporated

2727 S. Susan St.

Santa Ana, CA 92704

   * 8055   Dispensing Solutions, Inc.  

700 Churchhill Court, Ste. 110

Woodstock, GA 30188

  

Windsor Properties, LLC

700 Churchhill Court, Ste. 200

Woodstock, GA 30188

   * 8001   Gulf South Medical Supply Inc.  

4291 Pell Dr.

Sacramento, CA 95838

  

Mr. & Mrs. Chens Trust

377 Swift Ave.

South San Francisco, CA 94080

   * 8002   Gulf South Medical Supply Inc.  

1400 AIP Dr.

Harrisburg, PA 17057

  

Conwago

600 Flank Drive

Harrisburg, PA 17122

   * 8003   Gulf South Medical Supply Inc.  

4349 Duraform Ln.

Windsor, WI 53598

  

Welton Enterprises

559 D’Onofrio Drive

Madison, WI 53719

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

2

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 8003   Gulf South Medical Supply Inc.  

2218 Traux Blvd

Eau Claire, WI 54703

  

Fredrick B Wyss & Jan M Wyss

1004 McClaflin Ave.

Eau Claire, WI 54703

   * 8004   Gulf South Medical Supply Inc.  

510 N. Peachtree Rd.

Mesquite, TX 75149

  

LIT Industrial Texas Limited Partnership

PO Box 82559

Goleta, Ca. 93118

   * 8005   Gulf South Medical Supply Inc.  

173 E. Market Ridge Dr.

Jackson, MS 39157

  

Highland Colony Business Park Partnership

P. O. Box 10448

Jackson, MS 39289

   * 8006   Gulf South Medical Supply Inc.  

8220 Troon Circle

Austell, GA 30168

  

Rreef America

3520 Piedmont Road

Atlanta, GA 30305

   * 9970   PSS World Medical, Inc.         8009   Gulf South Medical Supply
Inc.  

2151 Proforma St.

Ontario, CA 91761

  

Pan Cal Proforma 256 LLC

18111 Von Karman, Ste. 500

Irvine, CA 95612

   * 8011   Gulf South Medical Supply Inc.  

915 Taylor Rd.

Gahanna, OH 43230

  

Meritex

6500 Olentangy River Rd.

Worthington, OH 43085

   * 8012   Gulf South Medical Supply Inc.  

2501 Investors Row, Ste. 1000

Orlando, FL 32837

  

Orlando Central Number One LP

2501 Investors Row

Orlando, FL 32837

   *

8019

1069

 

Gulf South Medical Supply Inc.

PSS World Medical, Inc.

 

1704 B St. NW, Ste. 120

Auburn, WA 98001

  

RREEF American REIT II Corp II

16000 Christensen Road

Tukwila, WA 98188

   * 8019   Gulf South Medical Supply Inc.  

12 N. Wentworth Ave.

Londonderry, NH 03053

  

Sarina Seacoast LLC

49 Tidewater Farms

Greenland, NH 03940

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

3

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 8022   Gulf South Medical Supply Inc.  

9301 Globe Center Dr., Ste. 100

Morrisville, NC 27560

  

Globe Center Realty Eight LLC

3605 Glenwood Ave.

Raleigh, NC 27612

   * 8031   Gulf South Medical Supply Inc.  

3602 W. Holland Ave.

Fresno, CA 93722

  

The Dick Family Trust

786 E. Fairmont Ave.

Fresno, CA

   * 8043   Gulf South Medical Supply Inc.  

7735 S. 134th St., Ste. 105 & 109

Omaha, NE 68138

  

First Management

1941 South 42nd St., Ste. 550

Omaha, NE 68105

   * 8056   Gulf South Medical Supply Inc.  

3601 Southeast Columbia Way Building 51, Ste. 260

Vancouver, WA 98661

  

CBC 1, LLC

2501 SE Columbia Way, Ste. 240

Vancouver Washington 98661

   * 8057   Gulf South Medical Supply, Inc. (Medex)  

5400 NW 35th Terrace, Ste. 101C

Fort Lauderdale, FL 33309

  

EastGroup Properties, LP

6555 NW 9th Ave., Ste. 104

Ft. Lauderdale, FL 33309

   * 8063   Gulf South Medical Supply Inc.  

1826 Executive Drive

Indianapolis, IN 46241

  

Dugan Realty LLC

c/o Duke Realty Services Limited Partnership

600 East 96th St., Ste. 100

Indianapolis, IN 46240

   * —   Gulf South Medical Supply Inc.   Handheld scanners in various locations
   n/a    * 1701   Linear Medical Solutions, LLC  

3333 Hendricks Ave.

Jacksonville, FL 32207

  

Linear Solutions investments, LLC

PO Box 10890

Jacksonville Florida 32247

   * 2025   Physician Sales & Service Limited Partnership  

3125 N. Great Southwest Pkwy, Ste. 200

Grand Prairie, TX 75050

  

Hillwood Investment Properties

5430 LBJ Freeway, Ste. 800

Dallas, TX 75240

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

4

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 2027   Physician Sales & Service Limited Partnership  

15550 Vickery Dr., Ste. 200

Houston, TX 77032

  

EastGroup Properties LP

1502 Augusta

Houston, TX 77057

   * 2029   Physician Sales & Service Limited Partnership  

6601 Guada Coma Dr., Ste. 250

Schertz, TX 78154

  

Verde Realty Tri -County, LTD

C/O Cavender & Hill Properties, Inc.

900 Isom Rd., Ste. 306

San Antonio, TX 78216

   * 2070   Physician Sales & Service Limited Partnership  

530 32nd St.

Lubbock, TX 79404

  

Skybell’s Ave. Q Rentals

1112 Ave. Q

Lubbock, TX 79401

   * 1401   ProClaim (Office)  

720 Cool Springs Blvd., Ste. 600

Franklin, TN 37067

  

Highwoods

1166 Ave. of the Americas

New York, NY 10036

   * 1006   PSS World Medical, Inc.  

301 Gillis Dr.

Orlando, FL 32824

  

Duke Realty L.P

75 Remittance Drive, Ste. 3205

Chicago, Il 60675-3205

   * 1006   PSS World Medical, Inc.  

122-6 Hamilton Park Dr.

Tallahassee , FL 32304

  

Hamilton Leasing Partnership LLP

PO Box 2068

Tallahassee, FL 32316

   * 1006   PSS World Medical, Inc.  

1455 SW 6th Ct. Bldg 1406

Pompano Beach, FL 33069

  

Liberty Property LP

777 Yamato Rd., Ste. 135

Boca Raton, FL 33431

   * 1011   PSS World Medical, Inc.  

4105 Royal Dr., Ste. 108, 600, 700 & 800

Kennesaw, GA 30144

  

Industrial Property Fund III LP

3434 Peachtree Rd. NE

Atlanta, GA 30326

Office / Warehouse Brokerage, Inc.

3131 Piedmont Rd, Ste. 200

Altanta, GA 30305

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

5

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1011   PSS World Medical, Inc.  

PSS Chattanooga

5959 Shallowford Rd.

Chattanooga, TN

  

Hickory Land Company

c/o Hudson Companies, Inc.

5959 Shallowford Road, Ste. 433

Chattanooga , TN 37421

   * 1011   PSS World Medical, Inc.  

627 American Glass Way, Ste. C

Knoxville, TN 37932

  

B & P Properties

P.O. Box 51058

Knoxville, TN 37950

   * 1011   PSS World Medical, Inc.  

1420 Donelson Pike, Ste. A9

Nashville, TN

  

FirstCal Industrial 2 Acquisition, LLC

c/o First Industrial Realty Trust, Inc.

311 South Wacker Drive, Ste. 4000

Chicago, IL 60606

   * 1011   PSS World Medical, Inc.  

PSS Birmingham

7654 Commerce Lane, Ste. A

Trussville, AL 35173

  

Donnie and Susan Jones

7774 Peppertree Highlands Circle

Trussville, AL 35173

   * 1016   PSS World Medical, Inc.  

150 Canvasback Dr.

St. Rose, LA 70123

  

Sealy LLC

333 Texas St., Ste. 1050

Shreveport, LA 70087

   * 1021   PSS World Medical, Inc.  

5950 Freeport Ave.

Memphis, TN 38141

  

DC Lease Management LLC

Industrial Developments Int’l LP

3424 Peachtree Rd., NE, Ste. 1500

Atlanta, GA 30326

   * 1021   PSS World Medical, Inc.  

25 Collins Industrial Pl.

Bldg 1, Ste. A

Little Rock, AR 72113

  

Haas Properties

128 South Shore Dr.

Maumelle, AR 72113

   * 1028   PSS World Medical, Inc.  

1938 Malvern Ave.

Fullerton, CA 92833

  

RREEF American REIT II Corp. X

1630 S. Sunkist St.

Anaheim, CA 92806

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

6

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1028   PSS World Medical, Inc.  

3330 Sunrise Ave., Ste. 108

Las Vegas, NV 89101

  

Harsch Investment Properties

3111 South Valley View Blvd, Ste. K101

Las Vegas, NV 89102

   * 1028   PSS World Medical, Inc.  

PSS Chatsworth

21732 Marilla St.

Chatsworth, CA 91311

  

First Industrial LP

311 S. Wacker Dr., Ste. 4000

Chicago, IL 60606

   * 1028   PSS World Medical, Inc.  

PSS San Diego

12310 World Trade Dr., Ste. 105

San Diego, CA 92128

  

CLPF Carmel Mountain

c\o Lion Industrial Trust

PO Box 100481

Pasadena, CA 91189

   * 1031   PSS World Medical, Inc.  

1816 West Pointe Dr.

Charlotte, NC 28214

  

Pro Logis -North Carolina LLT

PO Box 198267 , File 198267

Atlanta, GA 30384

   * 1031   PSS World Medical, Inc.  

9301 Globe Center Dr., Ste. 125

Morrisville, NC 27560

  

Globe Center Realty Eight LLC

3605 Glenwood Ave.

Raleigh, NC 27612

   * 1031   PSS World Medical, Inc.  

1281 1st St., South

Columbia, SC 29209

  

Neel Real Estate, INC

PO Box 2948

Irmo, SC 29063

   * 1033   PSS World Medical, Inc.  

3103 Broadway Rd., Ste. 100

Phoenix, AZ 85040

  

Phoenix I-10

PruCrow Industrial Properties LP

8 Campus Drive

Parsippany, NJ 07054

   * 1045   PSS World Medical, Inc.  

1950 Ruffin Mill Rd.

Colonial Heights, VA 23150

  

EWC LC

P. O. Box 377

Richmond, VA 23218

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

7

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1045   PSS World Medical, Inc.  

206 Research Dr.

Chesapeake , VA 23320

  

Greenbrier West Business Pk LLC

206 Research Dr., Ste. 101

Chesapeake, VA 23320

   * 1045   PSS World Medical, Inc.  

VA, Longwood Business Center

230 Industrial Dr.

Spotsylvania, VA 22408

  

Longwood LLC

PO Box 3485

Fredericksburg, VA 22402

   * 1045   PSS World Medical, Inc.  

9730 Martin Luther King Jr. Hwy

Lanham, MD 20706

  

FR Southgate Washington, LLC

c/o First Industrial, L.P.

PO Box 905654

Charlotte, NC 28290

   * 1047   PSS World Medical, Inc.  

1671 East Kansas City Rd.

Olathe, KS 66215

  

Equus Kansas Realty, LLC

719 Kasota Ave

Minneapolis, MN 55414

   * 1047   PSS World Medical, Inc.  

PSS St. Louis

94 MB Corporate Park Ct.

St Charles, MO 63301

  

Cornerstone Management Group, LLC

90 MB Corporate Park Ct.

St Charles, MO 63301

   * 1049   PSS World Medical, Inc.  

970 Riverside Pkwy, Ste. 60 & 90

West Sacramento, CA 95605

  

Harsch Investment Properties

1121 SW Salmon St.

Portland, OR 97205

   * 1049   PSS World Medical, Inc.  

37310 Cedar Blvd., Ste. G

Newark, CA 94560

  

Cedar Associates

225 W. Santa Clara St., Ste. 1050

San Jose, Ca. 95113

   * 1050   PSS World Medical, Inc.  

11175 E. 55th Ave., Ste. 106

Denver, CO 80239

  

ProLogis Trust

14100 East 35th Place

Aurora, CO 80011

   * 1053   PSS World Medical, Inc.  

300 Airport Road, Unit 2

Elgin, IL 60123

  

Fox River One LLC

5060 River Road

Schiller Park, IL60176

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

8

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1053   PSS World Medical, Inc.  

27754 W. Bluegrass Dr., Unit C

Channahon, IL 60410

  

Mallard Point Rentals

3101 W. Jefferson St.

Joliet, IL 60435

   * 1053   PSS World Medical, Inc.  

W228 S6944

Enterprise Drive, Unit 107

Big Bend, WI 53103

  

Jentzsch & Jentzsch LLC

S95W33380 Hickory Wood Trail

Mukwonago, WI 53149

   * 1056   PSS World Medical, Inc.  

5150 Interchange Way, Ste. B

Louisville, KY 40229

  

Crossing Center Seven LLC

12910 Shelbyville Road

Louisville, KY 40243

   * 1056   PSS World Medical, Inc.  

PSS Cincinnati (Hamilton)

5209 Mulhauser Rd.

Hamilton, OH 45011

  

Mulhauser Partners, LLC

739 Kroger Valley Dr.

Cincinnati, OH

   * 1057   PSS World Medical, Inc.  

12999 Wilfred Ln.

Rogers, MN 55374

  

Meritex Enterprises

2285 Walnut St

Roseville, MN 55114

   * 1058   PSS World Medical, Inc.  

4 Thatcher Ln.

Wareham, MA 02571

  

OUI-LOC Trust

21-D Patterson Brook Rd

West Wareham, MA 02576

   * 1058   PSS World Medical, Inc.  

16 Walker Way

Albany, NY 12205

  

Clark Industrial Park L.L.C

4 Walker Way

Albany, NY 12205

   * 1059   PSS World Medical, Inc.  

208 Passaic Ave.

Fairfield, NJ 07004

  

Passaic Realty

15 Green St.

Hackensack, NJ 07601

   * 1059   PSS World Medical, Inc.  

1800 TT Mearns Rd

Warminster, PA 18974

  

Hey Industrial Park

239 Madison Ave.

Warminster, PA 18974

   * 1059   PSS World Medical, Inc.  

425 Lexington Ave.

West Babylon, NY

  

Commerce Holding Co. Inc.

PO Box 672,

Hicksville, NY 11802

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

9

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1060   PSS World Medical, Inc.  

520 West Park Rd.

Pittsburg, PA 15221

  

Leetsdale Industrial II L.P.

100 Leetsdale Industrial Dr.

Leetsdale , PA 15056

   * 1060   PSS World Medical, Inc.  

895 Highland Rd.

Macedonia, OH 44056

  

Geis Companies

10020 Aurora-Hudson Rd.

Streetsboro, OH 44241

   * 1060   PSS World Medical, Inc.  

PSS Troy, MI

21022 Bridge St.

Southfield, MI 48033

  

Beezee Southfield Commerce Center L.D

29201 Telegraph Road, Ste. 510

Southfield, MI 48034

   * 1063   PSS World Medical, Inc.  

2444 Innovation Way

Rochester, NY 14624

  

Tech Park Owner LLC

c/o The Tryad Group

250 Greenpoint Ave., 4th Flr.

Brooklyn, NY 11222

   * 1066   PSS World Medical, Inc.  

3044 S. 1030 West, Ste. 201

Salt Lake City, UT 84119

  

Eckman & McGillis Properties LLC

3038 S. 1030 West

Salt Lake City, UT 84119

   * 1080   PSS World Medical, Inc.  

99-994 Iwena St.

Aiea, HI 96701

  

Sidney Spitzer Testamentary Trust

99-994 Iwena St., Ste. C

Aiea, Hawaii 96701

   *

1086/

8945/

9971

  PSS World Medical, Inc.  

4601 Bulls Bay Hwy, Bldg. 200

Jacksonville, FL 32219

  

Stone Mountain Industrial Park, Inc.

5830 E. Ponce de Leon Ave.

Stone Mountain, Georgia 30083

   *

1087/

1821

  PSS World Medical, Inc. (SAS)  

1 Southern Court

West Columbia, SC 29169

  

Palmetto Park Associates

74 Holly Ridge Lane

West Columbia, SC 29169

Attn: R. Mike Stamps

   *

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

10

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

 

Branch

 

Obligor

 

Location of collateral

  

Landlord/ Warehouseman

   Monthly Rent 1527  

PSS World Medical, Inc. (GSMSFieldSupp)/

(PSSFieldSupp)

 

4345 Southpoint Blvd.

Jacksonville, FL 32216

  

Liberty Property Trust

4190 Belfort Road

Jacksonville, FL 32216

   * 1527   PSS World Medical, Inc.  

4190 Belfort Rd.

Jacksonville, FL 32216

  

Liberty Property Trust

4190 Belfort Road

Jacksonville, FL 32216

   * 1601   PSS World Medical, Inc.  

6035 W. Gross Point Rd.

Niles, IL 60714

  

Howard Lehigh Corporation

6035 W. Gross Point Rd.

Niles, IL 60714

   * 2025   PSS World Medical, Inc.  

9920-C E. 55th St.

Tulsa, OK 74136

  

DCLA Properties, LLC

C/O Bob Lukken, General Partner

P.O Box 471345

Tulsa, OK 74147

   * 9975   PSS World Medical, Inc.  

1930 W Malvern Ave.

Fullerton, CA 92833

  

Avram & Associates, Inc.

1930 W. Malvern Ave.

Fullerton, California, 92833

   * —   PSS World Medical, Inc.   Inventory in customer’s possession Not Billed
as of 9/30/2011    n/a    * 1702   Stat Rx USA, LLC  

2481 Hilton Drive, Ste. 4

Gainesville, GA 30501

  

Jack Waldrip Real Estate

Holcomb Waldrip Properties

2536 Gainesville GA 30503

   * 1712   Theratech, Inc.  

1109 Myatt Blvd

Madison, TN 37115

  

Mike Price

109 Bella Vista Drive

Goodlettsville, TN 37072

   *

Locations of all Obligors’ other places of business during the past four months:
None.

 

 

* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.

 

11

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

SCHEDULE 7.31

Jurisdiction of Organization; Organizational ID Number

 

Obligor

  

Jurisdiction of Organization

  

Organizational Identification Number

PSS World Medical, Inc.

   FL    G36074

Theratech, Inc.

   TN    317308

Gulf South Medical Supply, Inc.

   DE    2332252

DS Holdings, Inc.

   DE    3403537

WorldMed Shared Services, Inc.

   FL    P04000045513

Linear Holdings, LLC

   DE    4868650

PSS Holding, Inc.

   FL    P97000026790

ProClaim, Inc.

   TN    262284

Cascade Medical Supply, Inc.

   WA    602158743

DSRx, Inc.

   CA    C2346317

Dispensing Solutions Acquisition Corp.

   CA    C2339760

Dispensing Solutions, Inc.

   DE    3374087

Linear Medical Solutions, LLC

   DE    4868658

Stat Rx USA, LLC

   DE    4868652

ClaimOne, LLC

   DE    4868654

BottomLine Medical Solutions, LLC

   DE    5026072

Physician Sales & Service Limited Partnership

   FL    A97000000761

Ancillary Management Solutions, Inc.

   TN    396867

POC Management Group, LLC

   CA    200500810019

Scrip Pak, LLC

   FL    L10000089249

Physician Sales & Service, Inc.

   FL    P96000090165

ThriftyMed, Inc.

   FL    P98000015351

PSS Service, Inc.

   FL    P97000026780

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

SCHEDULE 7.36

Patents, Trademarks and Copyrights

Patent Registrations and any Pending Applications: None.

Copyright Registrations and any Pending Applications: None.

Licenses of Patents, Trademarks and Copyrights: None.

Trademarks:

 

Obligor

 

Trademark

 

Serial

Number

 

Reg.

Number

PSS World Medical, Inc.   IT’S TIME TO CARE FOR THE CAREGIVERS   85457693  
Pending PSS World Medical, Inc.   SELECT CONFIDERM   85389670   Pending PSS
World Medical, Inc.   OSTEO I INNOVATION | INTEGRATION | INTEGRITY   85360494  
Pending PSS World Medical, Inc.   MEDSOL LABORATORY CONSULTING BY PSS   85284068
  Pending PSS World Medical, Inc.   MEDSOL   85276841   Pending PSS World
Medical, Inc.   CALL PROGRAM   85316910   Pending PSS World Medical, Inc.  
EXPERTISE DELIVERED   85222886   Pending PSS World Medical, Inc.   ADVANCE PLUS
+ BY SOUTHERN ANESTHESIA & SURGICAL, INC.   78785645   3255140 PSS World
Medical, Inc.   SMARTSCAN   78675636   3166941 PSS World Medical, Inc.   SELECT
DIAGNOSTICS   78611170   3336156 PSS World Medical, Inc.   SELECT MEDICAL
PRODUCTS PSS GULF SOUTH MEDICAL SUPPLY   78558225   3345187 PSS World Medical,
Inc.   PSS   78558204   3392847 PSS World Medical, Inc.   PSS ADVANTAGE CLUB THE
ADVANTAGE IS SAVING YOU MONEY   78458331   2997937 PSS World Medical, Inc.  
ARGENT SURGICAL SYSTEMS   77869493   Pending PSS World Medical, Inc.   PRECISION
PSS SURGICAL PACKS   77870034   3803132 PSS World Medical, Inc.   PATH
PALLIATIVE APPROACH THROUGH HOSPICE   77528083   3583017 PSS World Medical, Inc.
  MOMENTUM REWARDS   77473010   4016263 PSS World Medical, Inc.   MOMENTUM
REWARDS   77472771   4016261 PSS World Medical, Inc.   LUMEON   77462821  
3894295 PSS World Medical, Inc.   PATH PALLIATIVE APPROACH THROUGH HOSPICE  
77434350   3575213 PSS World Medical, Inc.   MARK! MEDICAL ALERT RESCUE KIT  
77344310   3599613 PSS World Medical, Inc.   QUINTET   77322650   3547935 PSS
World Medical, Inc.   QUINTET   77322640   3547934 PSS World Medical, Inc.  
CONSULT DIAGNOSTICS   77322632   3636099 PSS World Medical, Inc.   CONSULT  
77322618   3636098 PSS World Medical, Inc.   REPARA   77309861   3475364 PSS
World Medical, Inc.     77242720   3460839 PSS World Medical, Inc.   PREVENT  
77239650   Pending

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

PSS World Medical, Inc.   CORE CLINICAL OUTCOME RESOURCE ESSENTIALS   77236885  
3398243 PSS World Medical, Inc.   CORE   77236877   3425821 PSS World Medical,
Inc.   SMARTSCAN   77175694   3726801 PSS World Medical, Inc.   INTEGRID  
77124369   3395590 PSS World Medical, Inc.   RESPIREX   77070682   3595339 PSS
World Medical, Inc.   SOUTHERN ANESTHESIA SURGICAL   77036513   3342660 PSS
World Medical, Inc.   CONSULT   77023208   3565053 PSS World Medical, Inc.  
REPARA   77023007   3362945 PSS World Medical, Inc.   SELECT MEDICAL PRODUCTS  
77004599   3485491 PSS World Medical, Inc.   REGIMEN   77004433   3379097 PSS
World Medical, Inc.   CARDEX   77004352   3431820 PSS World Medical, Inc.   P
PSS WORLDMEDICAL   76497252   2831570 PSS World Medical, Inc.   PHYSICIAN SELECT
  75575562   2353323 PSS World Medical, Inc.   PSS   73735691   1528735 Gulf
South Medical Supply, Inc.   QISONE   85247372   Pending Gulf South Medical
Supply, Inc.   GULF SOUTH INTELLILINK   85333920   Pending Gulf South Medical
Supply, Inc.   GULF SOUTH INTELLILINK   85333910   Pending Gulf South Medical
Supply, Inc.   GULF SOUTH MEDICAL SUPPLY   78558209   3269339 Gulf South Medical
Supply, Inc.   NIGHTINGALE   78141022   2849333 Gulf South Medical Supply, Inc.
  NIGHTINGALE COOL COMFORT   77883171   4020084 Gulf South Medical Supply, Inc.
  GULF SOUTH OUTCOME MANAGEMENT   77942207   3859832 Gulf South Medical Supply,
Inc.   NIGHTINGALE   77421203   3632649 Gulf South Medical Supply, Inc.   GULF
SOUTH HOME HEALTH SOLUTIONS   77200403   3394397 Gulf South Medical Supply, Inc.
  MEDEX USA INNOVATIVE MEDICAL SUPPLY MANAGEMENT   76319665   2961637 Gulf South
Medical Supply, Inc.   ANSWERS   76256841   2748108 Gulf South Medical Supply,
Inc.   TOTAL SOURCE   85462528   Pending Dispensing Solutions, Inc.   EDISPENSE
  85400094   Pending Dispensing Solutions, Inc.   MAKING MEDICINE EASY  
78786886   3684528 Dispensing Solutions, Inc.   CARE340B   78786884   3309371
Dispensing Solutions, Inc.   DISPENSE QUICK MAKING MEDICINE EASY   78742502  
3432904 Dispensing Solutions, Inc.   DISPENSE QUICK   78376604   3066697
Dispensing Solutions, Inc.   EDISPENSE   78372676   3056393 Dispensing
Solutions, Inc.   EDISPENSE EXPRESS   78372673   3069176 Dispensing Solutions,
Inc.   EDISPENSE +   78372590   3110106 Dispensing Solutions, Inc.  
DISPENSEQUICK MAKING MEDICINE EASY   77336834   3640545 Dispensing Solutions,
Inc.   DISPENSING SOLUTIONS   77022130   3677994

 

2

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

SCHEDULE 8.15

Permitted Affiliate Transactions

 

1. Investments in Pathway Healthcare Services, Inc., per Schedule 1.2.

2. Select Rx, LLC – PSS has a contractual arrangement providing PSS with certain
rights in the event Select Rx LLC, sells its business.