Exhibit 10.45

CREDIT AGREEMENT

Dated as of March 22, 2002

among

GOTTSCHALKS INC.

as Borrower,

THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,

as Lenders,

and

KIMCO CAPITAL CORP.,

as Agent and Lender

TABLE OF CONTENTS

								    Page
	
THE LOANS  
1.1
Term Loans
1
1.2
Revolving Loans
2
1.3
The Notes
2
1.4
Amortization; Voluntary Prepayments; Other Prepayments
2
1.5
Use of Proceeds
3
1.6
Interest
4
1.7
Fees
5
1.8
Receipt of Payments
5
1.9
Application and Allocation of Payments
5
1.10
Loan Account and Accounting
6
1.11
Indemnity
6
1.12
Access
7
1.13
Taxes
8
1.14
Capital Adequacy; Increased Costs; Illegality
8
1.15
Single Loan
10
2.
CONDITIONS PRECEDENT
10
2.1
Conditions to the Initial Loans
10
2.2
Further Conditions to Each Loan
10
3.
REPRESENTATIONS AND WARRANTIES
11
3.1
Corporate Existence; Compliance with Law
11
3.2
Executive Offices, Collateral Locations, FEIN
12
3.3
Corporate Power, Authorization, Enforceable Obligations
12
3.4
Financial Statements and Projections
12
3.5
Material Adverse Effect
13
3.6
Ownership of Property; Liens
13
3.7
Labor Matters
15
3.8
Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness
15
3.9
Government Regulation
15
3.10
Margin Regulations
16
3.11
Taxes
16
3.12
ERISA
16
3.13
No Litigation
17
3.14
Brokers
18
3.15
Intellectual Property
18
3.16
Full Disclosure
18
3.17
Environmental Matters
18
3.18
Insurance
19
3.19
Agreements and Other Documents
19
3.20
Solvency
19
4.
FINANCIAL STATEMENTS AND INFORMATION
19
4.1
Reports and Notices
19
5.
AFFIRMATIVE COVENANTS
20
5.1
Maintenance of Existence and Conduct of Business
20
5.2
Payment of Charges
20
5.3
Books and Records
21
5.4
Insurance; Damage to or Destruction of Collateral
21
5.5
Compliance with Laws
24
5.6
Supplemental Disclosure; Notice of Material Events
25
5.7
Environmental Matters
25
5.8
Observance of Agreements
26
5.9
Further Assurances; Security Interests
27
5.10
Leases
27
5.11
Condition of the Select Real Property Assets.
30
5.12
Liens
30
5.13
Silverdale Ground Lease
30
5.14
Senior Facility Waiver or Amendment
31
5.15
Subsidiaries
31
5.16
 Condemnation/Eminent Domain
31
5.17
Reciprocal Easement Agreements
32
5.18
Conditions Subsequent
32
6.
NEGATIVE COVENANTS
33
6.1
Mergers, Purchases
34
6.2
Investments; Loans and Advances
34
6.3
Indebtedness
34
6.4
Employee Loans and Affiliate Transactions
34
6.5
Capital Structure and Business
34
6.6
Liens
35
6.7
Dispositions: Sale of Stock and Assets; Store Closings
35
6.8
ERISA
35
6.9
Hazardous Materials
35
6.10
Cancellation of Indebtedness
36
6.11
Change of Corporate Name or Location
36
6.12
No Speculative Transactions
36
6.13
Changes Relating to Material Contracts
36
7.
TERM
37
7.1
Termination
37
7.2
Survival of Obligations Upon Termination of Financing Arrangements
37
8.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
37
8.1
Events of Default
37
8.2
Remedies
38
8.3
Waivers by Borrower
39
9.
ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
39
9.1
Assignment and Participations
39
9.2
Appointment of Agent
41
9.3
Agent's Reliance, Etc
42
9.4
Kimco Capital Corp. and Affiliates
42
9.5
Lender Credit Decision
42
9.6
Indemnification
43
9.7
Successor Agent
43
9.8
Setoff and Sharing of Payments
44
9.9
Advances; Payments; Information; Actions in Concert
44
10.
SUCCESSORS AND ASSIGNS
47
10.1
Successors and Assigns
47
11.
MISCELLANEOUS
47
11.1
Complete Agreement; Modification of Agreement
47
11.2
Amendments and Waivers
47
11.3
Fees and Expenses
49
11.4
No Waiver
50
11.5
Remedies
50
11.6
Severability
50
11.7
Conflict of Terms
50
11.8
Confidentiality
50
11.9
GOVERNING LAW
51
11.10
Notices
52
11.11
Section Titles
52
11.12
Counterparts
52
11.13
WAIVER OF JURY TRIAL
52
11.14
Press Releases and Related Matters
53
11.15
Reinstatement
53
11.16
Advice of Counsel
53
11.17
No Strict Construction
53
11.18
Right of First Refusal to Purchase Select Real Property Assets
54
This CREDIT AGREEMENT (this "Agreement"), dated as of March 22, 2002 amongGOTTSCHALKS INC., a Delaware corporation ("Borrower"), KIMCO CAPITAL CORP., aDelaware corporation, for itself, as Lender, and as Agent for Lenders (in such capacity, the"Agent"), and the other Lenders signatory hereto from time to time.
**RECITALS

WHEREAS, Borrower has requested that Lenders extend certain loans to Borrower of FifteenMillion Dollars ($15,000,000) in the aggregate to provide (a) funds for general corporatepurposes of Borrower, (b) funds to cover the Fees and other expenses incurred in connectionwith this Agreement and (c) funds for other purposes permitted hereunder; and for thesepurposes, Lenders are willing to make certain loans to Borrower of such amount upon the terms andconditions set forth herein; and

WHEREAS, Borrower has agreed to secure all of its obligations under the Loan Documents bygranting to Agent, for the benefit of Agent and Lenders, a security interest in and a Lien upon allof its existing and after-acquired personal and real property; and

WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them inAnnex A and, for purposes of this Agreement and the other Loan Documents, the rules ofconstruction set forth in Annex A shall govern.  All Annexes, Disclosure Schedules,Exhibits and other attachments (collectively, "Appendices") hereto, or expresslyidentified to this Agreement, are incorporated herein by reference, and taken together with thisAgreement, shall constitute but a single agreement.  These Recitals shall be construed as part ofthe Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained,and for other good and valuable consideration, the parties hereto agree as follows:
- **THE LOANS	Term Loans.
- Each Lender, severally and not jointly, agrees, upon the terms and subject to the conditionshereinafter set forth to make a term loan (each a " Term Loan " and collectively, the" Term Loans ") to Borrower on the Closing Date in a single draw in the principalamount set forth on Annex D. 
- Once repaid, the Term Loans may not be re-borrowed, except as provided in  Section1.2 .
	Revolving Loans.
- Each Lender, severally and not jointly, agrees, upon the terms and subject to the conditionshereinafter set forth to make loans, in increments of $50,000.00, equal to its Pro Rata Share ofadvances (each a " Revolving Loan Advance " and collectively, the " RevolvingLoan Advances ") to Borrower on any Business Day and from time to time, from the ClosingDate to but excluding the Termination Date.  The Pro Rata Share of the Revolving Loan Advance of anyLender shall not at any time exceed its separate Commitment.  Until the Maturity Date, Borrower mayborrow, repay and reborrow under this  Section 1.2(a)  the amounts then repaid by Borrowerto Agent, for the ratable benefit of the Lenders, under the Term Loans;  provided , that theamount of any Revolving Loan Advance to be made at any time shall not exceed the Revolving LoanAdvance Availability.
- Each Revolving Loan Advance shall be made on notice by Borrower to Agent.  Any such notice mustbe given no later than 10:30 a.m. (Los Angeles time) on the date which is three (3) BusinessDays prior to the day of the proposed Revolving Loan Advance.  Each such notice(a " Notice of Revolving Loans ") must be given in writing (by e-mail, telecopyor overnight courier) substantially in the form of  Exhibit 1.2(b) , and shall include theinformation required in such Exhibit and such other information as may be required by Agent.
- Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Noticeof Revolving Loans or similar notice believed by Agent to be genuine.  Agent may assume that eachPerson executing and delivering any notice in accordance herewith was duly authorized, unless theresponsible individual acting thereon for Agent has actual knowledge to the contrary.
The Notes.  Except as provided in Section 1.10, Borrowershall execute and deliver to each Lender a note (each a "Note" and collectively,the "Notes") to evidence the Commitment of that Lender.  Each Note shall be in theprincipal amount of the Commitment of the applicable Lender, dated the Closing Date andsubstantially in the form of Exhibit 1.3.  Each Note shall represent the obligation ofBorrower to pay the amount of the applicable Lender's Commitment, or if less, such Lender's Pro RataShare of the aggregate unpaid principal amount of all Loans to Borrower outstanding, together withinterest thereon as prescribed in Section 1.6.  The entire unpaid balance of the aggregateLoans and all non-contingent Obligations shall be immediately due and payable in full in immediatelyavailable funds on the Maturity Date.
Amortization; Voluntary Prepayments; Other Prepayments.
- Borrower shall be required to repay the principal amount of the Loans, to the extent thenoutstanding (i) on the first Business Day in each month (commencing on the first Business Day in May2002), in installments of $120,000.00 per month and (ii) on the Maturity Date, in the full amountremaining outstanding;  provided ,  however , that if Borrower obtains the Mortgages,memoranda and financing statements in accordance with the terms of  Section 5.18(a)  andBorrower delivers to Agent a certificate of an Authorized Officer of Borrower certifying that, toBorrower's knowledge, the Qualifying Category A Properties include at least five (5) of theproperties listed on  Disclosure Schedule (5.18(a)) , including at least two (2) of (a) theFashion Fair Property, (b) the Sacramento Property, and/or (c) the SLO Lease, the monthlyinstallments under  clause (i)  above shall decrease to $80,000.00 per month; provided  further , that, after any such reduction in monthly installments, if and forso long as (but only for so long as), the Qualifying Category A Properties shall not include atleast five (5) of the properties listed on  Disclosure Schedule (5.18(a)) , including at leasttwo of (a) the Fashion Fair Property, (b) the Sacramento Property,  and/or (c) the SLO Lease, thenthe monthly installments under  clause (ii)  above shall be restored to $120,000.00 per month.
- Borrower may at any time on at least three (3) Business Days' prior written notice to Agentprepay the Loans, in whole, but not in part;  provided ,  however,  that Borrower mayrepay all or a portion of the Revolving Loans, without fee or penalty, in increments of $50,000.00,no more frequently than once each calendar month on the first Business Day of such month and shallspecify that such payment relates to the Revolving Loans.  The written notice of prepayment shallspecify the prepayment date, shall be irrevocable and shall commit Borrower to prepay the Loans infull on the date stated therein, together with any applicable interest and Prepayment Fee (definedin  Section 1.7(b)  below).  A prepayment under this  Section 1.4  shall be appliedratably in accordance with each Lender's Pro Rata Share of the Loans then outstanding.
- Prepayments from insurance or condemnation proceeds in accordance with  Section 5.4(e)  and (g)  shall be applied to the Obligations and shall not be subject to the Prepayment Feedescribed in  Section 1.7(b) .
- If at any time the sum of the outstanding balances of the Revolving Loans exceeds the lesser of(i) the Term Loan Repayment Amount and (ii) $500,000.00, Borrower shall immediately repaythe aggregate outstanding Revolving Loan Advances to the extent required to eliminate suchexcess.
- Nothing in this  Section 1.4  shall be construed to constitute Agent's or any Lender'sconsent to any transaction that is not  permitted by other provisions of this Agreement or the otherLoan Documents.
Use of Proceeds.  

(a)	Borrower shall utilize the proceeds of the Term Loans for financing the Fees and otherexpenses incurred in connection with the Agreement and general corporate purposes.

(b)	Borrower shall utilize the proceeds of the Revolving Loans exclusively to fund(i) any Environmental Liabilities and/or (ii) subject to Agent's approval, which approval shallnot be unreasonably withheld, conditioned or delayed, capital expenditures, in each case, affectingor related to any Select Real Property Asset. 
Interest.- Borrower shall pay interest to Agent, for the ratable benefit of Lenders, in accordance withthe Loan being made by each Lender, in advance on the Closing Date to cover any interest that willaccrue for the balance of the calendar month in which the Closing Date occurs and, thereafter, inarrears on each applicable Interest Payment Date, at a rate of 12.00% per annum.
- If any payment on any Loan becomes due and payable on a day other than a Business Day, thematurity thereof will be extended to the next succeeding Business Day and, with respect to paymentsof principal, interest thereon shall be payable at the then applicable rate during suchextension.
- All computations of Fees calculated on a per annum basis and interest shall be made by Agent onthe basis of a 360-day year, in each case for the actual number of days occurring in the period forwhich such interest and Fees are payable.  Each determination by Agent of an interest rate and Feeshereunder shall be final, binding and conclusive on Borrower, absent manifest error.
- So long as an Event of Default has occurred and is continuing under  Section 8.1(a) , (f)  or  (g)  or so long as any other Event of Default has occurred and iscontinuing and at the election of Agent (or upon the written request of Requisite Lenders) confirmedby written notice from Agent to Borrower, the interest rates applicable to the Loans shall beincreased to 14.00% per annum (" Default Rate "), and all outstanding Obligationsshall bear interest at the Default Rate applicable to such Obligations. Interest at the Default Rateshall accrue from the initial date of such Event of Default until that Event of Default is cured orwaived and shall be payable upon demand. 
- Notwithstanding anything to the contrary set forth in this  Section 1.6(e) , if acourt of competent jurisdiction determines in a final order that the rate of interest payablehereunder exceeds the highest rate of interest permissible under law (the " Maximum LawfulRate "), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interestpayable hereunder shall be equal to the Maximum Lawful Rate;  provided ,  however , thatif at any time thereafter the rate of interest payable hereunder is less than the Maximum LawfulRate, Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until such timeas the total interest received by Agent, on behalf of Lenders, is equal to the total interest thatwould have been received had the interest rate payable hereunder been (but for the operation of thisparagraph) 12.00%.  Thereafter, interest  hereunder shall be paid at the rate of interest and in themanner provided in  Sections 1.6(a)  through  (d) , unless and until the rate ofinterest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply.In no event shall the total interest received by any Lender pursuant to the terms hereof exceed theamount that such Lender could lawfully have received had the interest due hereunder been calculatedfor the full term hereof at the Maximum Lawful Rate.  If the Maximum Lawful Rate is calculatedpursuant to this paragraph, such interest shall be calculated at a daily rate equal to the MaximumLawful Rate divided by the number of days in the year in which such calculation is made.  If,notwithstanding the provisions of this  Section 1.6(e) , a court of competent jurisdictionshall finally determine that a Lender has received interest hereunder in excess of the MaximumLawful Rate, Agent shall, to the extent permitted by applicable law, promptly apply such excess inthe order specified in  Section 1.9  and thereafter shall refund any excess to Borrower oras a court of competent jurisdiction may otherwise order.
Fees.
- Borrower shall pay to Agent, individually, the Fee specified in that certain fee letter dated asof January 29, 2002 among Borrower and Kimco Realty Corporation, as the same may be amended,modified or supplemented from time to time by a written instrument executed by the parties thereto(the " Fee Letter ").
- If Borrower prepays the Loans as permitted by  Section 1.4(b) , Borrower shall pay toAgent, for the ratable benefit of the Lenders, a fee for any such prepayment (the "PrepaymentFee") on the principal amount of the Loans being prepaid at a rate determined in accordancewith the following schedule:
	Prepayment Fee	 	Relevant Time Period	
	2.0%	if prepaid prior to February 28, 2003

	1.0%	if prepaid prior to February 29, 2004

	0.5%	if prepaid prior to July 31, 2004; and

	0.0%	if prepaid thereafter.
If Borrower fails to make any payment of, or interest on or Fees owing in respect of, the Loansor any other Obligations, Borrower shall pay to Agent, for the ratable benefit of the Lenders, a feefor such late payment (the "
Late Payment Fee
") in the amount of$7,500.00.
Receipt of Payments.  Borrower shall make each payment under thisAgreement, in accordance with Agent's instructions, not later than 11:00 a.m. (Los Angelestime) on the day when due in immediately available funds in Dollars.  For purposes of computinginterest and Fees as of any date, all payments shall be deemed received on the Business Day on whichimmediately available funds therefor are received prior to 11:00 a.m. (Los Angeles time).Payments received after 11:00 a.m. (Los Angeles time) on any Business Day or on a day that isnot a Business Day shall be deemed to have been received on the following Business Day.
Application and Allocation of Payments.  All payments andprepayments applied to the Loans shall be applied ratably to the portion thereof held by each Lenderas determined by its Pro Rata Share of the Loans.  As to any other payment, and as to all paymentsmade when a Default or Event of Default has occurred and is continuing or following the MaturityDate, Borrower hereby irrevocably waives the right to direct the application of any and all paymentsreceived from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and all suchpayments against the Obligations of Borrower as Agent may deem advisable notwithstanding anyprevious entry by Agent in the Loan Account or any other books and records.  In the absence of aspecific determination by Agent with respect thereto, payments shall be applied to amounts then dueand payable in the following order:  first, to Fees and  reimbursable expenses of Agent then due andpayable; second, to interest then due and payable; third, to the principal balance of the Loansuntil the same has been paid in full; and fourth, to all other Obligations.  After the Maturity Dateor with respect to any payments received or payments received as proceeds of Collateral from andafter any Event of Default has occurred or is continuing, such payments shall be applied by Agent toamounts then due and payable in the following order: first, to Fees (other than the Fee payablepursuant to Section 1.7(b)) and reimbursable expenses of Agent then due and payable pursuantto any of the Loan Documents; second, to interest then due and payable on the Loans; third, to theprincipal balance of the Loans until the same has been repaid in full; fourth, to interest(including any Default Rate of interest payable pursuant to Section 1.6(d)) and; fifth, toall other Obligations.
Loan Account and Accounting.  Agent shall maintain a loan account(the "Loan Account") on its books to record:  all Revolving Loan Advances, allpayments made by Borrower, and all other debits and credits as provided in this Agreement withrespect to the Loans or any other Obligations.  All entries in the Loan Account shall be made inaccordance with Agent's customary accounting practices as in effect from time to time. The balancein the Loan Account, as recorded on Agent's most recent printout or other written statement, shall,absent manifest error, be presumptive evidence of the amounts due and owing to Agent and Lenders byBorrower; provided that any failure to so record or any error in so recording shall not limitor otherwise affect Borrower's duty to pay the Obligations.  Agent shall render to Borrower amonthly accounting of transactions with respect to the Loans setting forth the balance of the LoanAccount as to Borrower for the immediately preceding month.  Unless Borrower notifies Agent inwriting of any objection to any such accounting (specifically describing the basis for suchobjection), within 60 days after the date thereof, each and every such accounting shall (absentmanifest error) be deemed final, binding and conclusive on Borrower in all respects as to allmatters reflected therein.  Only those items expressly objected to in such notice shall be deemed tobe disputed by Borrower.  Notwithstanding any provision herein contained to the contrary, any Lendermay elect (which election may be revoked) to dispense with the issuance of Notes to that Lender andmay rely on the Loan Account as evidence of the amount of Obligations from time to time owing toit.
Indemnity.  Borrower shall indemnify and hold harmless each ofAgent, Lenders and their respective Affiliates, and each such Person's respective officers,directors, employees, attorneys, agents and representatives (each, an "IndemnifiedPerson"), from and against any and all suits, actions, proceedings, claims, damages,losses, liabilities and expenses (including reasonable attorneys' fees and disbursements and othercosts of investigation or defense, including those incurred upon any appeal) that may be institutedor asserted against or incurred by any such Indemnified Person as the result of credit having beenextended, suspended or terminated under this Agreement and the other Loan Documents and theadministration of such credit, and in connection with or arising out of the transactionscontemplated hereunder and thereunder and any actions or failures to act in connection therewith,including any and all
Environmental Liabilities and legal costs andexpenses arising out of or incurred in connection with disputes between or among any parties to anyof the Loan Documents (collectively, "Indemnified Liabilities"); provided,that Borrower shall not be liable for any indemnification to an Indemnified Person to the extentthat any such suit, action, proceeding, claim, damage, loss, liability or expense results from thatIndemnified Person's gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BERESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRDPARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCHPARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULTOF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OFANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
Access.  Unless a Default or Event of Default has occurred and iscontinuing or unless access is necessary to preserve or protect the Collateral as determined byAgent, Borrower and GCRC shall, during normal business hours, from time to time upon two (2)Business Days' prior notice as frequently as Agent reasonably determines to be appropriate:(a) provide Agent and any of its officers, employees and agents access (at Borrower's expensenot to exceed, together with any fees payable pursuant to Section 11.3(f), $1,000.00 permonth; provided, that such dollar limit shall not apply if an Event of Default has occurredand is continuing) to its properties, facilities, advisors and employees (including officers) ofBorrower, GCRC and to the Collateral, (b) permit Agent, and any of its officers, employees andagents, to inspect, audit and make extracts from Borrower's or GCRC's books and records, and(c) permit Agent, and its officers, employees and agents, to inspect, review, evaluate and maketest verifications and counts of the Collateral, Borrower and GCRC, as applicable; provided,that inspections and audits shall be conducted by Agent or any officer, employee or agent of Agentno more frequently than once each calendar quarter; provided, however, that during theoccurrence or continuance of any Default or Event of Default Agent or any officer, employee or agentof Agent shall be permitted to conduct audits as often as it deems appropriate.  If a Default orEvent of Default has occurred and is continuing or if access is necessary to preserve or protect theCollateral as determined by Agent, Borrower and GCRC shall provide such access to Agent and to eachLender at all times and without advance notice.  Furthermore, so long as any Event of Default hasoccurred and is continuing, Borrower shall provide Agent and each Lender with access to itssuppliers and customers.  Borrower and GCRC shall promptly make available to Agent and its counseloriginals or copies of all books and records that Agent may reasonably request.  Borrower and GCRCshall deliver any document or instrument necessary for Agent, as it may from time to time reasonablyrequest, to obtain records from any service bureau or other Person that maintains records forBorrower or GCRC, and shall maintain duplicate records or supporting documentation on media,including computer tapes and discs owned by Borrower or GCRC.  Agent will give Lenders at least five(5) Business Days' prior written notice of regularly scheduled audits.  Representatives of otherLenders may accompany Agent's representatives on regularly scheduled audits at no charge toBorrower.
Taxes.
- Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance withthis  Section 1.13 , free and clear of and without deduction for any and all present orfuture Taxes.  If Borrower shall be required by law to deduct any Taxes from or in respect of anysum payable hereunder or under the Notes, (i) the sum payable shall be increased as much asshall be necessary so that after making all required deductions (including deductions applicable toadditional sums payable under this  Section 1.13 ) Agent or Lenders, as applicable,receive an amount equal to the sum they would have received had no such deductions been made,(ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amountdeducted to the relevant taxing or other authority in accordance with applicable law.  Within thirty(30) days after the date of any payment of such deducted Taxes, Borrower shall furnish to Agentthe original or a certified copy of a receipt, copy of cancelled check or federal wire or otherevidence satisfactory to Agent evidencing payment thereof.  Agent and Lenders shall not be obligatedto return or refund any amounts received pursuant to this  Section 1.13 .
- Borrower shall indemnify and, within ten (10) days of demand therefor, pay Agent and each Lenderfor the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payableunder this  Section 1.13 ) paid by Agent or such Lender, as appropriate, and any liability(including penalties, interest and expenses) arising therefrom or with respect thereto, whether ornot such Taxes were correctly or legally asserted.
- No person residing or organized under the laws of a jurisdiction outside the United States (a" Foreign Person ") may become a Lender under this Agreement and, notwithstandinganything in this Agreement to the contrary, no Foreign Person may acquire any participation in anyportion of a Lender's Loan unless, on or prior to the date of the proposed assignment or sale,(i) all payments to be made under this Agreement or under the Notes to such Foreign Person orto such Lender on behalf of such Foreign Person are completely exempt from United States withholdingtax under an applicable statute or tax treaty and (ii) such Foreign Person has provided toBorrower and Agent properly completed and executed copies of IRS Form W-8ECI or Form W-8BEN or otherapplicable form, certificate or document prescribed by the IRS or the United States or reasonablyrequired by Borrower certifying as to such Foreign Person's entitlement to such exemption (a" Certificate of Exemption ").  Any Foreign Person that seeks to become a Lender orpurchase a participation from a Lender under this Agreement shall provide a Certificate of Exemptionto Borrower and Agent prior to becoming a Lender or purchasing a participation hereunder.  NoForeign Person may become a Lender or purchase a participation from a Lender hereunder if suchPerson fails to deliver a Certificate of Exemption in advance of becoming a Lender or purchasing aparticipation.
Capital Adequacy; Increased Costs; Illegality.
- If any Lender shall have determined that any law, treaty, governmental (or quasi-governmental)rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similarrequirements or compliance by any Lender with any request or directive regarding capital adequacy,reserve requirements or similar requirements (whether or not having the force of law), in each case,adopted after the Closing Date, from any central bank or other Governmental Authority increases orwould have the effect of increasing the amount of capital, reserves or other funds required to bemaintained by such Lender and thereby reducing the rate of return on such Lender's capital as aconsequence of its obligations hereunder, then Borrower shall from time to time upon demand by suchLender (with a copy of such demand to Agent) pay to Agent, for the account of such Lender,additional amounts sufficient to compensate such Lender for such reduction.  A certificate as to theamount of that reduction and showing the basis of the computation thereof submitted by such Lenderto Borrower and to Agent shall, absent manifest error, be final, conclusive and binding for allpurposes.
- If, due to either (i) the introduction of or any change in any law or regulation (or anychange in the interpretation thereof) or (ii) the compliance with any guideline or request fromany central bank or other Governmental Authority (whether or not having the force of law), in eachcase adopted after the Closing Date, there shall be any increase in the cost to any Lender ofagreeing to make or making, funding or maintaining any Loan, then Borrower shall from time to time,upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account ofsuch Lender additional amounts sufficient to compensate such Lender for such increased cost.  Acertificate as to the amount of such increased cost, submitted to Borrower and to Agent by suchLender, shall be conclusive and binding on Borrower for all purposes, absent manifest error.  EachLender agrees that it shall, as promptly as practicable after it becomes aware of any circumstancesreferred to above which would result in any such increased cost, to the extent not inconsistent withsuch Lender's internal policies of general application, use reasonable commercial efforts tominimize costs and expenses incurred by it and payable to it by Borrower pursuant to this Section 1.14(b) .
- Within fifteen (15) days after receipt by Borrower of written notice and demand from anyLender (an " Affected Lender ") for payment of additional amounts or increased costsas provided in  Section 1.13(a) ,  1.14(a)  or  1.14(b) , Borrower  may, at itsoption, notify Agent and such Affected Lender of its intention to replace the Affected Lender.  Solong as no Default or Event of Default has occurred and is continuing, Borrower, with the consent ofAgent, may obtain, at Borrower's expense, a replacement Lender (" ReplacementLender ") for the Affected Lender, which Replacement Lender must be reasonably satisfactoryto Agent.  If Borrower obtains a Replacement Lender within 90 days following notice of itsintention to do so, the Affected Lender must sell and assign its Loan to such Replacement Lender foran amount equal to the principal balance of the Loan held by the Affected Lender and all accruedinterest and Fees with respect thereto through the date of such sale;  provided , that Borrowershall have reimbursed such Affected Lender for the additional amounts or increased costs that it isentitled to receive under this Agreement through the date of such sale and assignment.Notwithstanding the foregoing, Borrower shall not have the right to obtain a Replacement Lender ifthe Affected Lender rescinds its demand for increased costs or additional amounts within fifteen(15) days following its receipt of Borrower's notice of intention to replace such AffectedLender.  Furthermore, if Borrower gives a notice of intention to replace and does not so replacesuch Affected Lender within 90 days thereafter, Borrower's rights under this Section 1.14(c)  shall terminate and Borrower shall promptly pay all increased costs oradditional amounts demanded by such Affected Lender pursuant to  Sections 1.13(a) , 1.14(a)  and  1.14(b) .
- Borrower shall not be required to compensate a Lender pursuant to  Section 1.14(a)  or Section 1.14(b)  for any increased cost or reduction in respect of a period occurring morethan 180 days prior to the date that such Lender notifies Borrower of such Lender's intention toclaim compensation therefor unless the circumstances giving rise to such increased cost or reductionbecame applicable retroactively, in which case no such time limitation shall apply so long as suchLender requests compensation within 180 days from the date such circumstances becomeapplicable.
Single Loan.  The Loans to Borrower and all of the otherObligations of Borrower arising under this Agreement and the other Loan Documents shall constituteone general obligation of that Borrower secured, until the Termination Date, by all of theCollateral.
**CONDITIONS PRECEDENTConditions to the Initial Loans.  No Lender shall be obligatedto make any Loan on the Closing Date, or to take, fulfill, or perform any other action hereunder,until the following conditions have been satisfied or provided for in a manner satisfactory toAgent, or waived in writing by Agent:  
Credit Agreement; Loan Documents
.  This Agreement or counterparts hereof shall have beenduly executed by, and delivered to, Borrower, Agent and Lenders; and Agent shall have received suchdocuments, instruments, agreements and legal opinions as Agent shall reasonably request inconnection with the transactions contemplated by this Agreement and the other Loan Documents,including all those listed in the Closing Checklist attached hereto as 
Annex B
, each inform and substance reasonably satisfactory to Agent. 
Approvals
.  Agent shall have received (i) satisfactory evidence that Borrower hasobtained all required consents and approvals of all Persons including all requisite GovernmentalAuthorities, to the execution, delivery and performance of this Agreement and the other LoanDocuments or (ii) an officer's certificate in form and substance reasonably satisfactory toAgent affirming that no such consents or approvals are required.
Payment of Fees
. Borrower shall have paid the Fees required to be paid on the ClosingDate in the respective amounts specified in the Fee Letter, and shall have reimbursed Agent for allfees, costs and expenses of closing presented as of the Closing Date.
Capital Structure:  Other Indebtedness
.  The capital structure of Borrower and GCRC andthe terms and conditions of all Indebtedness of Borrower shall be acceptable to Agent in its solediscretion.
Due Diligence
.  Agent shall have completed its business and legal due diligence, withresults reasonably satisfactory to Agent.
Further Conditions to Each Loan.  Except as otherwise expresslyprovided herein, no Lender shall be obligated to fund any Loan if, as of the date thereof:
- (i) any representation or warranty by Borrower contained herein or in any other Loan Document isuntrue or incorrect in any material respect as of such date, except to the extent that suchrepresentation or warranty expressly relates to an earlier date and except for changes thereinexpressly permitted or expressly contemplated by this Agreement and (ii) Agent or the RequisiteLenders have determined not to make such Loan, as a result of the fact that such warranty orrepresentation is untrue or incorrect in any material respect; 
- (i) any event or circumstance having a Material Adverse Effect has occurred since the datehereof as determined by the Requisite Lenders, and (ii) Agent or Requisite Lenders have determinednot to make such Loan, as a result of the fact that such event or circumstance has occurred; 
- (i) any Default or Event of Default has occurred and is continuing or would result after givingeffect to any Loan, and (ii) Agent or Requisite Lenders shall have determined not to make any Loanas a result of that Default or Event of Default; or
- in the case of a Revolving Loan, after giving effect to any Revolving Loan Advance, theoutstanding principal amount of the Revolving Loans would exceed the Revolving Loan AdvanceAvailability.

The request and acceptance by Borrower of the proceeds of any Loans, shall be deemed toconstitute, as of the date thereof, (i) a representation and warranty by Borrower that theconditions in this Section 2.2 (without reference to clauses (a)(ii), (b)(ii) and(c)(ii) of this Section 2.2 or any determination by Agent or any Lender with respectto any such condition) have been satisfied (including, without limitation, a representation andwarranty as to the accuracy in all material respects of representations and warranties (pursuant toterms of clause (a)(i) above), the absence of a Material Adverse Effect since the date hereofand the absence of any Default or Event of Default (pursuant to terms of clause (c)(i)above)), and (ii) a reaffirmation by Borrower of the granting and continuance of Agent's Liens,on behalf of itself and the Lenders, pursuant to the Collateral Documents.
**REPRESENTATIONS AND WARRANTIES**
To induce Lenders to make the Loans Borrower makes the following representations andwarranties to Agent and each Lender with respect to itself and GCRC, each and all of which shallsurvive the execution and delivery of this Agreement. 
Corporate Existence; Compliance with Law.  Each of Borrower andGCRC (a) is a corporation, duly organized, validly existing and in good standing under the lawsof its respective jurisdiction of incorporation set forth in Disclosure Schedule (3.1);(b) is duly qualified to conduct business and is in good standing in each other jurisdictionwhere its ownership or lease of property or the conduct of its business requires such qualification,except where the failure to be so qualified would not result in exposure to losses, damages orliabilities in excess of $250,000.00; and (c) has the requisite power and authority and thelegal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease theproperties it operates under a lease and to conduct its business as now, heretofore and proposed tobe
conducted.  Each of Borrower, GCRC and each Real Property Asset(a) subject to specific representations regarding Environmental Laws, has all materiallicenses, permits, consents or approvals from or by, and has made all material filings with, and hasgiven all material notices to, all Governmental Authorities having jurisdiction, to the extentrequired for such ownership, operation and conduct; (b) is in compliance with its charter andbylaws; (c) subject to specific representations set forth herein regarding ERISA, EnvironmentalLaws, tax and other laws, is in compliance with all applicable provisions of law; and (d) is incompliance with any building permits, (including, without limitation, any certificate of occupancyand any restrictions of record) affecting a Select Real Property Asset or Category A Property,except where the failure to comply, individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect.
Executive Offices, Collateral Locations, FEIN.  As of the ClosingDate, the current location of Borrower's chief executive office and the warehouses and premises atwhich any Collateral is located are set forth in Disclosure Schedule (3.2), and none ofsuch locations has changed within the twelve (12) months preceding the Closing Date.  Inaddition, Disclosure Schedule (3.2) lists the federal employer identification number ofBorrower.
Corporate Power, Authorization, Enforceable Obligations.  Theexecution, delivery and performance by each of Borrower and GCRC of the Loan Documents to which itis a party and the creation of all Liens provided for therein:  (a) are within such Person'spower; (b) have been duly authorized by all necessary corporate action; (c) do notcontravene any provision of such Person's charter or bylaws; (d) do not violate any law orregulation, or any order or decree of any court or Governmental Authority; (e) do not conflictwith or result in the breach or termination of, constitute a default under or accelerate or permitthe acceleration of any performance required by, any indenture, mortgage, deed of trust, lease,agreement or other instrument to which such Person is a party or by which such Person or any of itsproperty is bound; (f) do not result in the creation or imposition of any Lien upon any of theproperty of such Person other than those in favor of Agent, on behalf of itself and Lenders,pursuant to the Loan Documents; and (g) do not require the consent or approval of anyGovernmental Authority or any other Person for any action to be taken on or prior to the ClosingDate, except those referred to in Section 2.1(b), all of which will have been dulyobtained, made or complied with prior to the Closing Date.  Each of the Loan Documents to which eachof Borrower and GCRC is a party shall be duly executed and delivered by Borrower and GCRC, asapplicable, each such Loan Document shall constitute a legal, valid and binding obligation ofBorrower and GCRC, as applicable, enforceable against it in accordance with its terms and eachMortgage shall constitute a valid, binding and enforceable first lien on the Select Real PropertyAssets subject only to the Permitted Encumbrances, and a binding and enforceable Lien on the TrustProperty (as such term is defined in the Mortgage) other than the Select Real PropertyAssets.
Financial Statements and Projections.  Except for the Projections,all Financial Statements concerning Borrower delivered to Agent prior to the Closing Date wereprepared in accordance with GAAP consistently applied throughout the periods covered (except asdisclosed therein and except, with respect to unaudited Financial Statements, for the absence offootnotes and normal year-end audit adjustments) and present fairly in all material respects the
financial position of the Persons covered thereby as at the dates thereof andthe results of their operations and cash flows for the periods then ended.
Material Adverse Effect.  Between February 3, 2001 and theClosing Date except as otherwise disclosed by Borrower on Disclosure Schedule (3.5):(a) neither Borrower nor GCRC has incurred any obligations, contingent or noncontingentliabilities, liabilities for Charges, long-term leases or unusual forward or long-term commitmentsthat, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect,(b) no contract, lease or other agreement or instrument has been entered into by Borrower orGCRC or has become binding upon Borrower's or GCRC's assets and no law or regulation applicable toBorrower or GCRC has been adopted that has had or could reasonably be expected to have a MaterialAdverse Effect, and (c) neither Borrower nor GCRC is in default and to the best of Borrower'sknowledge no third party is in default under any material contract, lease or other agreement orinstrument to which Borrower or GCRC is a party, that alone or in the aggregate could reasonably beexpected to have a Material Adverse Effect.  Between February 3, 2001 and the Closing Date,except as otherwise disclosed by Borrower in writing to Agent, no event has occurred that alone ortogether with other events could reasonably be expected to have a Material Adverse Effect.
Ownership of Property; Liens***.- As of the Closing Date, the Real Property Assets listed in  DisclosureSchedule (3.6)  constitute all of the real property owned, licensed, leased, subleased orused by Borrower.  Borrower owns good fee simple title to all of its owned Real Property Assets, andvalid leasehold interests in all of its leased Real Property Assets, all as described on Disclosure Schedule (3.6) , and copies of all such leases or a summary of terms thereofreasonably satisfactory to Agent have been delivered to or made available to Agent.   DisclosureSchedule (3.6)  further describes any Real Property Assets with respect to which Borrower isa lessor, sublessor or assignor as of the Closing Date.  Borrower also has good title to, or validleasehold interests in, all of its personal property and assets.  As of the Closing Date, none ofthe properties and assets of Borrower are subject to any Liens other than the PermittedEncumbrances, including, but not limited to the Senior Facility Liens, and there are no facts,circumstances or conditions known to Borrower that may result in any Liens (including Liens arisingunder Environmental Laws) other than the Permitted Encumbrances.  Borrower has received all deeds,assignments, waivers, consents, nondisturbance and attornment or similar agreements, bills of saleand other documents, and has duly effected all recordings, filings and other actions necessary toestablish, protect and perfect Borrower's right, title and interest in and to all such Real PropertyAssets and other properties and assets.   Disclosure Schedule (3.6)  also describes anypurchase options, rights of first refusal or other similar contractual rights pertaining to any RealProperty Assets.  As of the Closing Date, no portion of Borrower's Real Property Assets has sufferedany material damage by fire or other casualty loss that has not heretofore been repaired andrestored in all material respects to its original condition or otherwise remedied.  As of theClosing Date, all material permits required to have been issued or appropriate to enable the RealProperty Assets to be lawfully occupied and used for all of the purposes for which it is currentlyoccupied and used have been lawfully issued and are in full force and effect.
- Borrower hereby represents and warrants the following:
the Silverdale Ground Lease is currently in full force and effect and unmodified and a true andcomplete copy of the same has been delivered to Agent by Borrower, 
Borrower has neither received nor delivered any notice of default and, to the best of Borrower'sknowledge, there is no existing default under the Silverdale Ground Lease by reason of an act oromission of the lessor or Borrower and no event has occurred which, to the best knowledge ofBorrower, with the lapse of time or the giving of notice or both would authorize the lessor orBorrower to terminate the Silverdale Ground Lease,
all rentals, if any, accrued to date and payable have been paid and Borrower has received nonotice that any rental payments due under the Silverdale Ground Lease are delinquent and, to thebest of Borrower's knowledge, neither Borrower nor the lessor has any present charge, lien or claimof offset against any sum due under the terms of the Silverdale Ground Lease,
Borrower has not agreed to any modification with respect to the Silverdale REA, the SLO REA andthe Hanford REA (each a "
Select Real Property REA
," collectively, the"
Select Real Property REAs
"), and, to the best knowledge of Borrower, the SelectReal Property REAs are currently in full force and effect and unmodified,
Borrower has neither received nor delivered any notice of a material default under a Select RealProperty REA and, to the best of Borrower's knowledge, there is no existing material default underany Select Real Property REA by reason of an act or omission of any party to the Select RealProperty REA, including Borrower, 
to the best knowledge of Borrower, no party has any current termination right under any SelectReal Property REA, 
Borrower has received no notice of, nor has any knowledge of, any pending or contemplatedcondemnation proceeding affecting any Select Real Property Asset or Category A Property or any saleor disposition thereof in lieu of condemnation,
Borrower has received no notice of, nor has any knowledge of, any pending or contemplated zoningchanges, "floor area ratio" changes, variances or special zoning exceptions, affecting orwhich might affect any Select Real Property Asset or Category A Property, 
Borrower has not transferred any development rights applicable to any Select Real Property Assetor Category A Property, or
Borrower has received no notice that the current use and occupancy of any Select Real PropertyAsset or Category A Property or the operation of the business as currently conducted thereonviolates any of the Permitted Encumbrances affecting such Select Real Property Asset or Category AProperty and to the best of Borrower's knowledge there is no basis for the issuance of any suchnotice or the taking of any action for such violation. 

Labor Matters.  As of the Closing Date (a) no strikes or othermaterial labor disputes against Borrower are pending or, to Borrower's knowledge, threatened;(b) hours worked by and payment made to employees of Borrower comply with the Fair LaborStandards Act and each other federal, state, local or foreign law applicable to such matters;(c) all payments due from Borrower for employee health and welfare insurance have been paid oraccrued as a liability on the books of Borrower; (d) except as set forth in DisclosureSchedule (3.7), Borrower is not a party to or bound by any collective bargaining agreement,management agreement, consulting agreement, employment agreement, bonus, restricted stock, stockoption, or stock appreciation plan or agreement or any similar plan, agreement or arrangement (andtrue and complete copies of any agreements described on Disclosure Schedule (3.7) havebeen delivered to or made available to Agent); (e) there is no organizing activity involvingBorrower pending or, to Borrower's knowledge, threatened by any labor union or group of employees;(f) there are no representation proceedings pending or, to Borrower's knowledge, threatenedwith the National Labor Relations Board, and no labor organization or group of employees of Borrowerhas made a pending demand for recognition; and (g) except as set forth in DisclosureSchedule (3.7), there are no material complaints or charges against Borrower pending or, tothe knowledge of Borrower, threatened to be filed with any Governmental Authority or arbitratorbased on, arising out of, in connection with, or otherwise relating to the employment or terminationof employment by Borrower of any individual.
Ventures, Subsidiaries and Affiliates; Outstanding Stock andIndebtedness.  Except as set forth in Disclosure Schedule (3.8), as of the ClosingDate, Borrower does not have any Subsidiaries, is not engaged in any joint venture or partnershipwith any other Person, or is not an Affiliate of any other Person; provided, however,that Disclosure Schedule (3.8) need not list individuals who are Affiliates solely byvirtue of clause (d) of the definition of "Affiliate."  All of the issued andoutstanding Stock of each Subsidiary of Borrower is owned by each of the Stockholders and in theamounts set forth in Disclosure Schedule (3.8).  Except as set forth in DisclosureSchedule (3.8) and except for common stock and options issued pursuant to stock optionplans of Borrower described on Disclosure Schedule (3.7), there are no outstandingrights to purchase, options, warrants or similar rights or agreements pursuant to which Borrower maybe required to issue, sell, repurchase or redeem any of its Stock or other equity securities or anyStock or other equity securities of its Subsidiaries.  All outstanding Indebtedness and GuaranteedIndebtedness of Borrower as of the Closing Date (except for the Obligations) is listed onDisclosure Schedule (6.3).
Government Regulation.  Borrower is not an "investmentcompany" or an "affiliated person" of, or "promoter" or "principalunderwriter" for, an "investment company," as such terms are defined in theInvestment Company Act of 1940.  Borrower is not subject to regulation under the Public UtilityHolding Company Act of 1935, the Federal Power Act, or any other federal or state statute thatrestricts or limits its ability to incur Indebtedness or to perform its obligations hereunder. Themaking of the Loans by Lenders to Borrower and the application
of theproceeds thereof and repayment thereof will not violate any provision of any such statute or anyrule, regulation or order issued by the Securities and Exchange Commission.
Margin Regulations.  Borrower is not engaged, nor will it engage,principally or as one of its important activities, in the business of extending credit for thepurpose of "purchasing" or "carrying" any "margin stock" as such termsare defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter ineffect (such securities being referred to herein as "Margin Stock").  Borrower doesnot own any Margin Stock, and none of the proceeds of the Loans under this Agreement will be used,directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purposeof reducing or retiring any Indebtedness that was originally incurred to purchase or carry anyMargin Stock or for any other purpose that might cause any of the Loans under this Agreement to beconsidered a "purpose credit" within the meaning of Regulations T, U or X of the FederalReserve Board.  Borrower will not take or permit to be taken any action that might cause any LoanDocument to violate any regulation of the Federal Reserve Board.
Taxes.  All tax returns, reports and statements, includinginformation returns, required by any Governmental Authority to be filed by Borrower have been filedwith the appropriate Governmental Authority and all Charges have been paid prior to the date onwhich any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or anysuch fine, penalty, interest, late charge or loss has been paid),  excluding Charges or otheramounts being contested in accordance with Section 5.2(b).  Proper and accurate amountshave been withheld by Borrower from its respective employees for all periods in full and completecompliance with all applicable federal, state, local and foreign laws and such withholdings havebeen timely paid to the respective Governmental Authorities.  Disclosure Schedule (3.11)sets forth as of the Closing Date those taxable years for which Borrower's tax returns are currentlybeing audited by the IRS or any other applicable Governmental Authority, and any assessments orthreatened assessments in connection with such audit, or otherwise currently outstanding.  Except asdescribed in Disclosure Schedule (3.11), Borrower has not executed or filed with the IRSor any other Governmental Authority any agreement or other document extending, or having the effectof extending, the period for assessment or collection of any Charges.  Neither Borrower nor itspredecessors are liable for any Charges:  (a) under any agreement (including any tax sharingagreements) or (b) to Borrower's knowledge, as a transferee.  As of the Closing Date, Borrowerhas not agreed or been requested to make any adjustment under IRC Section 481(a), by reason ofa change in accounting method or otherwise, which would have a Material Adverse Effect.
ERISA.
Disclosure Schedule (3.12)
 lists (i) all ERISA Affiliates and (ii) allPlans and separately identifies all Pension Plans, including Title IV Plans, Multiemployer Plans,ESOPs and Welfare Plans, including all Retiree Welfare Plans.  Copies of all such listed Plans,together with a copy of the latest IRS/DOL 5500-series form for each such Plan, have been deliveredto Agent.  Except with respect to Multiemployer Plans, each Qualified Plan has been determined bythe IRS to qualify under Section 401 of the IRC, the trusts created thereunder have beendetermined to be exempt from tax under the provisions of Section 501 of the IRC, and nothinghas occurred that would cause the loss of such qualification or tax-exempt status.  Each Plan is inmaterial compliance with the applicable provisions of ERISA and the IRC, including the timely filingof all reports required under the IRC or ERISA, including the statement required by 29 CFRSection 2520.104-23.  Neither Borrower nor any ERISA Affiliate has failed to make anycontribution or pay any amount due as required by either Section 412 of the IRC orSection 302 of ERISA or the terms of any such Plan.  Neither Borrower nor any ERISA Affiliatehas engaged in a "prohibited transaction," as defined in Section 406 of ERISA andSection 4975 of the IRC, in connection with any Plan, that would subject Borrower to a materialtax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of theIRC.
Except as set forth in 
Disclosure Schedule (3.12)
:  (i) no Title IV Plan has any UnfundedPension Liability; (ii) no ERISA Event or event described in Section 4062(e) of ERISA with respectto any Title IV Plan has occurred or is reasonably expected to occur; (iii) there are no pending, orto the knowledge of Borrower, threatened claims (other than claims for benefits in the normalcourse), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person asfiduciary or sponsor of any Plan; (iv) neither Borrower nor any ERISA Affiliate has incurred orreasonably expects to incur any liability as a result of a complete or partial withdrawal from aMultiemployer Plan; (v) within the last five (5) years no Title IV Plan of Borrower or ERISAAffiliate has been terminated, whether or not in a "standard termination" as that term isused in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of Borrower or any ERISA Affiliate(determined at any time within the last five  (5) years) with Unfunded Pension Liabilities beentransferred outside of the "controlled group" (within the meaning of Section 4001(a)(14)of ERISA) of Borrower or ERISA Affiliates (determined at such time); (vi) all Stock of Borrower andits ERISA Affiliates makes up, in the aggregate, no more than 20% of fair market value of all assetsnot derived from a company match, or earnings thereon, of any Plan measured on the basis of fairmarket value as of the latest valuation date of any Plan, 
provided
, that with respect to anyPlan, this representation shall not be deemed breached if the Plan is amended, promptly after such20% threshold is reached, to prevent additional investment in such Plan of Stock of Borrower notderived from company match or earnings thereon; (vii) all Plans satisfy all legal requirements withrespect to the amount of Stock of Borrower and its ERISA Affiliates held by each such Planincluding, but not limited to, Section 407 of ERISA and Section 401(a)(22) of the IRC; and (viii) noliability under any Title IV Plan has been satisfied with the purchase of a contract from aninsurance company that is not rated AAA by the Standard & Poor's Corporation or an equivalentrating by another nationally recognized rating agency.
No Litigation.  No action, claim, lawsuit, demand, investigation orproceeding is now pending or, to the knowledge of Borrower or GCRC, threatened against Borrower orGCRC, before any Governmental Authority or before any arbitrator or panel of arbitrators(collectively, "Litigation"), (a) that challenges Borrower's or GCRC's rightor power to enter into or perform any of its obligations under the Loan Documents to which it is aparty, or the validity or enforceability of any Loan Document or any action taken thereunder, or(b) that has a reasonable risk of being determined adversely to Borrower or GCRC and that , ifso determined, could be reasonably be expected to have a Material Adverse Effect.  Except as setforth on Disclosure Schedule (3.13), as of the Closing Date there is no Litigationpending or, to
Borrower's  or GCRC's knowledge, threatened, that seeksdamages in excess of $100,000.00 or injunctive relief against, or alleges criminal misconduct of,Borrower or GCRC. 
Brokers.  No broker or finder brought about the obtaining, makingor closing of the Loans, and neither Borrower nor any Affiliate thereof has any obligation to anyPerson in respect of any finder's or brokerage fees in connection therewith.
Intellectual Property.  As of the Closing Date, Borrower owns orhas rights to use all Intellectual Property necessary to continue to conduct its business as now orheretofore conducted by it or proposed to be conducted by it, and each Patent, Trademark, Copyrightand License is listed, together with application or registration numbers, as applicable, inDisclosure Schedule (3.15).  Borrower conducts its business and affairs withoutinfringement of or interference with any Intellectual Property of any other Person in any materialrespect.  Except as set forth in Disclosure Schedule (3.15), Borrower is not aware ofany infringement claim by any other Person with respect to any Intellectual Property.
Full Disclosure.  No information contained in this Agreement, anyof the other Loan Documents, Financial Statements or other written reports from time to timedelivered hereunder or any written statement furnished by or on behalf of Borrower or GCRC to Agentor any Lender pursuant to the terms of this Agreement contains or will contain any untrue statementof a material fact or omits or will omit to state a material fact necessary to make the statementscontained herein or therein not misleading in light of the circumstances under which they were made.The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the Collateral Documentswill at all times be fully perfected Liens in and to the Collateral described therein, subject, asto priority, only to:  (a) in the case of the Select Real Property Assets, the PermittedEncumbrances and (b) in the case of all other Collateral, the Permitted Encumbrances and Liens whichare not prohibited under the Senior Facility.
Environmental Matters.
- Except as set forth in  Disclosure Schedule (3.17) , as of the Closing Date:(i) each Real Property Asset is free of contamination from any Hazardous Material except forsuch contamination that would not adversely impact the value or marketability of such Real PropertyAsset and that would not result in Environmental Liabilities that could reasonably be expected toexceed $500,000.00; (ii) Borrower has not caused or suffered to occur any Release of HazardousMaterials on, at, in, under, above, to, from or about any of its Real Property Assets;(iii) Borrower is and has been in compliance with all Environmental Laws, except for suchnoncompliance that would not result in Environmental Liabilities which could reasonably be expectedto exceed $250,000.00; (iv) Borrower has obtained, and is in compliance with, all EnvironmentalPermits required by Environmental Laws for the operations of its business as presently conducted oras proposed to be conducted, except where the failure to so obtain or comply with such EnvironmentalPermits would not result in Environmental Liabilities that could reasonably be expected to exceed$250,000.00, and all such Environmental Permits are valid, uncontested and in good standing;(v) Borrower is not involved in operations or does not know of any facts, circumstances orconditions, including any Releases of Hazardous Materials, that are likely to result in anyEnvironmental Liabilities of Borrower which could reasonably be expected to exceed $500,000.00, andBorrower has not permitted any current or former tenant or occupant of the Real Property Assets toengage in any such operations; (vi) there is no Litigation arising under or related to anyEnvironmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties,fines, costs or expenses in excess of $250,000.00 or injunctive relief against, or that allegescriminal misconduct by, Borrower; (vii) no notice has been received by Borrower identifying itas a "potentially responsible party" or requesting information under CERCLA or analogousstate statutes, and to the knowledge of Borrower, there are no facts, circumstances or conditionsthat may result in Borrower being identified as a "potentially responsible party" underCERCLA or analogous state statutes; and (viii) Borrower has provided to Agent copies of allexisting environmental reports, reviews and audits and all written information pertaining to actualor potential Environmental Liabilities, in each case relating to Borrower. 
- Borrower hereby acknowledges and agrees that Agent (i) is not now, and has not ever been,in control of any Real Property Asset or its affairs, and (ii) does not have the capacitythrough the provisions of the Loan Documents or otherwise to influence Borrower's conduct withrespect to the ownership, operation or management of any of its Real Property Assets or compliancewith Environmental Laws or Environmental Permits. 
Insurance.  Disclosure Schedule (3.18) lists allinsurance policies maintained, as of the Closing Date, for current occurrences by Borrower inconnection with the Select Real Property Assets, and Borrower has delivered certificates of all suchinsurance policies showing Agent as an additional insured party, together with additional losspayable endorsements, to Agent.
Agreements and Other Documents.  As of the Closing Date, Borrowerhas provided to or made available to Agent or its counsel, on behalf of Lenders, accurate andcomplete copies (or summaries) of (i) all material agreements, including Select Real Property REAsand any amendments thereto, to which it is subject and which relate to the Select Real PropertyAssets and each of which is listed in Disclosure Schedule (3.19) and (ii) all leases enteredinto by Borrower as lessee with respect to the properties listed on Disclosure Schedule(5.18(a)).  Each such lease is in full force and effect and Borrower has received no notice of,and has no knowledge of, a material default with respect to any such lease.
Solvency.  Both before and after giving effect to (a) theLoans to be made or incurred on the Closing Date or such other date as Loans requested hereunder aremade or incurred, (b) the disbursement of the proceeds of such Loans pursuant to theinstructions of Borrower; and (c) the payment and accrual of all transaction costs inconnection with the foregoing, Borrower is and will be Solvent.
**FINANCIAL STATEMENTS AND INFORMATIONReports and Notices.
- Borrower hereby agrees that from and after the Closing Date and until the Termination Date, itshall deliver to Agent copies of the Financial Statements, notices, Projections and otherinformation as are required to be delivered to the Senior Lenders pursuant to the terms of Annex E  to the Senior Facility at the times set forth therein.
- Borrower hereby agrees that, from and after the Closing Date and until the Termination Date, itshall deliver to Agent, upon its request, copies of any of the Collateral Reports required to bedelivered to the Senior Lenders pursuant to the terms of  Annex F  of the Senior Facility.
- As soon as available, but in any event within thirty (30) days after the end of each FiscalQuarter, Borrower hereby agrees to deliver to Agent a certificate of an Authorized Officer ofBorrower in form and substance reasonably satisfactory to Agent stating whether or not suchAuthorized Officer has knowledge, after due inquiry, of any condition or event which wouldconstitute an Event of Default, a Default or a Category A Property Violation and, if so, specifyingeach such condition or event and the nature thereof and, with respect to Events of Default orDefaults, what action Borrower is taking or proposes to take with respect thereto.
- Upon the request of Agent, Borrower hereby agrees to deliver to Agent, a report in form andsubstance reasonably satisfactory to Agent reflecting the total sales in any calendar month on astore-by-store basis.

**AFFIRMATIVE COVENANTS**
Borrower agrees as to itself and its Subsidiaries that from and after the date hereof anduntil the Termination Date:
Maintenance of Existence and Conduct of Business.  Except where thefailure of Borrower to do so could not reasonably be expected to have a Material Adverse Effect,Borrower shall:  *** do or cause to be done all thingsnecessary to preserve, renew and keep in full force and effect its corporate existence, IntellectualProperty, licenses, permits, franchises, certificates, authorizations, easements, rights of way andother rights, consents and approvals;  continue to conduct its business substantially as nowconducted or as otherwise permitted hereunder;  at all times maintain, preserve and protect allof its assets and tangible properties, including without limitation, each Real Property Asset, usedor useful in the conduct of its business, and keep the same in good repair, working order andcondition in all material respects (taking into consideration ordinary wear and tear and damage bycasualty excepted, subject to the provisions of Section 5.11) and, from time to time, make,or cause to be made, all necessary or appropriate repairs and replacements thereto consistent withindustry practices and  transact business only in such corporate and trade names as are set forth inDisclosure Schedule (5.1). Payment of Charges.
- Subject to  Section 5.2(b)  and to the extent a failure to do so could reasonably beexpected to have a Material Adverse Effect, Borrower shall pay and discharge or cause to be paid anddischarged promptly all Charges payable by it, including (i) Charges imposed upon Borrower orany Subsidiary thereof, its sales and activities, or any part thereof, income and profits, or any ofits property (real, personal or mixed) and all Charges with respect to tax, social security andunemployment withholding with respect to its employees, (ii) lawful claims for labor,materials, supplies and services or otherwise, and (iii) all storage or rental charges payableto warehousemen or bailees, in each case, before any thereof shall become past due.
- Borrower may in good faith contest, by appropriate proceedings, the validity or amount of anyCharges, Taxes or claims described in  Section 5.2(a) ;  provided , that(i) adequate reserves with respect to such contest are maintained on the books of Borrower, inaccordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (otherthan payments to warehousemen and/or bailees) that is superior to any of the Liens securing theObligations and such contest is maintained and prosecuted continuously and with diligence andoperates to suspend collection or enforcement of such Charges; (iii) none of the Collateralbecomes subject to forfeiture or loss as a result of such contest; (iv) Borrower shall promptlypay or discharge such contested Charges, Taxes or claims and all additional charges, interest,penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agentof such compliance, payment or discharge, if such contest is terminated or discontinued adversely toBorrower or the conditions set forth in this  Section 5.2(b)  are no longer met; and(v) Agent has not advised Borrower in writing that Agent reasonably believes that nonpayment ornondischarge thereof could have or result in a Material Adverse Effect.
- Borrower covenants and agrees that, with respect to the Select Real Property Assets, there shallbe added to each monthly payment required hereunder one-twelfth of an amount (hereinafter referredto as the " Escrow Fund ") estimated by Agent to be sufficient to enable Agent topay, at least thirty (30) days before they become due, all real estate taxes and assessments(collectively, the " Impositions ") imposed or required to be paid by Borrower withrespect to each Select Real Property Asset during the ensuing twelve (12) months.  Agent will applythe Escrow Fund to the payment of the Impositions.  The Escrow Fund shall not be, nor be deemed tobe, trust funds but may be commingled with the general funds of Agent, and no interest shall bepayable in respect thereof.  Within ten (10) days of demand made by Agent, Borrower agrees todeliver to Agent such additional monies as are necessary to make up any deficiency in the amountnecessary to enable Agent to pay the Impositions.  
Books and Records.  Borrower  and GCRC shall keep adequate booksand records with respect to its business activities in which proper entries, reflecting allfinancial transactions, are made in accordance with GAAP and on a basis consistent with theFinancial Statements described in Section 3.4.
Insurance; Damage to or Destruction of Collateral.
- Borrower shall, at its sole cost and expense, maintain the policies of insurance providingcoverage for the Select Real Property Assets as in effect on the date hereof or otherwise in formand amounts and with insurers reasonably acceptable to Agent.  Borrower shall deliver to Agentevidence of such insurance reasonably acceptable to Agent, together with a copy of the declarationpage (as soon as practicable) for each such policy.  Borrower shall (i) pay as they become due allpremiums for such insurance, (ii) not later than ten (10) days prior to the expiration of eachpolicy to be furnished pursuant to the provisions of this  Section 5.4 , deliver a renewedpolicy or policies, certificates thereof, or duplicate original or originals thereof.  Such policiesof insurance (or additional loss payable and additional insured endorsements delivered to Agent)shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days priorwritten notice to Agent in the event of any non-renewal, cancellation or amendment of any suchinsurance policy.  If Borrower at any time or times hereafter shall fail to obtain or maintain anyof the policies of insurance required above, or to pay all premiums relating thereto, Agent may atany time or times thereafter obtain and maintain such policies of insurance and pay such premiumsand take any other action with respect thereto that Agent deems advisable and Borrower shall pay toAgent on demand such premium or premiums so paid by Agent with interest from the time of payment atthe Default Rate.  Agent shall have no obligation to obtain insurance for Borrower or pay anypremiums therefor.  By doing so, Agent shall not be deemed to have waived any Default or Event ofDefault arising from Borrower's failure to maintain such insurance or pay any premiums therefor.All sums so disbursed, including reasonable attorneys' fees, court costs and other charges relatedthereto, shall be payable on demand by Borrower to Agent and shall be additional Obligationshereunder secured by the Collateral.
- If any required insurance shall expire, be withdrawn, become void by breach of any conditionthereof by Borrower or by any lessee of any part of any Select Real Property Asset or become void orunsafe by reason of the failure or impairment of the capital of any insurer, or if for any otherreasonable reason whatsoever such insurance shall become reasonably  unsatisfactory to Agent,Borrower shall promptly obtain new or additional insurance reasonably satisfactory to Agent.Borrower shall not take out any separate or additional insurance that is contributing in the eventof loss unless it is properly endorsed and otherwise satisfactory to Agent in all respects.
- Borrower shall deliver to Agent endorsements to (i) all "All Risk" insurancepolicies insuring the Select Real Property Assets (which endorsements shall be in form and substancereasonably satisfactory to Agent) and the Category A Properties in amounts and with coveragescommercially reasonable for its industry, but in any event not less than the amounts approved byAgent as of the Closing Date, naming Agent, on behalf of itself and Lenders, as an additionalinsured and with respect to Select Real Property Assets only additional loss payee under a Lender'sLoss Payee Endorsement, and (ii) all of Borrower's general liability and other liabilitypolicies, including, without limitation, all such policies with respect to the Select Real PropertyAssets (which endorsements shall be in form and substance reasonably satisfactory to Agent) and theCategory A Properties, naming Agent, on behalf of itself and Lenders, as an additional insured; provided , that, notwithstanding anything herein which may be construed to the contrary,Borrower shall only be required to deliver additional insured endorsements to Agent in connectionwith the Category A Properties if the Senior Facility Agent has required  Borrower to deliverequivalent endorsements to the Senior Facility Agent;  provided ,  further , that theendorsements delivered to Agent shall be comparable to those delivered to the Senior Facility Agent.
- In the event the injury or property damage on a Select Real Property Asset is covered byBorrower's insurance policies and is in the amount of $250,000.00 or more, Agent shall have theright to join Borrower in adjusting any loss.  Notwithstanding anything to the contrary containedherein or in any other provision of applicable law, the proceeds of insurance policies coming intothe possession of Agent shall not be deemed trust funds and Agent shall be entitled to dispose ofsuch funds as provided in this  Section 5.4 .
- All proceeds of the insurance required to be maintained by Borrower in connection with a SelectReal Property Asset under this  Section 5.4 , and any condemnation award proceeds or othersimilar compensation received by Borrower in connection with a Select Real Property Asset shall bedeposited with Agent, except that so long as no Event of Default has occurred and is continuingwithout being waived or cured, any such proceeds or awards or other compensation (after deductingtherefrom all reasonable costs and expenses, including attorneys' fees, incurred by Agent inconnection with the collection thereof regardless of the particular nature thereof and whetherincurred with or without suit) (collectively, " Net Proceeds ") aggregating less than$1,000,000.00 (but if the event generating such Net Proceeds occurs after July 31, 2004, aggregatingless than $250,000.00) shall not be required to be so deposited.
(i)	All such Net Proceeds deposited with Agent shall be disbursed to Borrower for payment ofthe costs of restoring the Select Real Property Assets so damaged or taken to their value, utilityand condition immediately prior to such damage (collectively, "Restoration Costs"),provided, that:  (A) no Event of Default shall have occurred and be continuing withoutbeing waived or cured, and (B) in the reasonable judgment of Agent, (1) the Select RealProperty Assets so damaged can be restored substantially to the value, utility and condition thereofimmediately prior to such damage or condemnation, (2) the Net Proceeds deposited with Agent,together with such supplemental amounts deposited by Borrower with Agent for the purpose, shall besufficient to pay all Restoration Costs, (3) such restoration can be expected to be expected to becompleted no later than six (6) months after the Maturity Date, and (4) such damage orcondemnation and the time to complete such restoration shall not materially adversely affect theability of Borrower to pay and perform its obligations under this Agreement and the other LoanDocuments during such restoration or thereafter, and (C) no later than 120 days after Agent'sreceipt of such proceeds, Borrower shall have delivered to Agent detailed plans and specificationsand cost estimates reasonably acceptable to Agent and prepared by an architect or engineer selectedby Borrower and reasonably satisfactory to Agent.  After the payment in full of all RestorationCosts, the remainder of Net Proceeds, if any, shall be paid to Borrower.
(ii)	Such Restoration Funds will be advanced by Agent from time to time as the restorationwork progresses upon the written request of Borrower subject to compliance by Borrower with suchreasonable requirements and conditions as Agent shall impose which are reasonably necessary toensure Borrower's compliance with Section 5.11 below.
(iii)	In the event the conditions set forth in Section 5.4(e)(i)(A), (B) and(C) above are not satisfied, all such Net Proceeds deposited with Agent shall be applied byAgent to the payment of the Obligations in accordance with Section1.4(c),(notwithstanding the fact that the same may not then be due and payable) until the same have beenpaid in full, then the remainder, if any, to Borrower. 
- Borrower shall promptly notify Agent of any loss, damage, or destruction to the Select RealProperty Assets in the amount of $250,000.00 or more, whether or not covered by insurance.  
- Effective upon the occurrence and continuance of a Default or Event of Default, Borrower herebyirrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designatedby Agent), as Borrower's true and lawful agent and attorney-in-fact for the purpose of making,settling and adjusting claims under any "All Risk" policy of insurance insuring a SelectReal Property Asset, endorsing the name of Borrower on any check or other item of payment for theproceeds of such "All Risk" policies of insurance and for making all determinations anddecisions with respect to such "All Risk" policies of insurance.  Agent shall have no dutyto exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney.  Duringthe continuance of an Event of Default, after deducting from such proceeds the expenses, if any,incurred by Agent in the collection or handling thereof, Agent may, at its option, apply suchproceeds to the reduction of the Obligations in accordance with  Section 1.4(c) ; orpermit or require Borrower to use such money, or any part thereof, to replace, repair, restore orrebuild the Select Real Property Asset in a diligent and expeditious manner with materials andworkmanship of substantially the same quality as existed before the loss, damage or destruction.  Tothe extent not used to replace, repair, restore or rebuild the Select Real Property Asset, suchinsurance proceeds shall be applied in accordance with  Section 1.4(c) .
Compliance with Laws.
- Borrower shall do or cause to be done all things necessary to comply with all Laws (including,without limitation, Environmental Laws, Environmental Permits, all zoning and building codes, ERISAand OSHA) or any other requirements except (i) where the necessity of compliance therewith iscontested in good faith by the appropriate proceedings and such noncompliance in the aggregate wouldnot reasonably be expected to have a Material Adverse Effect or (ii) so long as the necessity ofcompliance is being contested in good faith;  provided , that Borrower may elect not to complywith any such Law during Borrower's good faith contest thereof to the extent such Law is applicableto a Select Real Property Asset, if (1) Borrower has given prior notice to Agent of Borrower'sintent to contest such Law, (2)  the legal proceedings shall operate conclusively to preventthe sale or forfeiture of such Select Real Property Asset, or any part thereof, for failure tocomply with such obligations prior to final determination of such proceedings, (3) if during suchcontest a lien or cloud on title shall exist with respect to such Select Real Property Asset,Borrower shall provide Agent with a good and sufficient bond from a surety company reasonablysatisfactory to Agent or other security reasonably satisfactory to Agent in an amount equal to theaforesaid lien or cloud on title or, if the amount thereof is uncertain, in an amount reasonablysatisfactory to Agent, (4) neither Agent nor the Lenders shall be subject either to civil orcriminal liability for any failure by Borrower to comply with such obligations during the pendencyof such contest, (5) such contest stays the enforcement of the applicable Law, and (6) Borroweror Subsidiary of Borrower shall have set aside on its books reasonable reserves (the presentation ofwhich is segregated to the extent required by GAAP).
- Borrower shall obtain or make all further authorizations, approvals, orders, consents, licenses,registrations or filings from or with any Governmental Authority required for the performance byBorrower of this Agreement and the other Loan Documents to which it is a party, as Agent shallreasonably require.
Supplemental Disclosure; Notice of Material Events.
- From time to time as may be reasonably requested by Agent (which request will not be made morefrequently than once each year absent the occurrence and continuance of a Default or an Event ofDefault), Borrower shall supplement any Disclosure Schedule hereto, or any representationherein or in any other Loan Document, with respect to any matter hereafter arising that, if existingor occurring at the date of this Agreement, would have been required to be set forth or described insuch Disclosure Schedule or as an exception to such representation or that is necessary tocorrect any information in such Disclosure Schedule or representation which has been renderedinaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such DisclosureSchedule shall be appropriately marked to show the changes made therein);  provided , that(a) no such supplement to any such Disclosure Schedule or representation shall amend,supplement or otherwise modify any Disclosure Schedule or representation, or be or be deemed awaiver of any Default or Event of Default resulting from the matters disclosed therein, except asconsented to by Agent and Requisite Lenders in writing, and (b) no supplement shall be requiredor permitted as to representations and warranties that relate solely to the Closing Date.
- Borrower shall promptly upon, but in any event within five (5) days after, an Authorized Officeror other executive officer of Borrower obtaining knowledge of (i) any Default or Event of Defaultunder this Agreement, (ii) any Default or Event of Default under the Senior Facility, (iii) anyMaterial Adverse Effect, (iv) any action, event or condition which could reasonably be expectedto have a Material Adverse Effect, (v) any change in the name, corporate structure or thejurisdiction of organization of Borrower, (vi) a change in the organizational identificationnumber of Borrower or the receipt of an organizational number by Borrower if it currently does nothave one, (vii) any other event which could reasonably be expected to materially decrease thevalue of any Select Real Property Asset, (viii) any proposed material amendment to any agreementsthat relate to any Select Real Property Asset and which would reasonably be expected to have aMaterial Adverse Effect, (ix) any pending or contemplated condemnation proceeding affecting anySelect Real Property Asset which would result in net cash proceeds of $300,000.00 or more, or (x)any Category A Property Violation, give written notice thereof to Agent specifying the nature andperiod of existence of any such condition or event, or specifying the notice given (including,without limitation, all notices delivered to the Senior Lenders in connection with such condition orevent) or action taken by such Person and the nature of such claimed Event of Default or conditionand what action Borrower has taken, is taking and proposes to take with respect thereto.  
Environmental Matters.  Except where the failure to do so could notreasonably be expected to have a Material Adverse Effect, Borrower shall and shall cause itsSubsidiaries and other Persons within its control to:  (a) conduct its operations and keep andmaintain its Real Property Assets in compliance with all Environmental Laws and Environmental
Permits; (b) implement any and all investigation, remediation, removal andresponse actions that are appropriate or necessary to maintain the value and marketability of theReal Property Assets or to otherwise comply with Environmental Laws and Environmental Permitspertaining to the presence, generation, treatment, storage, use, disposal, transportation or Releaseof any Hazardous Material on, at, in, under, above, to, from or about any of its Real PropertyAssets; (c) notify Agent promptly after Borrower becomes aware of any violation ofEnvironmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from orabout any Real Property Asset; and (d) promptly forward to Agent a copy of any order, notice,request for information or any communication or report received by Borrower in connection with anysuch violation or Release or any other matter relating to any Environmental Laws or EnvironmentalPermits whether or not the Environmental Protection Agency or any Governmental Authority has takenor threatened any action in connection with any such violation, Release or other matter.  If Agentat any time has a reasonable basis to believe that there may be a violation of any EnvironmentalLaws or Environmental Permits by Borrower or any Environmental Liability arising thereunder, or aRelease of Hazardous Materials on, at, in, under, above, to, from or about any of its Real PropertyAssets, that, in each case, could reasonably be expected to have a Material Adverse Effect, thenBorrower shall, upon Agent's written request (i) cause the performance of such environmentalaudits including subsurface sampling of soil and groundwater, and preparation of such environmentalreports, at Borrower's expense, as Agent may from time to time reasonably request, which shall beconducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be inform and substance reasonably acceptable to Agent, and (ii) permit Agent or its representativesto have access to all Real Property Assets for the purpose of conducting such environmental auditsand testing as Agent deems appropriate, including subsurface sampling of soil and groundwater.Borrower shall reimburse Agent for the costs of such audits and tests and the same will constitute apart of  the Obligations secured hereunder. 
Observance of Agreements.
- Borrower shall duly observe and perform all material terms and conditions of any agreementrelating to any Select Real Property Asset, and diligently protect and enforce the rights ofBorrower and its Subsidiaries under all such agreements in a manner consistent with prudent businessjudgment and subject to the terms and conditions of such agreements.
- Borrower shall comply at all times with the provisions of all leases and other materialagreements to which it is a party so as to prevent any loss or forfeiture thereof or thereunderunless compliance therewith is being currently contested in good faith by appropriate proceedingsand appropriate reserves have been established in accordance with GAAP or where such noncompliancein the aggregate would not reasonably be expected to have a Material Adverse Effect.
- Borrower shall promptly provide Agent copies of all agreements amending, altering, modifying,waiving or supplementing in any material respect any material agreement relating to any Select RealProperty Asset.
Further Assurances; Security Interests.
- Upon the request of Agent, Borrower shall duly execute and deliver, or cause to be duly executedand delivered to Agent, at the cost and expense of Borrower, such further instruments and do andcause to be done such further acts as may be necessary or proper in the reasonable opinion of Agentor its counsel to carry out more effectively the provisions and purposes of this Agreement or anyother Loan Document.
- Upon the request of Agent, Borrower shall promptly execute and deliver or cause to be executedand delivered, at the cost and expense of Borrower, such further instruments as may be appropriatein the reasonable judgment of Agent or its counsel, to provide Agent for the benefit of the Lenders(i) a first perfected Lien in each of the Select Real Property Assets, subject only to the PermittedEncumbrances, and (ii) a perfected Lien in the other Collateral subject only to the PermittedEncumbrances and any Lien which is not prohibited under the Senior Facility, and any and alldocuments (including, without limitation, an amendment or supplement of any financing statement anda continuation statement or other statement) for filing under the provisions of the Code and therules and regulations thereunder, or any other applicable law of the United States or any otherjurisdiction which Agent may deem reasonably necessary or advisable, and perform or cause to beperformed such other ministerial acts which are reasonably necessary or advisable, from time totime, in order to grant and maintain in favor of Agent for the benefit of the Lenders the securityinterest in the Collateral contemplated hereunder and under the other Loan Documents.
- Borrower shall promptly undertake to deliver or cause to be delivered to Agent from time to timesuch other documentation, consents, authorizations and approvals, in form and substance reasonablysatisfactory to Agent, as Agent or its counsel shall deem reasonably necessary or advisable toperfect or maintain the Liens of Agent for the benefit of the Lenders.
Leases.
Store Leases
.  Borrower covenants and agrees:
- promptly to perform and/or observe in all material respects all of the covenants and agreementsrequired to be performed and/or observed by the lessee under each Store Lease and do all thingsnecessary to preserve and to keep unimpaired its rights thereunder;
- promptly to notify Agent of any alleged default by any Person under each Store Lease andpromptly to deliver to Agent a copy of each notice of default and other material notice to beprovided or received in respect of any Store Lease; and
- to use commercially reasonable efforts to enforce the performance and observance of all of thecovenants and agreements required to be performed and/or observed by the lessor under each StoreLease unless, in each case failure to do so would not result in a Material Adverse Effect.
Space Leases
.  With respect to Space Leases affecting a Select Real Property Asset,Borrower shall:
- promptly perform and/or observe in all material respects all of the covenants and agreementsrequired to be performed and/or observed by the lessor under each Space Lease and do all thingsnecessary to preserve and to keep unimpaired its rights thereunder;
- promptly notify Agent of an alleged default by any Person under each Space Lease;
- promptly deliver to Agent a copy of each notice of default and other material notice to beprovided or received in respect of any Space Lease;
- exercise, within ten (10) days after a request by Agent, any right to request from the lessee acertificate with respect to the status thereof but not more frequently than annually;
- at Agent's request, promptly deliver to Agent a certified copy of Borrower's fully executedcounterpart of any Space Lease or amendment to a Space Lease  executed after the date hereof;and
- use commercially reasonable efforts to enforce the performance and observance of all of thecovenants and agreements required to be performed and/or observed by the lessee under each SpaceLease.  All Space Leases entered into by Borrower after the date hereof shall be on commerciallyreasonable terms and, other than renewals, on the form of Borrower.
Right to Take Action
.  If Borrower shall fail to perform or observe (after the applicablenotice and grace period) any of the covenants and/or agreements required to be performed and/orobserved by it under any Store Lease or Space Lease encumbering a Select Real Property Asset or anyCategory A Property and to the extent that such failure to perform or observe would result in aMaterial Adverse Effect, including, without limitation, payment of all rent and other charges duethereunder, Agent may, five (5) Business Days after Borrower's receipt of written notice (except inemergencies and/or in situations where a failure sooner to perform or observe the same may result ina forfeiture under lease (in either of the foregoing cases, Agent shall give only such prior noticeas is reasonable under the existing circumstances)), take such action as is appropriate to causesuch covenants and/or agreements promptly to be performed and/or observed on behalf of Borrower butno such action by Agent shall release Borrower from any of its obligations under the Loan Documents.Upon receipt by Agent from the counterparty under any such lease of any notice of default byBorrower thereunder, Agent may rely thereon and take any action as aforesaid to cure such defaulteven though the existence of such default or the nature thereof may be questioned or denied byBorrower or by any party on behalf of Borrower.
Renewal Options
.  Borrower shall provide written notice at least thirty (30) daysprior to the last day upon which Borrower may validly exercise any option to renew or extend theterm of any Store Lease either (i) duly exercise such option and give immediate notice thereofto Agent; or (ii) give Agent prior written notice of Borrower's intent not to renew any suchStore Lease, together with a summary of Borrower's intended plan for the sale, transfer or otherdisposition of all Collateral located in the premises subject of such Store Lease.  From and afterthe occurrence of an Event of Default, if Borrower shall fail to so exercise any option to renew orextend the term of any Store Lease, Agent shall have, and is hereby granted, the irrevocable rightto exercise such option, either in its own name and behalf, or in the name and behalf of Borrower,all as Agent shall determine.
Written Statement
.  Borrower shall, within twenty (20) days after demand by Agent,deliver to Agent a written statement certifying as to any factual matter and providingrepresentations as to any other matter in connection with any Store Lease which is reasonablyrequested by Agent.
Additional Store Lease Covenants
.
- In the event any Store Lease shall be terminated by reason of a default thereunder by Borrowerand Agent shall acquire from the fee owner a new lease, Borrower hereby waives any right, title andinterest in and to such new lease or the leasehold estate created thereby, waiving all rights ofredemption now or hereafter operable under any law.
- Borrower will promptly notify Agent in writing of the commencement of a proceeding under thefederal bankruptcy laws by or against Borrower or the lessor under any Store Lease.  In the event ofthe bankruptcy of the lessor or sublessor under any Store Lease, during the occurrence and thecontinuance of an Event of Default, Borrower shall not agree to treat any Store Lease as terminated,canceled or surrendered pursuant to the applicable provisions of the Bankruptcy Code or otherwise(including, but not limited to,  Section 365(h)(1)  thereof) without Agent's prior writtenconsent.  In addition, during the occurrence and continuance of an Event of Default, Borrower shall,in the event of the bankruptcy of the  lessor or sublessor under any Store Lease, reaffirm andratify the legality, validity, binding effect and enforceability of the Store Lease and shall electto remain in possession of the land and the leasehold estate, notwithstanding any rejection of suchStore Lease, unless Agent otherwise directs.  In the event of the bankruptcy of the lessor orsublessor under any Store Lease, if no Event of Default has occurred and is continuing, Borrower maytreat any Store Lease as terminated, canceled or surrendered pursuant to the applicable provisionsof the Bankruptcy Code or otherwise (including, but not limited to Section 365(h)(1) thereof), provided ,  however , that Borrower shall provide Agent with thirty (30) dayswritten notice prior to rejecting any Store Lease and vacating the premises, together with a summaryof Borrower's intended plan for the sale, transfer, or other disposition of Collateral located inthe premises subject of such Store Lease.
- Subject to the provisions of the Intercreditor Agreement, during the continuance of an Event ofDefault under this Agreement, Agent shall have the right, but not the obligation, (i) toperform and comply with all obligations of Borrower under the affected Store Lease without relyingon any grace period provided therein, (ii) to do and take, without any obligation to do so,such action as Agent deems necessary or desirable to prevent or cure any default by Borrower underthe Store Lease, including, without limitation, any act, deed, matter or thing whatsoever thatBorrower may do in order to cure a default under the Store Lease and (iii) to enter in and uponthe land or any part thereof to such extent and as often as Agent deems necessary or desirable inorder to prevent or cure any default of Borrower under the Store Lease.  Borrower shall, withinfive (5) days after written request is made therefor by Agent, execute and deliver toAgent or to any party designated by Agent, such further instruments, agreements, powers,assignments, conveyances or the like as may be reasonably necessary to complete or perfect theinterest, rights or powers of Agent pursuant to this  Section 5.10(f)  or as may otherwise berequired by Agent.
Condition of the Select Real Property Assets. Except where thefailure to do so would not reasonably be expected to have a Material Adverse Effect, Borrower shall(a) not permit any Select Real Property Asset (or any portion thereof) to be removed,demolished or materially altered, (b) not use or permit the use of any Select Real Property Asset inany manner which would permit any insurer to cancel any insurance policy or void coverage requiredto be maintained hereunder, (c) subject to the provisions of Section 1.4(c) andSections 5.4(e) and (g), repair, replace and restore the Select Real PropertyAssets now or hereafter damaged or destroyed by any casualty or other event (whether or not insuredagainst and insurable) or affected by any condemnation or other taking so that, when repaired,replaced and restored, the same shall be (i) at least equal in quality, usefulness and value asthe Select Real Property Asset, as the case may be, which existed immediately prior to suchcasualty, event or condemnation or other taking, as the case may be and (ii) of the same typeand character as the type and character of the Select Real Property Assets, as the case may beexisting on the date hereof and (d) perform any and all construction, equipping, alteration,repair, replacement and/or restoration in respect of the Select Real Property Assets in a good andworkmanlike manner, free and clear of all Liens (except the Permitted Encumbrances).  
Liens.  Borrower shall defend the Select Real Property Assetsagainst any and all Liens, claims and other impediments howsoever arising, other than the SeniorFacility Liens and other the Permitted Encumbrances and in any event defend the same against anyattempted foreclosure.
Silverdale Ground Lease.
- Borrower will not surrender, terminate or cancel the easements or leasehold estate created bythe Silverdale Ground Lease, and will not modify, change, supplement, alter, or amend the SilverdaleGround Lease either orally or in writing without the prior written consent of Agent, which consentshall not be unreasonably withheld, conditioned or delayed. 
- Borrower shall deliver to Agent by the tenth (10th) of each calendar month, satisfactoryevidence, as determined by Agent in its sole discretion, that Borrower has paid all of itsobligations to pay rent, additional rent or any other charges payable by Borrower as tenant underthe Silverdale Ground Lease (collectively, the " Rental Payments ").  If Borrowerdefaults in making any Rental Payments, Borrower shall pay to Agent monthly at least thirty (30)days prior to the date on which such Rental Payments shall be due and payable (and in addition toeach monthly installment of principal and interest hereunder), all amounts necessary to pay for theRental Payments.  The sums deposited hereunder shall not be, nor be deemed to be, trust funds butmay be commingled with the general funds of Agent, and no interest shall be payable in respectthereof.  Within ten (10) days of demand made by Agent, Borrower agrees to deliver to Agent suchadditional monies as are necessary to make up any deficiency in the amount necessary to enable Agentto pay the Rental Payments. The sums deposited hereunder shall be applied by Agent to the payment ofsuch Rental Payments as the same become due and payable. 
Senior Facility Waiver or Amendment.
- Subject to the terms of  Section 6.13(b) , Borrower shall, promptly upon, but in any eventwithin five (5) Business Days after an Authorized Officer or other executive officer of Borrowerobtains knowledge of any amendment to or waiver of a condition of the Senior Facility, give writtennotice thereof to Agent specifying the nature and period of existence of any such amendment orwaiver.
- If Borrower pays a fee to the Senior Facility Agent in consideration of any waiver or amendmentto the terms of the Senior Facility, Borrower shall promptly, but in any event no later than five(5) Business Days thereafter, pay to Agent a fee calculated by multiplying (a) the ratio expressedas a percentage of (i) the aggregate principal amount outstanding on the Loans hereunder to (ii) theaggregate Commitments (as defined in the Senior Facility) under the Senior Facility by (b) theamount of the fee paid to the Senior Facility Agent for the applicable amendment or waiver under theSenior Facility
Subsidiaries.  Any newly formed or acquired Subsidiary of Borrowerthat enters into a Guaranty (as defined in the Senior Facility) with the Senior Facility Lendersshall also deliver to Agent, reasonably promptly thereafter, a Guaranty, in form and substanceconsistent with the guaranty delivered to the Senior Facility Lenders, and subject to the provisionsof the Intercreditor Agreement, securing the Obligations hereunder executed on behalf of suchSubsidiary.  Borrower shall also cause such Subsidiary, subject to the provisions of theIntercreditor Agreement, to enter into such other agreements with and provide such other documentsto Agent, as required to be provided to the Senior Facility Lenders, and in form and substanceconsistent with such agreements and documents delivered to the Senior Facility Lenders, includingappropriate UCC-1 financing statements, Mortgages and/or other security documents, organizationaldocuments and written opinions of counsel, with such changes as reasonably required by Agent and itscounsel to conform such agreements and documents to this Agreement.
 Condemnation/Eminent Domain.  Immediately upon obtaining knowledgeof the institution of any proceedings for the condemnation of any Select Real Property Asset orCategory A Property, or any portion thereof, Borrower will notify Agent of the pendency of suchproceedings.  Borrower shall, at its expense, diligently prosecute any such proceeding.  Agent shallhave the right to join Borrower in adjusting and compromising any and all awards in connection withany condemnation of a Select Real Property Asset.  All such awards and proceeds of condemnationshall be applied as set forth in Section 5.4(e) and (g).
Reciprocal Easement Agreements.  Except where the failure to do sowould not reasonably be expected to have a Material Adverse Effect, Borrower covenants and agreesspecifically with respect to each Select Real Property REA that Borrower shall maintain each SelectReal Property REA in full force and effect and not take or allow to be taken any action that wouldterminate or cancel, or permit the termination or cancellation of, such Select Real Property REAwithout the prior consent of Agent and that:
- Borrower will pay on or before the due dates thereof all amounts payable, if any, under theprovisions of each Select Real Property REA and will timely observe and perform, in all materialrespects, all of the terms, covenants, agreements and conditions of each Select Real Property REArequired therein to be observed and performed by Borrower as party to each Select Real Property REA,and will upon written request, furnish to Agent receipts from any other party under each Select RealProperty REA and other satisfactory evidence of payment evidencing the timely payment of all amountsdue thereunder. Borrower covenants and agrees to deliver to Agent a copy of any notice of defaultunder each Select Real Property REA received by Borrower immediately after such receipt.
- Borrower will not surrender the easements, estate or interest created by any Select RealProperty REA, nor terminate or cancel any Select Real Property REA, and Borrower will not, withoutthe express consent of Agent (which consent shall not be unreasonably withheld, conditioned ordelayed), modify, change, supplement, alter, or amend any Select Real Property REA either orally orin writing.
- Borrower will promptly notify Agent in writing of the commencement of a proceeding under theBankruptcy Code by or against Borrower and, upon its knowledge thereof, any other party to anySelect Real Property REA. 
- Upon Borrower's receipt of knowledge thereof, Borrower will promptly notify Agent of any requestmade by any party to each Select Real Property REA to the other party thereto for arbitration orappraisal proceedings pursuant to each Select Real Property REA, and of the institution of anyarbitration or appraisal proceedings and promptly deliver to Agent a copy of the determination ofthe arbitrators or appraisers in each such proceeding.
Conditions Subsequent.
- Borrower shall, within 180 days of the Closing Date, make commercially reasonably efforts toduly execute and deliver, or cause to be duly executed and delivered, at the cost and expense ofBorrower, a Mortgage, appropriate UCC-1 financing statements, recordable memorandum of lease and acertificate of an Authorized Officer of Borrower certifying that, to Borrower's knowledge, the RealProperty Asset to which it relates is not subject to a Category A Violation, except as disclosed insuch certificate, with respect to at least five (5) of the parcels listed on  DisclosureSchedule (5.18(a) ) hereto, which shall include, in any event, a Mortgage, appropriate UCC-1financing statements, a recordable memorandum of lease and a certificate of an Authorized Officer ofBorrower certifying that, to Borrower's knowledge, such Real Property Asset is not subject to aCategory A Violation, except as disclosed in such certificate, with respect to at least two of (i)the Fashion Fair Property, (ii) the Sacramento Property and/or (iii) the SLO Lease.  Borrower'sfailure to secure such Mortgages, financing statements, memoranda and officer's certificates withinthe time period set out above shall not constitute a Default or an Event of Default. 
- Borrower shall provide to Agent copies of all  memoranda of lease and landlord consents withrespect to any Real Property Asset, including, but not limited to, those properties listed on Disclosure Schedule (5.18(a)) , reasonably promptly after Borrower's receipt thereof.Borrower shall promptly notify Agent if any such memorandum of lease and any Mortgage with respectto any Real Property Asset are recorded in any jurisdiction in favor of the Senior FacilityLenders.
- If Borrower grants a Mortgage (as defined in the Senior Facility) in favor of the SeniorFacility Lenders with respect to any Real Property Asset, other than the Select Real PropertyAssets, Borrower shall execute and deliver to Agent, reasonably promptly thereafter and subject tothe terms of the Intercreditor Agreement, a Mortgage with respect to such Real Property Asset, infavor of Agent for the benefit of the Lenders, subject only to the Permitted Encumbrances and anyLien which is not prohibited under the Senior Facility.  Any such Mortgage shall be in the form of Exhibit M  hereto.  Borrower shall also, subject to the provisions of the IntercreditorAgreement, provide to Agent such other documents, as required to be provided to the Senior FacilityLenders, in form and substance consistent with such documents delivered to the Senior FacilityLenders, including appropriate UCC-1 financing statements and organizational documents, with suchchanges as reasonably required by Agent and its counsel to conform such documents to thisAgreement.
- If either Borrower or GCRC grants a pledge of any additional Stock (as defined in the SeniorFacility), promissory notes or instruments, as applicable, to the Senior Facility Lenders, thenreasonably promptly thereafter and subject to the terms of the Intercreditor Agreement, Borrowershall deliver to Agent, or cause to be delivered to Agent, a Pledge Amendment (as defined in eachrespective Pledge Agreement) to the Pledge Agreement executed by the relevant party, in the formattached thereto, pledging such additional Stock, promissory notes and instruments, as applicable,to Agent, for the benefit of Lenders, in each case, subject only to the Permitted Encumbrances andany Lien which is not prohibited under the Senior Facility.
- Within 180 days of the Closing Date, Borrower shall use commercially reasonable efforts toobtain from each of the parties to the Select Real Property REAs, listed on  Disclosure Schedule5.18(e) , an estoppel certificate duly executed by an Authorized Officer of such party, in formand substance reasonably satisfactory to Agent. 
** 
NEGATIVE COVENANTS**
Borrower agrees as to itself and its Subsidiaries that from and after the date hereof untilthe Termination Date:
Mergers, Purchases.  Neither Borrower nor GCRC shall directly orindirectly, by operation of law or otherwise: 
- Merge with, consolidate with, acquire all or substantially all of the assets or Stock of, orotherwise combine with or acquire, any Person in any transaction that  involves an Affiliate ofthe Senior Facility Agent;  was arranged by or coordinated by the Senior Facility Agent or results in the payment of a fee or other monetary sum, or in a direct economic benefit to theSenior Facility Agent (other than any fee or expenses for a waiver of or amendment to any provisionof the Senior Facility).
- Lease, occupy, operate, purchase or otherwise acquire any real property not currently operatedby Borrower that is located within five (5) miles of any Select Real Property Asset and thatcontains a retail store or chain of retail stores.
Investments; Loans and Advances.  Borrower shall not make or permitto exist any investment in, or make, accrue or permit to exist loans or advances of money to, anyPerson, through the direct or indirect lending of money, holding of securities or otherwise, in anytransaction that  involves an Affiliate of the Senior Facility Agent;  was arranged by orcoordinated by the Senior Facility Agent or  results in the payment of a fee or other monetarysum, or in a direct economic benefit to the Senior Facility Agent (other than any fee or expensesfor a waiver of or amendment to any provision of the Senior Facility).
Indebtedness.
- Borrower shall not create, incur, assume or permit to exist any Indebtedness, except (i)Indebtedness incurred in connection with the Senior Facility and (ii) Indebtedness not prohibited bythe Senior Facility, including, but not limited to, the Indebtedness in existence on the date hereoflisted on  Disclosure Schedule (6.3) .
- Borrower shall not increase the Maximum Amount (as defined in the Senior Facility) under theSenior Facility to more than $175,000,000 without the prior written consent of Agent.
Employee Loans and Affiliate Transactions.  Except as otherwiseexpressly permitted in this Section 6.4 with respect to Affiliates, Borrower shall notenter into or be a party to any transaction with any Subsidiary or Affiliate thereof except in theordinary course of and pursuant to the reasonable requirements of Borrower's business and upon fairand reasonable terms that are no less favorable to Borrower than would be obtained in a comparablearm's length transaction with a Person not an Affiliate of Borrower.  In addition, the terms ofthese transactions must be disclosed in advance to Agent and Lenders.  All such transactionsexisting as of the date hereof are described in Disclosure Schedule (6.4). 
Capital Structure and Business.  Borrower shall not (a) make anychanges in any of its business objectives, purposes or operations that could in any way adverselyaffect the repayment of the Loans or any of the other Obligations or could reasonably be expected tohave or result in a Material Adverse Effect, or (b) amend its charter or bylaws in a mannerthat
could reasonably be expected to result in a Material Adverse Effect.Borrower shall not engage in any business other than the businesses currently engaged in by it orbusinesses reasonably related thereto.
Liens.  
- Borrower shall not create, incur, assume or permit to exist any Lien on or with respect to anySelect Real Property Asset, except for a Permitted Encumbrance that relates to any Select RealProperty Assets.  All Liens in existence on January 31, 2002 are summarized on  DisclosureSchedule (6.6) .  Borrower shall date  Disclosure Schedule (6.6)  down to the Closing Datewithin ten (10) Business Days after the Closing Date.

	(b)	Upon the reasonable request of Borrower and to the extent granted by the  SeniorFacility Lenders, Agent shall execute and deliver to Borrower written waivers with respect tocertain Liens identified by Borrower, in order to facilitate equipment leases, sale leasebacks ofequipment or other equipment financing transactions not prohibited by the Senior Lenders under theSenior Facility.  Any written waiver delivered pursuant to this Section 6.6(b) in connectionwith any transaction contemplated by Borrower shall be similar in form and substance to the writtenwaiver executed by the Senior Facility Lenders in connection with such transaction.
Dispositions: Sale of Stock and Assets; Store Closings.  Borrowershall not sell, transfer, convey, assign or otherwise dispose of (i) all or any portion of, or anyinterest in, any Select Real Property Asset or Category A Property whether legal or equitable, byoutright sale, deed, installment sale contract, land contract, contract for deed, leaseholdinterest, lease option, contract or any other method or conveyance of real property interests, or(ii) all or substantially all of its assets and properties.  Borrower may not close any retaildepartment store or elect not to renew any Store Lease, without Agent's prior written consent.Borrower also may not close the facility currently subject to the SLO Lease prior to the TerminationDate.  With respect to any disposition of assets and properties not inconsistent with thisSection 6.7 and otherwise not prohibited by the terms hereof and by the Senior Lendersunder the Senior Facility, Agent agrees upon reasonable prior written notice and receipt ofreasonable evidence that the Senior Facility Agent will concurrently release its Liens on suchassets and properties, to release its Liens on such assets and properties in order to permitBorrower to effect any disposition, and shall execute and deliver to Borrower, at Borrower'sexpense, appropriate UCC-3 termination statements and other releases as reasonably requested byBorrower.
ERISA.  Borrower shall not, or shall cause or permit any ERISAAffiliate to, cause or permit to occur an event that could result in the imposition of a Lien underSection 412 of the IRC or Section 302 or 4068 of ERISA or cause or permit to occur anERISA Event to the extent such ERISA Event could reasonably be expected to have a Material AdverseEffect.
Hazardous Materials.  Borrower shall not cause or permit a Releaseof any Hazardous Material on, at, in, under, above, to, from or about any of the Real PropertyAssets where such Release would (a) violate in any respect, or form the basis for anyEnvironmental
Liabilities under, any Environmental Laws or EnvironmentalPermits or (b) otherwise adversely impact the value or marketability of any of the RealProperty Assets or any of the Collateral, other than such violations or Environmental Liabilitiesthat could not reasonably be expected to have a Material Adverse Effect.
Cancellation of Indebtedness.  Borrower shall not cancel any claimor debt owing to it, except for reasonable consideration negotiated on an arm's length basis and inthe ordinary course of its business consistent with past practices.
Change of Corporate Name or Location.  Borrower shall not(a) change its name as it appears in official filings in the state of its incorporation orother organization (b) change its warehouses or locations at which Collateral is held orstored, or the location of its records concerning the Collateral, (c) change the type of entitythat it is, (d) change its organization identification number, if any, issued by its state ofincorporation, or (e) change its state of incorporation, in each case without at least thirty(30) days prior written notice to Agent and after Agent's written acknowledgment that any reasonableaction requested by Agent in connection therewith, including to continue the perfection of any Liensin favor of Agent, on behalf of Lenders, in any Collateral, has been completed or taken, andprovided, that any such new location shall be in the United States.  Without limiting theforegoing, Borrower shall not change its name, identity or corporate structure in any manner thatmight make any financing or continuation statement filed in connection herewith seriously misleadingwithin the meaning of Section 9-402(7) of the Code or any other then applicable provision ofthe Code except upon prior written notice to Agent and Lenders and after Agent's writtenacknowledgment that any reasonable action requested by Agent in connection therewith, including tocontinue the perfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, hasbeen completed or taken.  
No Speculative Transactions.  Borrower shall not engage in anytransaction involving commodity options, futures contracts or similar transactions, except solely tohedge against fluctuations in the prices of commodities owned or purchased by it and the values offoreign currencies receivable or payable by it and interest swaps, caps or collars without Agent'sprior written consent
Changes Relating to Material Contracts.  

(a)	Borrower shall not consent to any modification or waiver of any material agreement listedon Disclosure Schedule (3.19) hereto affecting a Select Real Property Asset if suchmodification or waiver would have a Material Adverse Effect.

(b)	Borrower shall not consent to any amendment or waiver under the Senior Facility thatincreases the percentage of advance rates set forth therein in the definition of Borrowing Base.
**TERMTermination.  The financing arrangements contemplated herebyshall be in effect until the Maturity Date, and the Loans and all other Obligations shall beautomatically due and payable in full on such date.
Survival of Obligations Upon Termination of Financing Arrangements.Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation(regardless of cause or procedure) of any financing arrangement under this Agreement shall in anyway affect or impair the obligations, duties and liabilities of Borrower or the rights of Agent andLenders relating to any unpaid portion of the Loans or any other Obligations, due or not due,liquidated, contingent or unliquidated, or any transaction or event occurring prior to suchtermination, or any transaction or event, the performance of which is required after the MaturityDate.  Except as otherwise expressly provided herein or in any other Loan Document, allundertakings, agreements, covenants, warranties and representations of or binding upon Borrower, andall rights of Agent and each Lender, all as contained in the Loan Documents, shall not terminate orexpire, but rather shall survive any such termination or cancellation and shall continue in fullforce and effect until the Termination Date; provided, that the provisions ofSection 11, the payment obligations under Sections 1.13 and 1.14, andthe indemnities contained in the Loan Documents shall survive the Termination Date.

**EVENTS OF DEFAULT; RIGHTS AND REMEDIESEvents of Default.  The occurrence of any one or more of thefollowing events (regardless of the reason therefor) shall constitute an "Event ofDefault" hereunder:
- Borrower (i) fails to make any payment of principal of, or interest on, or Fees ( includingany applicable late fee) owing in respect of, the Loans or any of the other Obligations within five(5) days after receipt of notice of non-payment; and (ii) fails to pay or reimburse Agent orLenders for any expense reimbursable hereunder or under any other Loan Document within ten (10) daysfollowing Agent's demand for such reimbursement or payment of expenses.
- Borrower or GCRC fails or neglects to perform, keep or observe any of the provisions of Section 1.5 ,  5.4(a) ,  5.18(a)  or  6 , respectively.
- Borrower or GCRC fails or neglects to perform, keep or observe any of the provisions of Section 4  and the same shall remain unremedied for three (3) Business Days or more.
- Borrower or GCRC fails or neglects to perform, keep or observe any other provision of thisAgreement or of any of the other Loan Documents or any default shall occur under any Loan Document(other than any provision embodied in or covered by any other clause of this Section 8.1 ) and the same shall remain unremedied for thirty **(30) days ormore.An Event of Default (as defined in the Senior Facility) under the Senior Facility has occurredand is continuing without having been waived or cured.
A case or proceeding is commenced against Borrower or GCRC seeking a decree or order in respectof Borrower  or GCRC, (i) under the Bankruptcy Code, or any other applicable federal, state orforeign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator,assignee, trustee or sequestrator (or similar official) for Borrower  or GCRC or for any substantialpart of Borrower's or GCRC `s assets, or (iii) ordering the winding-up or liquidation of theaffairs of Borrower or GCRC, and such case or proceeding shall remain undismissed or unstayed for 60days or more or a decree or order granting the relief sought in such case or proceeding shall beentered by a court of competent jurisdiction.
Borrower or GCRC (i) files a petition seeking relief under the Bankruptcy Code, or anyother applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to orfails to contest in a timely and appropriate manner the institution of proceedings thereunder or thefiling of any such petition or the appointment of or taking possession by a custodian, receiver,liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or for anysubstantial part of Borrower's or GCRC's assets, (iii) makes an assignment for the benefit ofcreditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits inwriting its inability to, or is generally unable to, pay its debts as such debts become due.
Any material provision of any Loan Document for any reason ceases to be valid, binding andenforceable in accordance with its terms (or Borrower shall challenge the enforceability of any LoanDocument or shall assert in writing, or engage in any action or inaction based on any suchassertion, that any provision of any of the Loan Documents has ceased to be or otherwise is notvalid, binding and enforceable in accordance with its terms), any Lien created under any LoanDocument on any Select Real Property Asset purported to be covered thereby ceases to be a valid andperfected first priority Lien, subject only to the Permitted Encumbrances, or any Lien created underany Loan Document in any other material component of the Collateral purported to be covered therebyceases to be a valid and perfected Lien, subject only to the Permitted Encumbrances and any Lienswhich are not prohibited under the Senior Facility.
Any representation or warranty herein or in any Loan Document or in any financial statement orcertificate made or delivered to Agent or any Lender of Borrower or GCRC is untrue or incorrect inany material respect as of the date made or deemed made.
Remedies.
- If any Default or Event of Default has occurred and is continuing, Agent may (and at the writtenrequest of the Requisite Lenders shall), without notice suspend the Revolving Loan facility withrespect to additional Revolving Loan Advances whereupon any additional Revolving Loan Advances shallbe made or incurred in Agent's sole discretion (or in the sole discretion of the Requisite Lenders,if such suspension occurred at their direction) so long as such Default or Event of Default iscontinuing.  If any Default or Event of Default has occurred and is continuing, Agent may (and atthe written request of Requisite Lenders shall), without notice, except as otherwise expresslyprovided herein, increase the rate of interest applicable to the Loans to the Default Rate.
- If any Event of Default has occurred and is continuing, Agent may (and at the written request ofthe Requisite Lenders shall), without notice:  (i) terminate the Revolving Loan facility withrespect to further Revolving Loan Advances; (ii) declare all or any portion of the Obligations,including all or any portion of any Loan to be forthwith due and payable, all without presentment,demand, protest or further notice of any kind, all of which are expressly waived by Borrower and;(ii) exercise any rights and remedies provided to Agent under the Loan Documents or at law orequity, including all remedies provided under the Code;  provided , that upon the occurrence ofan Event of Default specified in  Section 8.1(f ) or  (g) , the Revolving Loanfacility shall be immediately terminated and all of the Obligations, including the aggregateRevolving Loans, shall become immediately due and payable without declaration, notice or demand byany Person; and/or (iii) apply the sums held pursuant to  Sections 5.2(c)  and/or 5.13(b)  toward the elimination of any default of principal, interest or any covenanthereunder
Waivers by Borrower.  Except as otherwise provided for in thisAgreement or by applicable law, Borrower waives:  (a) presentment, demand and protest andnotice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest,default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or allcommercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties atany time held by Agent on which Borrower may in any way be liable, and hereby ratifies and confirmswhatever Agent may do in this regard, (b) all rights to notice and a hearing prior to Agent'staking possession or control of, or to Agent's replevy, attachment or levy upon, the Collateral orany bond or security that might be required by any court prior to allowing Agent to exercise any ofits remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemptionlaws.
***ASSIGNMENT AND PARTICIPATIONS;APPOINTMENT OF AGENT
Assignment and Participations.
- Subject to the terms of this  Section 9.1 , any Lender may make an assignment to aQualified Assignee of, or sell participations in, at any time or times, the Loan Documents and Loansor any portion thereof or interest therein, including any Lender's rights, title, interests,remedies, powers or duties thereunder.  Any assignment by a Lender shall:  (i) require theconsent of Agent (which consent shall not be unreasonably withheld or delayed with respect to aQualified Assignee) and the execution of an assignment agreement (an " AssignmentAgreement ") substantially in the form attached hereto as  Exhibit 9.1(a)  andotherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent; (ii) beconditioned on such assignee Lender representing to the assigning Lender and Agent that it ispurchasing the applicable Loans to be assigned to it for its own account, for investment purposesand not with a view to the distribution thereof; (iii) after giving effect to any such partialassignment, the assignee Lender shall have a Loan outstanding in an amount at least equal to$5,000,000.00 and the assigning Lender shall have retained a Loan outstanding in an amount at leastequal to $5,000,000.00; (iv) include a payment to Agent of an assignment fee of $3,500; and(v) so long as no Event of Default has occurred and is continuing, require the consent ofBorrower, which shall not be unreasonably withheld or delayed;  provided , that no suchconsent shall be required for an assignment to a Qualified Assignee.  In the case of an assignmentby a Lender under this  Section 9.1(a) , the assignee shall have, to the extent of suchassignment, the same rights, benefits and obligations as all other Lenders hereunder.  The assigningLender shall be relieved of its obligations hereunder with respect to its Loan outstanding orassigned portion thereof from and after the date of such assignment.  Borrower hereby acknowledgesand agrees that any assignment shall give rise to a direct obligation of Borrower to the assigneeand that the assignee shall be considered to be a "Lender."  In all instances, eachLender's liability to make Loans hereunder shall be several and not joint and shall be limited tosuch Lender's Pro Rata Share of the Loans.  In the event Agent or any Lender assigns or otherwisetransfers all or any part of the Obligations, Agent or any such Lender shall so notify Borrower andBorrower shall, upon the request of Agent or such Lender, execute new Notes in exchange for theNotes, if any, being assigned.  Notwithstanding the foregoing provisions of this Section 9.1(a) , any Lender may at any time pledge the Obligations held by it and suchLender's rights under this Agreement and the other Loan Documents to a Federal Reserve Bank, and anyLender that is an investment fund may assign the Obligations held by it and such Lender's rightsunder this Agreement and the other Loan Documents to another investment fund managed by the sameinvestment advisor;  provided , that no such pledge to a Federal Reserve Bank shall releasesuch Lender from such Lender's obligations hereunder or under any other Loan Document.
- Any participation by a Lender of all or any part of its outstanding Loan shall be made with theunderstanding that all amounts payable by Borrower hereunder shall be determined as if that Lenderhad not sold such participation, and that the holder of any such participation shall not be entitledto require such Lender to take or omit to take any action hereunder except actions directlyaffecting (i) any reduction in the principal amount of, or interest rate or Fees payable withrespect to, any Loan in which such holder participates, (ii) any extension of the scheduledamortization of the principal amount of any Loan in which such holder participates or the finalmaturity date thereof, and (iii) any release of all or substantially all of the Collateral(other than in accordance with the terms of this Agreement, the Collateral Documents or the otherLoan Documents).  Solely for purposes of  Sections 1.11 ,  1.13 ,  1.14  and 9.8 , Borrower acknowledges and agrees that a participation shall give rise to a directobligation of Borrower to the participant effective upon delivery of written notice to Borrower ofsuch participation and the participant shall be considered to be a " Lender ."Except as set forth in the preceding sentence Borrower shall not have any obligation or duty to anyparticipant.  Neither Agent nor any Lender (other than the Lender selling a participation) shallhave any duty to any participant and may continue to deal solely with the Lender selling aparticipation as if no such sale had occurred.
- Except as expressly provided in this  Section 9.1 , no Lender shall, as betweenBorrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunderas a result of any sale, assignment, transfer or negotiation of, or granting of participation in,all or any part of the Loans, the Notes or other Obligations owed to such Lender.
- Borrower shall assist any Lender permitted to sell assignments or participations under this Section 9.1  as reasonably required to enable the assigning or selling Lender to effectany such assignment or participation, including the execution and delivery of any and allagreements, notes and other documents and instruments as shall be requested.
- Any Lender may furnish any information concerning Borrower in the possession of such Lender fromtime to time to assignees and participants (including prospective assignees and participants); provided , that such Lender shall obtain from assignees or participants confidentialitycovenants substantially equivalent to those contained in  Section 11.8 ;  provided ,further that no such assignee or participant (or prospective assignee or participant) shall be aretailer or a supplier of goods, except for Schottenstein Stores Corporation and itsAffiliates.

(f)	So long as no Event of Default has occurred and is continuing, no Lender shall assign orsell participations in any portion of its Loan to a potential Lender or participant, if, as of thedate of the proposed assignment or sale, the assignee Lender or participant would be subject tocapital adequacy or similar requirements under Section 1.14(a), increased costs underSection 1.14(b), withholding taxes in accordance with Section 1.13(a), or has notprovided a Certificate of Exemption.
**Appointment of Agent.  Kimco Capital Corp. is herebyappointed to act on behalf of all Lenders as Agent under this Agreement and the other LoanDocuments.  The provisions of this Section 9.2 are solely for the benefit of Agent andLenders and no other Person shall have any rights as a third party beneficiary of any of theprovisions hereof.  In performing its functions and duties under this Agreement and the other LoanDocuments, Agent shall act solely as an agent of Lenders and does not assume and shall not be deemedto have assumed any obligation toward or relationship of agency or trust with or for Borrower or anyother Person.  Agent shall have no duties or responsibilities except for those expressly set forthin this Agreement and the other Loan Documents.  The duties of Agent shall be mechanical andadministrative in nature and Agent shall not have, or be deemed to have, by reason of thisAgreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender.Except as expressly set forth in this Agreement and the other Loan Documents, Agent shall not haveany duty to disclose, and shall not be liable for failure to disclose, any information relating toBorrower or any of its Subsidiaries or any of its Affiliates in any capacity.  Neither Agent nor anyof its Affiliates nor any of their respective officers, directors, employees, agents orrepresentatives shall be liable to any Lender for any action taken or omitted to be taken by ithereunder or under any other Loan Document, or in connection herewith or therewith, except fordamages caused by its or their own gross negligence or willful misconduct.

If Agent shall request instructions from Requisite Lenders or all affected Lenders with respectto any act or action (including failure to act) in connection with this Agreement or any other LoanDocument, then Agent shall be entitled to refrain from such act or taking such action unless anduntil Agent shall have received instructions from Requisite Lenders or all affected Lenders, as thecase may be, and Agent shall not incur liability to any Person by reason of so refraining.  Agentshall be fully justified in failing or refusing to take any action hereunder or under any other LoanDocument (a) if such action would, in the opinion of Agent, be contrary to law or the terms ofthis Agreement or any other Loan Document, (b) if such action would, in the opinion of Agent,expose Agent to Environmental Liabilities or (c) if Agent shall not first be indemnified to itssatisfaction against any and all liability and expense which may be incurred by it by reason oftaking or continuing to take any such action.  Without limiting the foregoing, no Lender shall haveany right of action whatsoever against Agent as a result of Agent acting or refraining from actinghereunder or under any other Loan Document in accordance with the instructions of Requisite Lendersor all affected Lenders, as applicable.
Agent's Reliance, Etc.  Neither Agent nor any of its Affiliates norany of their respective directors, officers, agents or employees shall be liable for any actiontaken or omitted to be taken by it or them under or in connection with this Agreement or the otherLoan Documents, except for damages caused by its or their own gross negligence or willfulmisconduct.  Without limiting the generality of the foregoing, Agent:  (a)  may treat the payeeof any Note as the holder thereof until Agent receives written notice of the assignment or transferthereof signed by such payee and in form reasonably satisfactory to Agent; (b) may consult withlegal counsel, independent public accountants and other experts selected by it and shall not beliable for any action taken or omitted to be taken by it in good faith in accordance with the adviceof such counsel, accountants or experts; (c) makes no warranty or representation to any Lenderand shall not be responsible to any Lender for any statements, warranties or representations made inor in connection with this Agreement or the other Loan Documents; (d) shall not have any dutyto ascertain or to inquire as to the performance or observance of any of the terms, covenants orconditions of this Agreement or the other Loan Documents on the part of Borrower or to inspect theCollateral (including the books and records) of Borrower; (e) shall not be responsible to anyLender for the due execution, legality, validity, enforceability, genuineness, sufficiency or valueof this Agreement or the other Loan Documents or any other instrument or document furnished pursuanthereto or thereto; and (f) shall incur no liability under or in respect of this Agreement orthe other Loan Documents by acting upon any notice, consent, certificate or other instrument orwriting (which may be by electronic mail, telecopy, telegram, cable or telex) believed by it to begenuine and signed or sent by the proper party or parties.
Kimco Capital Corp. and Affiliates.  With respect to its Loanhereunder, Kimco Capital Corp. shall have the same rights and powers under this Agreement and theother Loan Documents as any other Lender and may exercise the same as though it were not Agent; andthe term "Lender" or "Lenders" shall, unless otherwise expressly indicated,include Kimco Capital Corp. in its individual capacity.  Kimco Capital Corp. and its Affiliates maylend money to, invest in, and generally engage in any kind of business with, Borrower, any of theirAffiliates and any Person who may do business with or own securities of Borrower or any suchAffiliate, all as if Kimco Capital Corp. were not Agent and without any duty to account therefor toLenders.  Kimco Capital Corp. and its Affiliates may accept fees and other consideration fromBorrower for services in connection with this Agreement or otherwise without having to account forthe same to Lenders. Each Lender acknowledges the potential conflict of interest between KimcoCapital Corp., as a Lender holding disproportionate interests in the Loans and Kimco Capital Corp.,as Agent.
Lender Credit Decision.  Each Lender acknowledges that it has,independently and without reliance upon Agent or any other Lender and based on the Financial
Statements referred to in Section 3.4 and such other documents andinformation as it has deemed appropriate, made its own credit and financial analysis of Borrower andits own decision to enter into this Agreement.  Each Lender also acknowledges that it will,independently and without reliance upon Agent or any other Lender and based on such documents andinformation as it shall deem appropriate at the time, continue to make its own credit decisions intaking or not taking action under this Agreement.  Each Lender acknowledges the potential conflictof interest of each other Lender as a result of Lenders holding disproportionate interests in theLoans, and expressly consents to, and waives any claim based upon, such conflict ofinterest.
Indemnification.  Lenders agree to indemnify Agent (to the extentnot reimbursed by Borrower and without limiting the obligations of Borrower hereunder), ratablyaccording to their respective Pro Rata Share of the Loans outstanding, from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind or nature whatsoever that may be imposed on, incurred by, or assertedagainst Agent in any way relating to or arising out of this Agreement or any other Loan Document orany action taken or omitted to be taken by Agent in connection therewith; provided, that noLender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligenceor willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agentpromptly upon demand for its ratable share of any out-of-pocket expenses (including reasonablecounsel fees) incurred by Agent in connection with the preparation, execution, delivery,administration, modification, amendment or enforcement (whether through negotiations, legalproceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, thisAgreement and each other Loan Document, to the extent that Agent is not reimbursed for such expensesby Borrower.  
Successor Agent.  Agent may resign at any time by giving not lessthan thirty (30) days' prior written notice thereof to Lenders and Borrower.  Upon any suchresignation, the Requisite Lenders shall have the right to appoint a successor Agent.  If nosuccessor Agent shall have been so appointed by the Requisite Lenders and shall have accepted suchappointment within thirty (30) days after the resigning Agent's giving notice of resignation, thenthe resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank orfinancial institution or a subsidiary of a commercial bank or financial institution if suchcommercial bank or financial institution is organized under the laws of the United States of Americaor of any State thereof and has a combined capital and surplus of at least $300,000,000.00.  If nosuccessor Agent has been appointed pursuant to the foregoing, within thirty (30) days after the datesuch notice of resignation was given by the resigning Agent, such resignation shall become effectiveand the Requisite Lenders shall thereafter perform all the duties of Agent hereunder until suchtime, if any, as the Requisite Lenders appoint a successor Agent as provided above.  Any successorAgent appointed by Requisite Lenders hereunder shall be subject to the approval of Borrower, suchapproval not to be unreasonably withheld or delayed; provided, that such approval shall notbe required if a Default or an Event of Default has occurred and is continuing.  Upon the acceptanceof any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed toand become vested with all the rights, powers, privileges and duties of the resigning Agent.  Uponthe earlier of the acceptance of any
appointment as Agent hereunder by asuccessor Agent or the effective date of the resigning Agent's resignation, the resigning Agentshall be discharged from its duties and obligations under this Agreement and the other LoanDocuments, except that any indemnity rights or other rights in favor of such resigning Agent shallcontinue.  After any resigning Agent's resignation hereunder, the provisions of thisSection 9 shall inure to its benefit as to any actions taken or omitted to be taken byit while it was acting as Agent under this Agreement and the other Loan Documents. 
Setoff and Sharing of Payments.  In addition to any rights now orhereafter granted under applicable law and not by way of limitation of any such rights, upon theoccurrence and during the continuance of any Event of Default and subject toSection 9.9(f), each Lender, each participant and each holder is hereby authorized atany time or from time to time, without notice to Borrower or to any other Person, any such noticebeing hereby expressly waived, to offset and to appropriate and to apply any and all balances heldby it at any of its offices for the account of Borrower or any Guarantor (regardless of whether suchbalances are then due to Borrower or any Guarantor) and any other properties or assets at any timeheld or owing by that Lender, holder or participant to or for the credit or for the account ofBorrower or any Guarantor against and on account of any of the Obligations that are not paid whendue.  Any Lender exercising a right of setoff or otherwise receiving any payment on account of theObligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lendersor holders shall sell) such participations in each such other Lender's or holder's Pro Rata Share ofthe Obligations as would be necessary to cause such Lender to share the amount so offset orotherwise received with each other Lender or holder in accordance with their respective Pro RataShares (other than offset rights exercised by any Lender with respect to Sections 1.11,1.13 or 1.14).  Borrower or Guarantor agrees, to the fullest extent permitted by law,that (a) any Lender may exercise its right to offset with respect to amounts in excess of itsPro Rata Share of the Obligations and may sell participations in such amounts so offset to otherLenders, participants and holders and (b) any Lender, participant or holder so purchasing aparticipation in the Loans made or other Obligations held by other Lenders, participants or holdersmay exercise all rights of offset, bankers' lien, counterclaim or similar rights with respect tosuch participation as fully as if such Lender, participant or holder were a direct holder of theLoans and the other Obligations in the amount of such participation.  Notwithstanding the foregoing,if all or any portion of the offset amount or payment otherwise received is thereafter recoveredfrom the Lender that has exercised the right of offset, the purchase of participations by thatLender shall be rescinded and the purchase price restored without interest.
Advances; Payments; Information; Actions in Concert.
Advances; Payments
.
- On the Closing Date, each Lender shall make the amount of such Lender's Pro Rata Share of theTerm Loans available to Agent in accordance with instructions of Agent in same day funds not laterthan 11:00 a.m. (Los Angeles time).  Agent shall disburse the proceeds of the Loans bydepositing them on the Closing Date in an account of Borrower as Borrower may specify to Agent inwriting.
- Each Lender shall make the amount of such Lender's Pro Rata Share of each Revolving Loan Advanceavailable to Agent in accordance with the instructions of Agent in same day funds by wire transferon the requested funding date not later than 11:00 a.m. (Los Angeles time).  After receipt of suchwire transfers (or, in the Agent's sole discretion, before receipt of such wire transfers), subjectto the terms hereof, Agent shall make the requested Revolving Loan Advance to Borrower.  All suchpayments by each Lender shall be made without setoff, counterclaim or deduction of any kind.
- On the 2nd Business Day of each calendar week or more frequently at Agent's election (each, a" Settlement Date "), Agent shall advise each Lender by telephone, electronic mail,or telecopy of the amount of such Lender's Pro Rata Share of principal, interest and Fees paid forthe benefit of Lenders with respect to its Loan.  Provided that each Lender has funded all paymentsor Revolving Loan Advances required to be made by it under this Agreement and the other LoanDocuments as of such Settlement Date, Agent shall pay to each Lender such Lender's Pro Rata Share ofprincipal, interest and Fees paid by Borrower since the previous Settlement Date for the benefit ofsuch Lender on the Loans held by it.  To the extent that any Lender (a " Non-FundingLender ") has failed to fund all such payments and Revolving Loan Advances, Agent shall beentitled to set off the funding short-fall against that Non-Funding Lender's Pro Rata Share ofall payments received from Borrower.  Such payments shall be made by wire transfer to such Lender'saccount (as specified by such Lender to Agent in writing) not later than 1:00 p.m. (Los Angelestime) on the next Business Day following each Settlement Date.
Availability of Lender's Pro Rata Share
.  Agent may assume that each Lender will make itsPro Rata Share of (i) each Term Loan available to Agent on the Closing Date and (ii) each RevolvingLoan Advance available to Agent on each funding date.  If such Pro Rata Share is not, in fact, paidto Agent by such Lender when due, Agent will be entitled to recover such amount on demand from suchLender without setoff, counterclaim or deduction of any kind.  If any Lender fails to pay the amountof its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly notify Borrower andBorrower shall immediately repay such amount to Agent.  Nothing in this 
Section 9.9(b)
or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent toadvance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill itsCommitments hereunder or to prejudice any rights that Borrower may have against any Lender as aresult of any default by such Lender hereunder.  To the extent that Agent advances funds to Borroweron behalf of any Lender and is not reimbursed therefor on the same Business Day as such Loan ismade, Agent shall be entitled to retain for its account all interest accrued on such Loan untilreimbursed by the applicable Lender.
Return of Payments
.
- If Agent pays an amount to a Lender under this Agreement in the belief or expectation that arelated payment has been or will be received by Agent from Borrower and such related payment is notreceived by Agent, then Agent will be entitled to recover such amount from such Lender on demandwithout setoff, counterclaim or deduction of any kind.
- If Agent determines at any time that any amount received by Agent under this Agreement must bereturned to Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then,notwithstanding any other term or condition of this Agreement or any other Loan Document, Agent willnot be required to distribute any portion thereof to any Lender.  In addition, each Lender willrepay to Agent on demand any portion of such amount that Agent has distributed to such Lender,together with interest at such rate, if any, as Agent is required to pay to Borrower or such otherPerson, without setoff, counterclaim or deduction of any kind.
Non-Funding Lenders
.  The failure of any Non-Funding Lender to make any Loan or anypayment required by it hereunder on the date specified therefor shall not relieve any other Lender(each such other Lender, an "Other Lender") of its obligations to make such Loans on suchdate, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-FundingLender to make a Loan or make any other payment required hereunder.  Notwithstanding anything setforth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights underor with respect to any Loan Document or constitute a "Lender" (or be included in thecalculation of "Requisite Lenders" hereunder) for any voting or consent rights under orwith respect to any Loan Document.  At Borrower's request, Agent or a Person reasonably acceptableto Agent shall have the right with Agent's consent and in Agent's sole discretion (but shall have noobligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that itshall, at Agent's request, sell and assign to Agent or such Person, all of the Commitments of thatNon-Funding Lender for an amount equal to the principal balance of all Loans held by such Non-Funding Lender and all accrued interest and fees with respect thereto through the date of sale, suchpurchase and sale to be consummated pursuant to an executed Assignment Agreement.
Dissemination of Information
.  Agent shall use reasonable efforts to provide Lenders withany notice of Default or Event of Default received by Agent from, or delivered by Agent to,Borrower, with notice of any Event of Default of which Agent has actually become aware and withnotice of any action taken by Agent following any Event of Default; 
provided
, that Agentshall not be liable to any Lender for any failure to do so, except to the extent that such failureis attributable to Agent's gross negligence or willful misconduct.  Lenders acknowledge thatBorrower is required to provide Financial Statements and Collateral Reports to Lenders in accordancewith 
Section 3.4
 hereto and agree that Agent shall have no duty to provide the same toLenders.
Actions in Concert
.  Anything in this Agreement to the contrary notwithstanding, eachLender hereby agrees with each other Lender that no Lender shall take any action to protect orenforce its rights arising out of this Agreement or the Notes (including exercising any rights ofsetoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it beingthe intent of Lenders that any such action to protect or enforce rights under this Agreement and theNotes shall be taken in concert and at the direction or with the consent of Agent or RequisiteLenders. 
**SUCCESSORS AND ASSIGNSSuccessors and Assigns.  This Agreement and the other LoanDocuments shall be binding on and shall inure to the benefit of Borrower, Agent, Lenders and theirrespective successors and assigns (including a debtor-in-possession on behalf of Borrower), exceptas otherwise provided herein or therein.  Borrower may not assign, transfer, hypothecate orotherwise convey its rights, benefits, obligations or duties hereunder or under any of the otherLoan Documents without the prior express written consent of Agent and Lenders.  Any such purportedassignment, transfer, hypothecation or other conveyance by Borrower without the prior expresswritten consent of Agent and Lenders shall be void.  The terms and provisions of this Agreement arefor the purpose of defining the relative rights and obligations of Borrower, Agent and Lenders withrespect to the transactions contemplated hereby and no Person shall be a third party beneficiary ofany of the terms and provisions of this Agreement or any of the other Loan Documents.

**MISCELLANEOUSComplete Agreement; Modification of Agreement.  The LoanDocuments constitute the complete agreement between the parties with respect to the subject matterthereof and may not be modified, altered or amended except as set forth in Section 11.2.Any letter of interest, commitment letter, or fee letter (other than the Fee Letter) orconfidentiality agreement, if any, between Borrower and Agent or any Lender or any of theirrespective Affiliates, predating this Agreement and relating to a financing of substantially similarform, purpose or effect shall be superseded by this Agreement.
Amendments and Waivers.
- Except for actions expressly permitted to be taken by Agent, no amendment, modification,termination or waiver of any provision of this Agreement or any other Loan Document, or any consentto any departure by Borrower therefrom, shall in any event be effective unless the same shall be inwriting and signed by Agent and Borrower, and by Requisite Lenders or all affected Lenders, asapplicable.  
- No amendment, modification, termination or waiver of or consent with respect to any provision ofthis Agreement that waives compliance with the conditions precedent set forth in Section 2.2  to the making of any Loan shall be effective unless the same shall be inwriting and signed by Agent, Requisite Lenders and Borrower.  Notwithstanding anything contained inthis Agreement to the contrary, no waiver or consent with respect to any Default or any Event ofDefault shall be effective for purposes of the conditions precedent to the making of Loans set forthin  Section 2.2  unless the same shall be in writing and signed by Agent, RequisiteLenders and Borrower.
- No amendment, modification, termination or waiver shall, unless in writing and signed by Agentand each Lender directly affected thereby:  (i) increase the principal amount of any Lender'sLoan (which action shall be deemed only to affect those Lenders whose Loan is increased and may beapproved by Requisite Lenders, including those Lenders whose Loan is increased); (ii) reducethe principal of, rate of interest on or Fees payable with respect to any Loan of any affectedLender; (iii) extend any scheduled payment date (other than payment dates of prepayments under Section 1.4(d) ),  or final maturity date of the principal amount of the Loan of anyaffected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Feesas to any affected Lender; (v) increase the Revolving Loan Advance Availability;(vi) except as expressly permitted or required in the Loan Documents, release, foreclose on ordispose of any material portion of the Collateral;  provided , that Agent may release certainnon-material Collateral without such writing in accordance with the terms of  Section 6.7 ,(vii) change the percentage of the aggregate unpaid principal amount of Loans that shall be requiredfor Lenders or any of them to take any action hereunder; and (viii) amend or waive this Section 11.2  or the definition of the term " Requisite Lenders ," insofaras such definition affects the substance of this  Section 11.2 . Furthermore, noamendment, modification, termination or waiver affecting the rights or duties of Agent under thisAgreement or any other Loan Document shall be effective unless in writing and signed by Agent, inaddition to Lenders required hereinabove to take such action.  Each amendment, modification,termination or waiver shall be effective only in the specific instance and for the specific purposefor which it was given.  No amendment, modification, termination or waiver shall be required forAgent to take additional Collateral pursuant to any Loan Document.  No amendment, modification,termination or waiver of any provision of any Note shall be effective without the writtenconcurrence of the holder of that Note.  No notice to or demand on Borrower in any case shallentitle Borrower to any other or further notice or demand in similar or other circumstances. Anyamendment, modification, termination, waiver or consent effected in accordance with this Section 11.2  shall be binding upon each holder of the Notes at the time outstanding andeach future holder of the Notes. 
- If, in connection with any proposed amendment, modification, waiver or termination (a" Proposed Change ") requiring the consent of all affected Lenders, the consent ofRequisite Lenders is obtained, but the consent of other Lenders whose consent is required is notobtained (any such Lender whose consent is not obtained being referred to as a " Non-Consenting Lender ") then, so long as Agent is not a Non-Consenting Lender, at Borrower'srequest, Agent or a Person reasonably acceptable to Agent shall have the right with Agent's consentand in Agent's sole discretion (but shall have no obligation) to purchase from such Non-ConsentingLenders, and such Non-Consenting Lenders agree that they shall, upon Agent's request, sell andassign to Agent or such Person, all of the Loans of such Non-Consenting Lenders for an amount equalto the principal balance of the Loans held by the Non-Consenting Lenders and all accrued interestand Fees with respect thereto through the date of sale, such purchase and sale to be consummatedpursuant to an executed Assignment Agreement. 
- Upon payment in full in cash and performance of all of the Obligations (other thanindemnification Obligations), termination of the Loans and a release of all claims against Agent andLenders, and so long as no suits, actions, proceedings or claims are pending or threatened againstany Indemnified Person asserting any damages, losses or liabilities that are IndemnifiedLiabilities, Agent shall deliver to Borrower termination statements, mortgage releases and otherdocuments necessary or appropriate to evidence the termination of the Liens securing payment of theObligations. 
Fees and Expenses.  Borrower shall reimburse (i) Agent for allfees, costs and expenses (including the reasonable fees and expenses of all of its counsel,advisors, consultants and auditors) and (ii) Agent (and, with respect to clauses(c) and (d) below, all Lenders) for all fees, costs and expenses, includingthe reasonable fees, costs and expenses of counsel or other advisors (including environmental andmanagement consultants and appraisers), incurred in connection with the negotiation and preparationof the Loan Documents and incurred in connection with:
- the forwarding to Borrower or any other Person on behalf of Borrower by Agent of the proceeds ofany Loan (including a wire transfer fee of $25.00 per wire transfer);
- any amendment, modification or waiver of, consent with respect to, or termination of, any of theLoan Documents or advice in connection with the syndication and administration of the Loans madepursuant hereto or its rights hereunder or thereunder;
- any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, anyLender, Borrower or any other Person and whether as a party, witness or otherwise) in any wayrelating to the Collateral, any of the Loan Documents or any other agreement to be executed ordelivered in connection herewith or therewith, including any litigation, contest, dispute, suit,case, proceeding or action, and any appeal or review thereof, in connection with a case commenced byor against Borrower or any other Person that may be obligated to Agent by virtue of the LoanDocuments; including any such litigation, contest, dispute, suit, proceeding or action arising inconnection with any work-out or restructuring of the Loans during the pendency of one or more Eventsof Default;  provided , that in the case of reimbursement of counsel for Lenders other thanAgent, such reimbursement shall be limited to one counsel for all such Lenders;  provided , further , that no Person shall be entitled to reimbursement under this  clause(c)  in respect of any litigation, contest, dispute, suit, proceeding or action to theextent any of the foregoing results from such Person's gross negligence or willful misconduct;
- any attempt to enforce any remedies of Agent against Borrower or any other Person that may beobligated to Agent or any Lender by virtue of any of the Loan Documents, including any such attemptto enforce any such remedies in the course of any work-out or restructuring of the Loans during thependency of one or more Events of Default;  provided , that in the case of reimbursement ofcounsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for allsuch Lenders;
- any workout or restructuring of the Loans during the pendency of one or more Events of Default;and
- efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate,observe or assess Borrower or their respective affairs, and (iii) verify, protect, monitor,evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral; provided , that the expense of such efforts, together with any expenses incurred pursuant to Section 1.12 , does not exceed $1,000.00 per month;  provided ,  further , that,such dollar limit shall not apply if an Event of Default has occurred and is continuing;

including, as to each of clauses(a) through (f) above, allreasonable attorneys' and other professional and service providers' fees arising from such servicesand other advice, assistance or other representation, including those in connection with anyappellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel andothers in connection with or relating to any of the events or actions described in thisSection 11.3, all of which shall be payable, on demand, by Borrower to Agent.  Withoutlimiting the generality of the foregoing, such expenses, costs, charges and fees may include:  fees,costs and expenses of accountants, environmental advisors, appraisers, investment bankers,management and other consultants and paralegals; court costs and expenses; photocopying andduplication expenses; court reporter fees, costs and expenses; long distance telephone charges; airexpress charges; telegram or telecopy charges; secretarial overtime charges; and expenses fortravel, lodging and food paid or incurred in connection with the performance of such legal or otheradvisory services.
**No Waiver.  Agent's or any Lender's failure, at any time ortimes, to require strict performance by Borrower of its Subsidiaries of any provision of thisAgreement or any other Loan Document shall not waive, affect or diminish any right of Agent or suchLender thereafter to demand strict compliance and performance herewith or therewith.  Any suspensionor waiver of an Event of Default shall not suspend, waive or affect any other Event of Defaultwhether the same is prior or subsequent thereto and whether the same or of a different type.Subject to the provisions of Section 11.2, none of the undertakings, agreements,warranties, covenants and representations of Borrower contained in this Agreement or any of theother Loan Documents and no Default or Event of Default by Borrower shall be deemed to have beensuspended or waived by Agent or any Lender, unless such waiver or suspension is by an instrument inwriting signed by an officer of or other authorized employee of Agent and the applicable requiredLenders, and directed to Borrower specifying such suspension or waiver.
Remedies.  Agent's and Lenders' rights and remedies under thisAgreement shall be cumulative and nonexclusive of any other rights and remedies that Agent or anyLender may have under any other agreement, including the other Loan Documents, by operation of lawor otherwise.  Recourse to the Collateral shall not be required.
Severability.  Wherever possible, each provision of this Agreementand the other Loan Documents shall be interpreted in such a manner as to be effective and validunder applicable law, but if any provision of this Agreement or any other Loan Document shall beprohibited by or invalid under applicable law, such provision shall be ineffective only to theextent of such prohibition or invalidity without invalidating the remainder of such provision or theremaining provisions of this Agreement or such other Loan Document.
Conflict of Terms.  Except as otherwise provided in this Agreementor any of the other Loan Documents by specific reference to the applicable provisions of thisAgreement, if any provision contained in this Agreement conflicts with any provision in any of theother Loan Documents, the provision contained in this Agreement shall govern and control.
Confidentiality.  Agent and each Lender agree to use commerciallyreasonable efforts (equivalent to the efforts Agent or such Lender applies to maintainingconfidentiality of its own confidential information) to maintain as confidential allconfidential
information provided to them by Borrower for a period of two(2) years following receipt thereof, except that Agent and any Lender may disclose such information(a) to Persons employed or engaged by Agent or such Lender; (b) to any bona fide assigneeor participant or potential assignee or participant that has agreed to comply with the covenantcontained in this Section 11.8 (and any such bona fide assignee or participant orpotential assignee or participant may disclose such information to Persons employed or engaged bythem as described in clause (a) above); (c) as required or requested by anyGovernmental Authority or reasonably believed by Agent or such Lender to be compelled by any courtdecree, subpoena or legal or administrative order or process; (d) as, on the advice of Agent'sor such Lender's counsel, is required by law; (e) in connection with the exercise of any rightor remedy under the Loan Documents or in connection with any Litigation to which Agent or suchLender is a party; or (f) that ceases to be confidential through no fault of Agent or anyLender.  None of the foregoing obligations and restrictions shall apply to any information that(i) was or is generally available to the public other than as a result of a disclosure by Agentor any Lender, or (ii) was or is available to Agent or any Lender on a non-confidential basisprior to its disclosure by Borrower.
GOVERNING LAW.***EXCEPT ASOTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OFCONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLETO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OFAMERICA.  BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THESOUTHERN DISTRICT OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS ORDISPUTES BETWEEN BORROWER, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOANDOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOANDOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSECOURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE SOUTHERN DISTRICT OF NEW YORK;PROVIDEDFURTHER,  THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TOPRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZEON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURTORDER IN FAVOR OF AGENT.  BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION INANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION THATBORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEFAS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUITAND AGREESTHAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIEDMAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN ANNEX C OF THIS AGREEMENT ANDTHAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOFOR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.*Notices.  Except as otherwiseprovided herein, whenever it is provided herein that any notice, demand, request, consent, approval,declaration or other communication shall or may be given to or served upon any of the parties by anyother parties, or whenever any of the parties desires to give or serve upon any other parties anycommunication with respect to this Agreement, each such notice, demand, request, consent, approval,declaration or other communication shall be in writing and shall be deemed to have been validlyserved, given or delivered:  (a) upon the earlier of actual receipt and three (3) Business Daysafter deposit in the United States Mail, registered or certified mail, return receipt requested,with proper postage prepaid; (b) upon transmission, when sent by telecopy or other similarfacsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy bypersonal delivery or United States Mail as otherwise provided in this Section 11.10);(c) upon transmission, when sent by electronic mail; (d) one (1) Business Day afterdeposit with a reputable overnight courier with all charges prepaid or (e) when delivered, ifhand-delivered by messenger, all of which shall be addressed to the party to be notified and sent tothe address or facsimile number indicated in Annex C or to such other address (orfacsimile number) as may be substituted by notice given as herein provided.  The giving of anynotice required hereunder may be waived in writing by the party entitled to receive such notice.Failure or delay in delivering copies of any notice, demand, request, consent, approval, declarationor other communication to any Person (other than Borrower or Agent) designated inAnnex C to receive copies shall in no way adversely affect the effectiveness of suchnotice, demand, request, consent, approval, declaration or other communication.
Section Titles.  The Section titles and Table of Contents containedin this Agreement are and shall be without substantive meaning or content of any kind whatsoever andare not a part of the agreement between the parties hereto.
Counterparts.  This Agreement may be executed in any number ofseparate counterparts, each of which shall collectively and separately constitute oneagreement.
WAIVER OF JURY TRIAL**.  BECAUSE DISPUTES ARISING IN CONNECTIONWITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED ANDEXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THANARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCHAPPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEMAND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO, ORINCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OFTHE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.Press Releases and Related Matters.  Borrower agrees thatneither it nor its Affiliates will in the future issue any press releases or other public disclosureusing the name of Kimco Capital Corp., or any of its affiliates or referring to this Agreement orthe other Loan Documents without at least two (2) Business Days' prior notice to Agent, and withoutthe prior written consent of Kimco Capital Corp. unless (and only to the extent that) Borrower orAffiliate is required to do so under law and then, in any event, Borrower or Affiliate will consultwith Agent, as applicable, before issuing such press release or other public disclosure or unlesssuch public disclosure is made in connection with compliance by Borrower or Affiliate with itsobligations under the federal securities laws.  Borrower consents to the publication by Agent or anyLender of a tombstone or similar advertising material relating to the financing transactionscontemplated by this Agreement.  Agent or such Lender shall provide a draft of any such tombstone orsimilar advertising material to Borrower for review and comment prior to the publication thereof.Agent reserves the right to provide to industry trade organizations information necessary andcustomary for inclusion in league table measurements.
Reinstatement.  This Agreement shall remain in full force andeffect and continue to be effective should any petition be filed by or against Borrower forliquidation or reorganization, should Borrower become insolvent or make an assignment for thebenefit of any creditor or creditors or should a receiver or trustee be appointed for all or anysignificant part of Borrower's assets, and shall continue to be effective or to be reinstated, asthe case may be, if at any time payment and performance of the Obligations, or any part thereof, is,pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored orreturned by any obligee of the Obligations, whether as a "voidable preference,""fraudulent conveyance," or otherwise, all as though such payment or performance had notbeen made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored orreturned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not sorescinded, reduced, restored or returned.
Advice of Counsel.  Each of the parties represents to each otherparty hereto that it has discussed this Agreement and, specifically, the provisions ofSections 11.9 and 11.13, with its counsel.
No Strict Construction.  The parties hereto have participatedjointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question ofintent or interpretation arises, this Agreement shall be construed as if drafted jointly by theparties hereto and no presumption or burden of proof shall arise favoring or disfavoring any partyby virtue of the authorship of any provisions of this Agreement.
Right of First Refusal to Purchase Select Real Property Assets.Agent shall have a right of first refusal, as hereinafter described, to purchase or lease any SelectReal Property Asset on the conditions set forth in this Section 11.18.  Such right of firstrefusal shall be exercised as follows:
- If Borrower shall desire to sell the fee title or leasehold interest (as the case may be) to anySelect Real Property Asset or lease any Select Real Property Asset and shall receive a bona-fideoffer acceptable to Borrower, Borrower shall by notice to Agent (the "Right of First RefusalNotice") offer to Agent the right to enter into a contract for the purchase of the fee or leaseholdtitle to the Select Real Property Asset or to lease the Select Real Property Asset, as the case maybe, on the material terms set forth in such bona-fide offer.  Agent shall then have a period offifteen (15) days from the date of the Right of First Refusal Notice to elect to exercise the rightof first refusal specified herein.  If Agent fails to timely exercise its right of first refusal ashereinabove provided, Borrower may enter into a sales contract for the Select Real Property Asset ora lease of the Select Real Property Asset, as the case may be, pursuant to such bona-fide offer andsaid right of first refusal shall thereupon terminate and be null and void (except as set forthbelow). If such sales contract or lease, as the case may be, shall not have been executed anddelivered within forty-five (45) days after the end of such 15-day period, or if the closing undersuch contract of sale or the effective date of such lease, shall not have occurred within forty-five(45) days after the end of such 45-day period, Agent's right of first refusal specified herein shallagain be applicable.  Notwithstanding anything else to the contrary contained herein, any sale ofany Select Real Property Asset or lease of the same shall be subject to the prior consent ofAgent.
- Upon the exercise by Agent of its right of first refusal, as provided in this  Section11.18 , Borrower and Agent shall, within thirty (30) days after Agent delivers to Borrower noticeof its election to exercise its right of first refusal, enter into a written agreement for the saleof the Select Real Property Asset or the lease of the Select Real Property Asset, as the case maybe, which may include the material terms of the Right of First Refusal Notice and such otherappropriate terms and provisions as shall be reasonably required by Agent.
- The Right of First Refusal granted pursuant to this  Section 11.18  shall terminate onthe earlier of (i) the date which is six (6) months prior to the Maturity Date, or (ii) the datewhich is six (6) months after any prepayment of the Loans. 
**[Remainder of Page Intentionally Left Blank]**
 

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 
**GOTTSCHALKS INC.**
By: /s/ James R. Famalette

Title:	President and Chief Executive Officer
** 

KIMCO CAPITAL CORP.,**
as Agent and Lender

 

By: /s/ Raymond Edwards

Title:	Vice President

 

 
**ANNEX A (Recitals)

to

CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise providedelsewhere in the Loan Documents) the following respective meanings, and all references to Sections,Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits,Schedules or Annexes of or to the Agreement:

"Account Debtor" means any Person who may become obligated to Borrower under,with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including apayment intangible).

"Accounts" means all "accounts," as such term is defined in the Code,now owned or hereafter acquired by Borrower, including (a) all accounts receivable, otherreceivables, book debts and other forms of obligations (other than forms of obligations evidenced byChattel Paper, or Instruments), (including any such obligations that may be characterized as anaccount or contract right under the Code), (b) all of Borrower's rights in, to and under allpurchase orders or receipts for goods or services, (c) all of Borrower's rights to any goodsrepresented by any of the foregoing (including unpaid sellers' rights of rescission, replevin,reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods),(d) all rights to payment due to Borrower for property sold, leased, licensed, assigned orotherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligationincurred or to be incurred, for energy provided or to be provided, for the use or hire of a vesselunder a charter or other contract, arising out of the use of a credit card or charge card, or forservices rendered or to be rendered by Borrower or in connection with any other transaction (whetheror not yet earned by performance on the part of Borrower) and, (e) all collateral security ofany kind, given by any Account Debtor or any other Person with respect to any of the foregoing.  Forpurposes of this Agreement, the term "Accounts" shall not include GCRC Receivables only tothe extent such GCRC Receivables have been sold or otherwise transferred to the Gottschalks MasterCredit Card Trust pursuant to the Receivables Purchase Agreement.

"Affected Lender" has the meaning ascribed to it in Section 1.14(c).

"Affiliate" means, with respect to any Person, (a) each Person that,directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or otherfiduciary, 5% or more of the Stock having ordinary voting power in the election of directors of suchPerson, (b) each Person that controls, is controlled by or is under common control with suchPerson, (c) each of such Person's officers, directors, joint venturers and partners and(d) in the case of Borrower, the immediate family members, spouses and lineal descendants ofindividuals who are Affiliates of Borrower.  For the purposes of this definition,"control" of a Person shall mean the possession, directly or indirectly, of thepower to direct or cause the direction of its management or policies, whether through the ownershipof voting securities, by contract or otherwise; provided, however, that the term"Affiliate" shall specifically exclude Agent and each Lender.

"Agent" means Kimco Capital Corp., in its capacity as Agent for Lenders or itssuccessor appointed pursuant to Section 9.7.

"Agreement" means the Credit Agreement by and among Borrower, Kimco CapitalCorp., as Agent and Lender and the other Lenders from time to time party thereto, dated as of March22, 2002, as the same may be amended, supplemented, restated or otherwise modified from time totime.

"Appendices" has the meaning ascribed to it in the recitals to theAgreement.

"Assignment Agreement" has the meaning ascribed to it inSection 9.1(a).

"Authorized Officer" means, with respect to Borrower, the president, vicepresident, chief financial officer, chief accounting officer, secretary, treasurer or the generalpartner or managing member of such entity.

"Bankruptcy Code" means the provisions of Title 11 of the United States Code, 11U.S.C.   101 etseq. 

"Borrower" has the meaning ascribed thereto in the preamble to theAgreement.

"Business Day" means any day that is not a Saturday, a Sunday or a day on whichbanks are required or permitted to be closed in the States of California and/or New York.

	"Category A Property" means each property listed on Disclosure Schedule(5.18(a)) that is subject to a recorded Mortgage in favor of Agent, for the benefit of theLenders.

	"Category A Property Violation" means, with respect to any Category AProperty, the occurrence of any of the following, without the prior written consent of Agent (asapplicable):  (a) surrender, termination or cancellation of any Store Lease affecting such CategoryA Property, or any material amendment or modification to a material term of any Store Leaseaffecting such Category A Property; (b) Borrower shall consent to any modification, termination orwaiver of any other material agreement affecting such Category A Property if such modification,termination or waiver would have a material adverse effect on such Category A Property; (c) Borrowershall create, incur, assume or permit to exist any Lien on or with respect to such Category AProperty, other than the Permitted Encumbrances and any Lien which is not prohibited under theSenior Facility (d) any Lien created under any Mortgage on such Category A Property ceases to be avalid and perfected Lien, having priority over all Liens other than the Senior Facility Liens, andother Permitted Encumbrances having priority over the Senior Facility Liens; (e) Borrower shall failto duly observe and perform all material terms and conditions of any Store Lease, or other materialagreement relating to such Category A Property, and diligently protect and enforce the rights ofBorrower and its Subsidiaries under all such agreements in a manner consistent with prudent businessjudgment and subject to the terms and conditions of such agreements, to the extent that such failurewould have a material adverse effect on such Category A Property; (f) Borrower shall fail topromptly provide Agent copies of all agreements amending, altering, modifying, waiving orsupplementing in any material respect any Store Lease or other material agreement relating to suchCategory A Property; (g) Borrower shall fail to do or cause to be done all things necessary tocomply with all applicable Laws or any other requirements affecting or related to any Category AProperty and such noncompliance would have a material adverse effect with respect to such Category AProperty unless the necessity of such compliance is being contested in good faith; (h) Borrowershall permit any Category A Property (or any portion thereof) to be removed, demolished ormaterially altered, or fail to maintain the Category A Property in good repair, order and conditionin all material respects; (i) subject to the provisions of Section 1.4(c) andSections 5.4(e) and (g), Borrower shall fail to repair, replace and restore suchCategory A Property now or hereafter damaged or destroyed by any casualty or other event (whether ornot insured against and insurable) or affected by any condemnation or other taking so that, whenrepaired, replaced and restored, the same shall be at least equal in quality, usefulness and valueas the Category A Property which existed immediately prior to such casualty, event or condemnationor other taking, as the case may be, and of the same type and character as the Category A Propertyexisting on the date hereof; (j) Borrower shall fail to perform any and all construction,equipping, alteration, repair, replacement and/or restoration in a good and workmanlike manner; or(k) Borrower shall sell, transfer, convey, assign or otherwise dispose of all or any portionof, or any interest in, any Category A Property.

"Certificate of Exemption" has the meaning ascribed to it in Section1.13(c).

"Charges" means all federal, state, county, city, municipal, local, foreign orother governmental taxes (including taxes owed to the PBGC at the time due and payable), levies,assessments, charges, liens, claims or encumbrances (a) upon or relating to the Collateral,	(b) upon or relating to the Obligations, (c) measured by the employees, payroll, income orgross receipts of Borrower owed by or assessable against Borrower, (d) upon or relating toBorrower's ownership or use of any properties or other assets, or (e) upon or relating to anyother aspect of Borrower's business.

"Chattel Paper" means any "chattel paper," as such term is defined inthe Code, including electronic chattel paper, now owned or hereafter acquired by Borrower.

"Closing Date" means the date on which the conditions precedent set forth inSection 2 and Annex B hereto have been satisfied.

"Closing Checklist" means the schedule, including all appendices, exhibits orschedules thereto, listing certain documents and information to be delivered in connection with theAgreement, the other Loan Documents and the transactions contemplated thereunder, substantially inthe form attached hereto as Annex B.

"Code" means the Uniform Commercial Code as the same may, from time to time, beenacted and in effect in the State of New York; provided, that to the extent that the Code isused to define any term herein or in any Loan Document and such term is defined differently indifferent Articles or Divisions of the Code, the definition of such term contained in Article orDivision 9 shall govern; provided, further, that in the event that, by reason ofmandatory provisions of law, any or all of the attachment, perfection or priority of, or remedieswith respect to, Agent's or any Lender's Lien on any Collateral is governed by the UniformCommercial Code as enacted and in effect in a jurisdiction other than the State of New York, theterm "Code" shall mean the Uniform Commercial Code as enacted and in effect in suchother jurisdiction solely for purposes of the provisions thereof relating to such attachment,perfection, priority or remedies and for purposes of definitions related to such provisions.

"Collateral" means the property covered by the Security Agreement, the Mortgagesand the other Collateral Documents and any other property, real or personal, tangible or intangible,now existing or hereafter acquired, that may at any time be or become subject to a security interestor Lien in favor of Agent, on behalf of itself and Lenders, to secure the Obligations.

"Collateral Documents" means the Security Agreement, the Pledge Agreements, theMortgages, the Trademark Security Agreement and all similar agreements entered into guaranteeingpayment of, or granting a Lien upon property as security for payment of, the Obligations.

"Commitment" means (a) as to any Lender, the commitment of such Lender tomake a Term Loan as set forth on Annex D to the Agreement or in the most recentAssignment Agreement executed by such Lender and (b) as to all Lenders, the aggregatecommitment of all Lenders to make Term Loans, which aggregate commitment shall be Fifteen MillionDollars ($15,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time totime in accordance with the Agreement.

"Contracts" means all "contracts," as such term is defined in theCode, now owned or hereafter acquired by Borrower, in any event, including all contracts, leases,undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments)in or under which Borrower may now or hereafter have any right, title or interest, including anyagreement relating to the terms of payment or the terms of performance of any Account.

 "Copyright License" means any and all rights now owned or hereafter acquired byBorrower under any written agreement granting any right to use any Copyright or Copyrightregistration.

"Copyrights" means all of the following now owned or hereafter adopted oracquired by Borrower:  (a) all copyrights and general intangibles of like nature (whetherregistered or unregistered), all registrations and recordings thereof, and all applications inconnection therewith, including all registrations, recordings and applications in the United StatesCopyright Office or in any similar office or agency of the United States, any state or territorythereof, or any other country or any political subdivision thereof, and (b) all reissues,extensions or renewals thereof.

"Credit Card Receivables" has the meaning ascribed to it in the SeniorFacility.

 "Default" means any event that, with the passage of time or notice or both,would, unless cured or waived, become an Event of Default.

"Default Rate" has the meaning ascribed to it in Section 1.6(d).

"Disclosure Schedules" means the Schedules prepared by Borrower and denominatedas Disclosure Schedules (3.1) through (6.6) in the Index to the Agreement.

	

	"Disqualified Category A Property" means any Category A Property as to whichany Category A Property Violation shall have occurred and be continuing, without having been curedor waived in writing by the Agent.

"Documents" means all "documents," as such term is defined in theCode, now owned or hereafter acquired by Borrower, wherever located.

"Dollars" or "$"  means lawful currency of the United States ofAmerica.

"Environmental Laws" means all applicable federal, state, local and foreignlaws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, andany applicable judicial or administrative interpretation thereof, including any applicable judicialor administrative order, consent decree, order or judgment, imposing liability or standards ofconduct for or relating to the regulation and protection of human health, safety, the environmentand natural resources (including ambient air, surface water, groundwater, wetlands, land surface orsubsurface strata, wildlife, aquatic species and vegetation).  Environmental Laws include theComprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.   9601 etseq.) ("CERCLA"); the Hazardous MaterialsTransportation Authorization Act of 1994 (49 U.S.C.    5101 etseq.); the FederalInsecticide, Fungicide, and Rodenticide Act (7 U.S.C.    136 etseq.); the SolidWaste Disposal Act (42 U.S.C.    6901 etseq.); the Toxic Substance Control Act(15 U.S.C.    2601 etseq.); the Clean Air Act (42 U.S.C.    7401 etseq.); the Federal Water Pollution Control Act (33 U.S.C.    1251 etseq.);the Occupational Safety and Health Act (29 U.S.C.    651 etseq.); and the SafeDrinking Water Act (42 U.S.C.    300(f) etseq.), and any and allregulations promulgated thereunder, and all analogous state, local and foreign counterparts orequivalents and any transfer of ownership notification or approval statutes.

"Environmental Liabilities" means, with respect to any Person, all liabilities,obligations, responsibilities, response, remedial and removal costs, investigation and feasibilitystudy costs, capital costs, operation and maintenance costs, losses, damages, punitive damages,property damages, natural resource damages, consequential damages, treble damages, costs andexpenses (including all reasonable fees, disbursements and expenses of counsel, experts andconsultants), fines, penalties, sanctions and interest incurred as a result of or related to anyclaim, suit, action, investigation, proceeding or demand by any Person, whether based in contract,tort, implied or express warranty, strict liability, criminal or civil statute or common law,including any arising under or related to any Environmental Laws, Environmental Permits, or inconnection with any Release or threatened Release or presence of a Hazardous Material whether on,at, in, under, from or about or in the vicinity of any real or personal property.

"Environmental Permits" means all permits, licenses, authorizations,certificates, approvals or registrations required by any Governmental Authority under anyEnvironmental Laws.

"Equipment" means all "equipment," as such term is defined in theCode, now owned or hereafter acquired by Borrower, wherever located and, in any event, including allof Borrower's machinery and equipment, including processing equipment, conveyors, machine tools,data processing and computer equipment, including embedded software and peripheral equipment and allengineering, processing and manufacturing equipment, office machinery, furniture, materials handlingequipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts,molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature,trade fixtures and fixtures not forming a part of real property, together with all additions andaccessions thereto, replacements therefor, all parts therefor, all substitutes for any of theforegoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights withrespect thereto, and all products and proceeds thereof and condemnation awards and insuranceproceeds with respect thereto.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amendedfrom time to time, and any regulations promulgated thereunder.

"ERISA Affiliate" means, with respect to Borrower, any trade or business(whether or not incorporated) that, together with Borrower, are treated as a single employer withinthe meaning of Sections 414(b), (c), (m) or (o) of the IRC.

"ERISA Event" means, with respect to Borrower or any ERISA Affiliate,(a) any event described in Section 4043(c) of ERISA with respect to a Title IV Plan;(b) the withdrawal of Borrower or ERISA Affiliate from a Title IV Plan subject toSection 4063 of ERISA during a plan year in which it was a substantial employer, as defined inSection 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of Borrower or anyERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminatea Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 ofERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan bythe PBGC; (f) the failure by Borrower or ERISA Affiliate to make when due requiredcontributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;(g) any other event or condition that might reasonably be expected to constitute grounds underSection 4042 of ERISA for the termination of, or the appointment of a trustee to administer,any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section 4041A ofERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 ofERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status; or(j) the termination of a Plan described in Section 4064 of ERISA.

"Escrow Fund" has the meaning ascribed to it in Section 5.2(c).

"ESOP" means a Plan that is intended to satisfy the requirements ofSection 4975(e)(7) of the IRC.

"Event of Default" has the meaning ascribed to it inSection 8.1.

"Fair Labor Standards Act" means the Fair Labor Standards Act, 29 U.S.C.  201etseq. 

"Fashion Fair Property" means the store property leased by Borrower located inFresno, California and designated as store number 5.

"Federal Reserve Board" means the Board of Governors of the Federal ReserveSystem.

"Fee Letter" has the meaning ascribed to it in Section 1.7(a).

"Fees" means any and all fees payable to Agent or any Lender pursuant to theAgreement or any of the other Loan Documents.

"Financial Statements" means the consolidated and consolidating incomestatements, statements of cash flows and balance sheets of Borrower delivered in accordance withSection. 3.4.

"Fiscal Quarter" means any of the quarterly accounting periods of Borrower,ending on or about April 30, July 31, October 30 and January 31 of eachyear.

"Fixtures" means all "fixtures" as such term is defined in the Code,now owned or hereafter acquired by Borrower.

"Foreign Person" has the meaning ascribed to it in Section 1.13(c).

"GAAP" means generally accepted accounting principles in the United States ofAmerica consistently applied.

"GCRC" means Gottschalks Credit Receivables Corporation, a Delawarecorporation.

"GCRC Pledge Agreement" means that certain Pledge Agreement dated as of evendate herewith between Agent and GCRC in form and substance satisfactory to Agent.

"GCRC Receivables" has the meaning ascribed to it in the Senior Facility.

"General Intangibles" means all "general intangibles," as such term isdefined in the Code, now owned or hereafter acquired by Borrower, including all right, title andinterest that Borrower may now or hereafter have in or under any Contract, all payment intangibles,customer lists, Licenses, Trademarks, and all applications therefor and reissues, extensions orrenewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures andother business associations, licenses, permits, copyrights, trade secrets, proprietary orconfidential information, inventions (whether or not patented or patentable), technical information,procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience,processes, models, drawings, materials and records, goodwill (including the goodwill associated withany Trademark or Trademark License), all rights and claims in or under insurance policies (includinginsurance for fire, damage, loss and casualty, whether covering personal property, real property,tangible rights or intangible rights, all liability, life, key man and business interruptioninsurance, and all unearned premiums), uncertificated securities, choses in action, deposit,checking and other bank accounts, rights to receive tax refunds and other payments, rights toreceive dividends, distributions, cash, Instruments and other property in respect of or in exchangefor pledged Stock and Investment Property, rights of indemnification, all books and records,correspondence, credit files, invoices and other papers, including without limitation all tapes,cards, computer runs and other papers and documents in the possession or under the control ofBorrower or any computer bureau or service company from time to time acting for Borrower.

"Goods" means all "goods" as defined in the Code, now owned orhereafter acquired by Borrower, wherever located, including embedded software to the extent includedin "goods" as defined in the Code, manufactured homes, standing timber that is cut andremoved for sale and unborn young of animals.

"Governmental Authority" means any nation or government, any state or otherpolitical subdivision thereof, and any agency, department or other entity exercising executive,legislative, judicial, regulatory or administrative functions of or pertaining to government.

"Guaranteed Indebtedness" means as to any Person, any obligation of such Personguaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or otherobligation ("primary obligation") of any other Person (the "primaryobligor") in any manner, including any obligation or arrangement of such Person to(a) purchase or repurchase any such primary obligation, (b) advance or supply funds(i) for the purchase or payment of any such primary obligation or (ii) to maintain workingcapital or equity capital of the primary obligor or otherwise to maintain the net worth or solvencyor any balance sheet condition of the primary obligor, (c) purchase property, securities orservices primarily for the purpose of assuring the owner of any such primary obligation of theability of the primary obligor to make payment of such primary obligation, (d) protect thebeneficiary of such arrangement from loss (other than product warranties given in the ordinarycourse of business) or (e) indemnify the owner of such primary obligation against loss inrespect thereof.  The amount of any Guaranteed Indebtedness at any time shall be deemed to be anamount equal to the lesser at such time of (x) the stated or determinable amount of the primaryobligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximumamount for which such Person may be liable pursuant to the terms of the instrument embodying suchGuaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipatedliability (assuming full performance) in respect thereof.

"Guaranty" means, as to any Person, any direct or indirect obligation of suchPerson guaranteeing or intending to guarantee, or otherwise providing credit support, for anyIndebtedness, Capital Lease, dividend or other monetary obligation ("primaryobligation") of any other Person (the "primary obligor") in any manner,whether directly or indirectly, by contract, as a general partner or otherwise, including, withoutlimitation, any obligation of such Person, whether or not contingent, (a) to purchase any suchprimary obligation or any property constituting direct or indirect security therefor, (b) to advanceor supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintainworking capital or equity capital of the primary obligor or otherwise to maintain the net worth orsolvency of the primary obligor, or (c) to purchase property, securities or services from theprimary obligor or other Person, in each case, primarily for the purpose of assuring the performanceof the primary obligor of any such primary obligation or assuring the owner of any such primaryobligation of the repayment of such primary obligation.  The amount of any Guaranty shall be deemedto be an amount equal to (x) the stated or determinable amount of the primary obligation inrespect of which such Guaranty is made (or, if the amount of such primary obligation is not statedor determinable, the maximum reasonably anticipated liability in respect thereof (assuming suchPerson is required to perform thereunder)) or (y) the stated maximum liability under suchGuaranty, whichever is less.

"Hanford REA" means that certain Amended and Restated Construction, Operationand Reciprocal Easement Agreement, dated December 12, 1998, among Hanford Mall Partners, L.P.,Borrower, Mervyn's and Sears, Roebuck and Co. and recorded on September 16, 1999 as Instrument No.9919777 in the Official Records of Kings County, California.

"Hazardous Material" means any substance, material or waste that is regulatedby, or forms the basis of liability now or hereafter under, any Environmental Laws, including anymaterial or substance that is (a) defined as a "solid waste," "hazardouswaste," "hazardous material," "hazardous substance," "extremelyhazardous waste,"  "restricted hazardous waste," "pollutant,""contaminant," "hazardous constituent," "special waste," "toxicsubstance" or other similar term or phrase under any Environmental Laws, or (b) petroleumor any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or anyradioactive substance.

"Impositions" has the meaning ascribed to it in Section 5.2(c).

"Indebtedness" means, with respect to any Person, without duplication,(a) all indebtedness of such Person for borrowed money or for the deferred purchase price ofproperty payment for which is deferred 6 months or more, but excluding obligations to tradecreditors incurred in the ordinary course of business that are unsecured and not overdue by morethan 6 months unless being contested in good faith, (b) all reimbursement and other obligationswith respect to letters of credit, bankers' acceptances and surety bonds, whether or not matured,(c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) allindebtedness created or arising under any conditional sale or other title retention agreement withrespect to property acquired by such Person (even though the rights and remedies of the seller orlender under such agreement in the event of default are limited to repossession or sale of suchproperty), (e) all capital lease obligations and the present value of future rental paymentsunder all synthetic leases, (f) all obligations of such Person under commodity purchase oroption agreements or other commodity price hedging arrangements, in each case whether contingent ormatured, (g) all obligations of such Person under any foreign exchange contract, currency swapagreement, interest rate swap, cap or collar agreement or other similar agreement or arrangementdesigned to alter the risks of that Person arising from fluctuations in currency values or interestrates, in each case whether contingent or matured, (h) all indebtedness secured by (or forwhich the holder of such indebtedness has an existing right, contingent or otherwise, to be securedby) any Lien upon or in property or other assets (including accounts and contract rights) owned bysuch Person, even though such Person has not assumed or become liable for the payment of suchindebtedness, and (i) the Obligations.

"Indemnified Liabilities" has the meaning ascribed to it inSection 1.11.

"Indemnified Person" has the meaning ascribed to inSection 1.11.

"Instruments" means all "instruments," as such term is defined in theCode, now owned or hereafter acquired by Borrower, wherever located, and, in any event, includingall certificated securities, all certificates of deposit, and all promissory notes and otherevidences of indebtedness, other than instruments that constitute, or are a part of a group ofwritings that constitute, Chattel Paper.

"Intellectual Property" means any and all Licenses, Patents, Copyrights,Trademarks, and the goodwill associated with such Trademarks.

"Interest Payment Date" means the first Business Day of each month (commencingthe first Business Day of May 2002).

"Intercreditor Agreement" means that certain Intercreditor Agreement executed byAgent and the Senior Lenders in form and substance satisfactory to Agent. 

"Inventory" means all "inventory," as such term is defined in theCode, now owned or hereafter acquired by Borrower, wherever located, and in any event includinginventory, merchandise, goods and other personal property that are held by or on behalf of Borrowerfor sale or lease or are furnished or are to be furnished under a contract of service, or thatconstitute raw materials, work in process, finished goods, returned goods, or materials or suppliesof any kind, nature or description used or consumed or to be used or consumed in Borrower's businessor in the processing, production, packaging, promotion, delivery or shipping of the same, includingall supplies and embedded software.

"Investment Property" means all "investment property" as such term isdefined in the Code now owned or hereafter acquired by Borrower, wherever located, including(i) all securities, whether certificated or uncertificated, including stocks, bonds, interestsin limited liability companies, partnership interests, treasuries, certificates of deposit, andmutual fund shares; (ii) all securities entitlements of Borrower, including the rights ofBorrower to any securities account and the financial assets held by a securities intermediary insuch securities account and any free credit balance or other money owing by any securitiesintermediary with respect to that account; (iii) all securities accounts of Borrower;(iv) all commodity contracts of Borrower; and (v) all commodity accounts held byBorrower.

"IRC" means the Internal Revenue Code of 1986 and all regulations promulgatedthereunder.

"IRS" means the Internal Revenue Service.

"Late Payment Fee" has the meaning ascribed to it in Section 1.7(c).

"Law" means any applicable statute, ordinance, rule, regulation or order of, orany applicable restriction or requirement imposed by, any Governmental Authority. 

"Lenders" means Kimco Capital Corp., the other Lenders named on the signaturepages of the Agreement, and, if any such Lender shall decide to assign all or any portion of theObligations, such term shall include any assignee of such Lender.

"Letter-of-Credit Rights" means "letter-of-credit rights" as such termis defined in the Code, now owned or hereafter acquired by Borrower, including rights to payment orperformance under a letter of credit, whether or not Borrower, as beneficiary, has demanded or isentitled to demand payment or performance.

"License" means any Copyright License, Patent License, Trademark License orother license of rights or interests now held or hereafter acquired by Borrower.

"Lien" means any mortgage or deed of trust, pledge, hypothecation, assignment,deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference,priority or other security agreement or preferential arrangement of any kind or nature whatsoever(including any lease or title retention agreement, any financing lease having substantially the sameeconomic effect as any of the foregoing, and the filing of, or agreement to give, any financingstatement perfecting a security interest under the Code or comparable law of any jurisdiction).

"Litigation" has the meaning ascribed to it in Section 3.13.

"Loan" and "Loans" means the Terms Loans and the RevolvingLoans.

"Loan Account" has the meaning ascribed to it in Section 1.10.

"Loan Documents" means the Agreement, the Notes, the Collateral Documents, theGCRC Pledge Agreement and all other agreements, instruments, documents and certificates identifiedin the Closing Checklist executed and delivered to, or in favor of, Agent or any Lenders andincluding all other pledges, powers of attorney, consents, assignments, contracts, notices, and allother written matter whether heretofore, now or hereafter executed by or on behalf of Borrower orGCRC, or any employee of Borrower or GCRC, and delivered to Agent or any Lender in connection withthe Agreement or the transactions contemplated thereby.  Any reference in the Agreement or any otherLoan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, andall amendments, restatements, supplements or other modifications thereto, and shall refer to theAgreement or such Loan Document as the same may be in effect at any and all times such referencebecomes operative.

"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Material Adverse Effect" means a material adverse effect on (a) thebusiness, assets, operations, prospects or financial or other condition of Borrower and GCRC, takenas a whole, (b) Borrower's ability to pay any of the Loans or any of the other Obligations inaccordance with the terms of the Agreement, (c) any Select Real Property Assets or Agent'sLiens, on behalf of itself and Lenders, on any Select Real Property Assets or the priority of suchLiens, (d) Agent's or any Lender's rights and remedies under the Agreement and the other LoanDocuments, or (e) the Collateral taken as a whole. 

"Maturity Date" means the earlier of (i) January 31, 2005 and (ii) the date onwhich the Loans shall become due and payable pursuant to Article 7 hereof.

"Maximum Lawful Rate" has the meaning ascribed to it in Section1.6(e).

"Mortgage" means a Mortgage, Open End Mortgage, Deed of Trust, Trust Deed,Leasehold Mortgage, Leasehold Deed of Trust, Deed to Secure Debt, Credit Line Deed of Trust,Assignment, Security Agreement and Financing Statement, substantially in the form ofExhibit M hereto, as modified to apply to the applicable type of Real Property Assetcovered thereby in recordable form, and as otherwise may be required to give the intended effectthereto (as advised by local counsel to Agent in the affected jurisdiction), executed and deliveredby Borrower to Agent (for the benefit of the Lenders) and in each case, as such document may beamended, amended and restated, supplemented or otherwise modified, renewed or replaced from time totime.

"Mortgaged Store Lease" means any Store Lease which is subject to aMortgage.

"Multiemployer Plan" means a "multiemployer plan" as defined inSection 4001(a)(3) of ERISA, and to which Borrower or ERISA Affiliate is making, is obligatedto make or has made or been obligated to make, contributions on behalf of participants who are orwere employed by any of them.

"Net Proceeds" has the meaning ascribed to it in Section 5.4(e). 

"Non-Funding Lender" has the meaning ascribed to it inSection 9.9(a)(iii).

"Note" or "Notes" has the meaning ascribed to it inSection 1.3.

"Obligations" means all loans, advances, debts, liabilities and obligations forthe performance of covenants, tasks or duties or for payment of monetary amounts (whether or notsuch performance is then required or contingent, or such amounts are liquidated or determinable)owing by Borrower to Agent or any Lender, and all covenants and duties regarding such amounts, ofany kind or nature, present or future, whether or not evidenced by any note, agreement or otherinstrument, arising under the Agreement or any of the other Loan Documents.  This term includes allprincipal, interest (including all interest that accrues after the commencement of any case orproceeding by or against Borrower in bankruptcy, whether or not allowed in such case or proceeding),Fees, Charges, expenses, attorneys' fees and any other sum chargeable to Borrower under theAgreement or any of the other Loan Documents.

"OSHA" means Occupational Safety and Hazard Act.

"Park 41" means Park 41, a California limited partnership.

"Patent License" means rights under any written agreement now owned or hereafteracquired by Borrower granting any right with respect to any invention on which a Patent is inexistence.

"Patents" means all of the following in which Borrower now holds or hereafteracquires any interest:  (a) all letters patent of the United States or of any other country,all registrations and recordings thereof, and all applications for letters patent of the UnitedStates or of any other country, including registrations, recordings and applications in the UnitedStates Patent and Trademark Office or in any similar office or agency of the United States, anyState, or any other country, and (b) all reissues, continuations, continuations-in-part orextensions thereof.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Pension Plan" means a Plan described in Section 3(2) of ERISA.

"Permitted Encumbrances" means the following encumbrances:  (a) Liens fortaxes or assessments or other governmental Charges not yet due and payable or which are beingcontested in accordance with Section 5.2(b); (b) pledges or deposits of moneysecuring statutory obligations under workmen's compensation, unemployment insurance, social securityor public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges ordeposits of money securing bids, tenders, contracts (other than contracts for the payment of money)or leases to which Borrower is a party as lessee made in the ordinary course of business;(d) inchoate and unperfected workers', mechanics' or similar liens arising in the ordinarycourse of business so long as such Liens attach only to equipment, fixtures and/or real estate;(e) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to whichBorrower is a party; (f) any attachment or judgment lien; (g) zoning restrictions,easements, licenses, or other restrictions on the use of any real estate or other minorirregularities in title (including leasehold title) thereto, so long as the same do not materiallyimpair the use, value, or marketability of such real estate, or provide for forfeiture of title;(h) presently existing or hereafter created Liens in favor of Agent, on behalf of Lenders;(i) the Senior Facility Liens; (j) Liens in existence on the date hereof (and summarized onDisclosure Schedule (6.6)) securing the Indebtedness described on Disclosure Schedule(6.3), and permitted refinancings, extensions and renewals thereof, including extensions andrenewals of any such Liens, provided, that the principal amount of the Indebtedness sosecured is not increased; (k) inchoate Liens arising by operation of law in favor of landlords; (l)inchoate Liens arising under Division 2 of the Code or similar provisions of applicable law in theordinary course of Borrower's business, covering only the goods sold and securing only the unpaidpurchase price for such goods and related expenses; (m) customary rights of set off and chargeback under deposit agreements or under the Code of depository institutions for accounts maintainedby Borrower in compliance with the terms of this Agreement; (n) inchoate Liens in favor of bankswhich arise under Article 4 of the Code or similar provisions of applicable law on items incollection; (o) Liens not evidenced by a financing statement arising by operation of law in favor ofcredit card processors who have executed a credit card agreement with respect to credit cardreceivables processed by them; and (p) Liens not evidenced by a financing statement arising byoperation of law in favor of common carriers, covering only the goods carried, securing only chargesnot yet payable to such carrier.

"Person" means any individual, sole proprietorship, partnership, joint venture,trust, unincorporated organization, association, corporation, limited liability company,institution, public benefit corporation, other entity or government (whether federal, state, county,city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, bodyor department thereof).

"Plan" means, at any time, an "employee benefit plan," as defined inSection 3(3) of ERISA, that Borrower or ERISA Affiliate maintains, contributes to or has anobligation to contribute to or has maintained, contributed to or had an obligation to contribute toat any time within the past 7 years on behalf of participants who are or were employed by Borroweror ERISA Affiliate.

"Pledge Agreement" means the Pledge Agreements made in favor of Agent, on behalfof Lenders, by Borrower and GCRC, including without limitation, the GCRC Pledge Agreement.

"Prepayment Fee" has the meaning ascribed to it in Section 1.7(b)hereof.

"Proceeds" means "proceeds," as such term is defined in the Code,including (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable toBorrower from time to time with respect to any of the Collateral, (b) any and all payments (inany form whatsoever) made or due and payable to Borrower from time to time in connection with anyrequisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateralby any Governmental Authority (or any Person acting under color of governmental authority),(c) any claim of Borrower against third parties (i) for past, present or futureinfringement of any Patent or Patent License, or  (ii) for past, present or future infringementor dilution of any Copyright, Copyright License, Trademark or Trademark License, or for injury tothe goodwill associated with any Trademark or Trademark License, (d) any recoveries by Borroweragainst third parties with respect to any litigation or dispute concerning any of the Collateralincluding claims arising out of the loss or nonconformity of, interference with the use of, defectsin, or infringement of rights in, or damage to, Collateral, (e) all amounts collected on, ordistributed on account of, other Collateral, including dividends, interest, distributions andInstruments with respect to Investment Property and pledged Stock, and (f) any and all otheramounts, rights to payment or other property acquired upon the sale, lease, license, exchange orother disposition of Collateral and all rights arising out of Collateral.

"Pro Rata Share" means with respect to all matters relating to any Lender(a) with respect to the Revolving Loan Advances, the percentage obtained by dividing(i) the Commitment of that Lender by (ii) the aggregate Commitments of all Lenders, and(b) with respect to all Loans, the percentage obtained by dividing (i) the aggregateoutstanding principal balance of the Loans held by that Lender, by (ii) the outstandingprincipal balance of the Loans held by all Lenders, as such percentages may be adjusted byassignments permitted pursuant to Section 9.1.

"Projections" means Borrower's forecasted consolidated:  (a) balancesheets; (b) profit and loss statements; and (c) cash flow statements, all prepared on aSubsidiary by Subsidiary basis, if applicable, except for GCRC, and otherwise consistent with thehistorical Financial Statements of Borrower, together with appropriate supporting details and astatement of underlying assumptions.

"Proposed Change" has the meaning ascribed to it in Section 11.2(d).

"Qualified Plan" means a Pension Plan that is intended to be tax-qualified underSection 401(a) of the IRC.

"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender and,with respect to any Lender that is an investment fund that invests in commercial loans, any otherinvestment fund that invests in commercial loans and that is managed or advised by the sameinvestment advisor as such Lender or by an Affiliate of such investment advisor, and (b) anycommercial bank, savings and loan association or savings bank or any other entity which is an"accredited investor" (as defined in Regulation D under the Securities Act of 1933) whichextends credit or buys loans as one of its businesses, including insurance companies, mutual funds,lease financing companies and commercial finance companies, in each case, which has a rating of BBBor higher from S&P and a rating of Baa2 or higher from Moody's at the date that it becomes aLender and which, through its applicable lending office, is capable of lending to Borrower withoutthe imposition of any withholding or similar taxes; provided, that no Person determined byAgent to be acting in the capacity of a vulture fund or distressed debt purchaser shall be aQualified Assignee, and no Person or Affiliate of such Person (other than a Person that is already aLender) holding Subordinated Debt or Stock issued by Borrower shall be a Qualified Assignee.

"Qualifying Category A Properties" means all Category A Properties other thanDisqualified  Category A Properties, if any. 

 "Real Property Assets" means as of any time (i) all parcels of real property,owned or leased at such time directly or indirectly by Borrower, including without limitation theSelect Real Property Assets and the Category A Properties and, in each case, together with allbuildings, improvements, appurtenances, fixtures easements and other property and rights incidentalto the ownership or lease (as applicable) of such parcel of real property or any of theforegoing.

"Receivables Purchase Agreement" has the meaning ascribed to it in the SeniorFacility.

"Release" means any release, threatened release, spill, emission, leaking,pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, includingthe movement of Hazardous Material through or in the air, soil, surface water, ground water orproperty.

"Rental Payments" has the meaning ascribed to it in Section 5.13(b)
"Replacement Lender" has the meaning ascribed to it in Section1.14(c).

"Requisite Lenders" means Lenders holding greater than fifty percent (50%) ofthe total Loans then outstanding.

"Restoration Costs" has the meaning ascribed to it in Section5.4(e)(i).

"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides forcontinuing coverage or benefits for any participant or any beneficiary of a participant after suchparticipant's termination of employment, other than continuation coverage provided pursuant toSection 4980B of the IRC and at the sole expense of the participant or the beneficiary of theparticipant.

"Revolving Loan" means, at any time, the sum of the aggregate amount ofRevolving Loan Advances outstanding to Borrower.

"Revolving Loan Advance" or "Revolving Loan Advances" has themeaning ascribed to it in Section 1.2(a).

"Revolving Loan Advance Availability " means, at any time, the lesser of(i) the Term Loan Repayment Amount and (ii) $500,000.00, in each case, less the sum of theRevolving Loans then outstanding.

"Revolving Loan Obligation" means, as to any Lender, the obligation by theLender to make Revolving Loan Advances as specified in Section 1.2 and as set forth onAnnex D to the Agreement, which commitment constitutes a subfacility of the Term LoanCommitment of the Lender.

"Sacramento Property" means the store property leased by Borrower located inSacramento, California and designated as store number 9.

"Security Agreement" means the Security Agreement of even date herewith enteredinto by and among Agent, on behalf of itself and Lenders, and Borrower.

"Select Real Property Assets" means the parcels of real property owned or leasedby Borrower and located at the following addresses, as more particularly described in the Mortgageencumbering such Select Real Property Asset: (i) 313 Madonna Road, San Luis Obispo, California,93405; (ii) 1673 West Lacey Blvd., Hanford, California 93230; and (iii) 10317 Silverdale Way North,Silverdale, Washington 98383 (the "Silverdale Property"), together with allbuildings, improvements, appurtenances, fixtures, easements and other rights incidental to theownership of such parcels of real property or any of the foregoing, including, without limitation,the benefits under all reciprocal easement agreements or similar documents related to each of theforegoing properties.

"Select Real Property REAs" has the meaning ascribed to it in Section3.6(b)(iv).

"Senior Facility" means that certain Credit Agreement, dated January 31, 2002,among Borrower, the Guarantors signatory thereto, the Lenders signatory thereto, General ElectricCapital Corporation, as Agent and Lender, The CIT Group/Business Credit, Inc., as Syndication Agentand Lender and GECC Capital Markets Group, Inc., as Lead Arranger, as the same may be amended,supplemented, restated, or otherwise modified from time to time or any replacement thereof.

"Senior Facility Agent" means General Electric Capital Corporation, a DelawareCorporation, in its capacity as agent to the Senior Facility Lenders under the Senior Facility.

"Senior Facility Liens" means the Liens granted by Borrower in favor of theSenior Facility Lenders as security for and in connection with the Senior Facility.

"Senior Facility Lenders" means the "Lenders" as defined in the SeniorFacility.

"Settlement Date" has the meaning ascribed to it inSection 9.9(a)(iii).

"Silverdale Ground Lease" means that certain Ground Lease, dated as of August 7,1984, between PPR Kitsap Mall LLC, a Delaware limited liability company, as landlord, and Borrower(successor in interest to Lamonts Apparel, Inc., as evidenced by that certain Lease Assignment andAssumption Agreement, dated as of July 24, 2000, and recorded on July 27, 2000 as Instrument No.200007270062 in the Official Records of the County of Kitsap, State of Washington and as evidencedby that certain Statutory Warranty Deed, dated July 24, 2000, by the Bankruptcy Estate of LamontsApparel Inc., and recorded on July 27, 2000, as Instrument No. 20007270061 in the Official Recordsof Kitsap County, State of Washington), as tenant, as recorded pursuant to that certain Short Formof Lease between the parties thereto, dated as of August 7, 1984 and recorded on August 22, 1984 asInstrument No. 8408220150 in the Official Records of the County of Kitsap, State of Washington, asfurther amended by that certain First Amendment to Lease, dated as of May 2, 1987, between theparties thereto and recorded on June 4, 1987 as Instrument No. 8706040088 in the Official Records ofthe County of Kitsap, State of Washington.

"Silverdale REA" means that certain Second Amendment to and Restatement ofConstruction, Operation and Reciprocal Easement Agreement, dated February 1, 1988, among PPR KitsapMall LLC, Sears, Roebuck and Co., Borrower and J.C. Penney Properties, Inc. and recorded on July 7,1988 as Instrument No. 8807070057 in the Official Records of Kitsap County, State of Washington, asamended by that certain Third Amendment to Construction, Operation and Reciprocal Easement Agreementdated November 1, 1992 and recorded on May 10, 1993 as Instrument No. 9305100088 in the OfficialRecords of Kitsap County, State of Washington.

"SLO Lease" means that certain Lease, dated July 27, 1999, between MBK SouthernCalifornia, Ltd. (as successor in interest to MONY Life Insurance Company), as landlord, andBorrower, as tenant, covering that certain premises located in San Luis Obispo, California and asmore particularly described therein.

"SLO REA" means that certain Amended and Restated Construction, Operations andReciprocal Easement Agreement, dated July 30, 1999, among MBK Southern California Ltd., Borrower andNesbitt Partners San Luis Obispo Venture Ltd. and recorded on July 30, 1999 as Instrument No. 1999-055874 in the Official Records of San Luis Obispo County, California.

"Software" means all "software" as such term is defined in the Code,now owned or hereafter acquired by Borrower, other than software embedded in any category of Goods,including all computer programs and all supporting information provided in connection with atransaction related to any program.

"Solvent" means, with respect to any Person on a particular date, that on suchdate (a) the fair value of the property of such Person is greater than the total amount ofliabilities, including contingent liabilities, of such Person; (b) the present fair salablevalue of the assets of such Person is not less than the amount that will be required to pay theprobable liability of such Person on its debts as they become absolute and matured; (c) suchPerson does not intend to, and does not believe that it will, incur debts or liabilities beyond suchPerson's ability to pay as such debts and liabilities mature; and (d) such Person is notengaged in a business or transaction, and is not about to engage in a business or transaction, forwhich such Person's property would constitute an unreasonably small capital.  The amount ofcontingent liabilities (such as litigation, guaranties and pension plan liabilities) at any timeshall be computed as the amount that, in light of all the facts and circumstances existing at thetime, represents the amount that can be reasonably be expected to become an actual or maturedliability.

"Space Lease" means any lease that generates annual rent revenue in excess of$500,000.00 under which Borrower is the lessor or sublessor.

"Stock" means all shares, options, warrants, general or limited partnershipinterests, membership interests or other equivalents (regardless of how designated) of or in acorporation, partnership, limited liability company or equivalent entity whether voting ornonvoting, including common stock, preferred stock or any other "equity security" (as suchterm is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securitiesand Exchange Commission under the Securities Exchange Act of 1934).

"Stockholder" means, with respect to any Person, each holder of Stock of suchPerson.

"Store Lease" means each lease identified by its address under the subheading"Store Leases" on Disclosure Schedule (3.6) (as any such lease may behereinafter amended, modified, restated, extended, supplemented, renewed or consolidated inaccordance with the terms hereof), and all other leases which may now or hereinafter be entered intoby Borrower as lessee, as any such lease may be hereinafter amended, modified, restated, extended,supplemented, renewed or consolidated in accordance with the terms hereof. 

"Subordinated Debt" means the Indebtedness of Borrower to the Harris Companyevidenced by the Subordinated Note and any other Indebtedness of Borrower subordinated to theObligations in a manner and form satisfactory to Agent and Lenders in their sole discretion, as toright and time of payment and as to any other rights and remedies thereunder.

"Subordinated Note" means that certain 8% Subordinated Note dueAugust 20, 2003 issued by Borrower in an aggregate original principal amount of$22,179,598.00.

"Subsidiary" means, with respect to any Person, (a) any corporation ofwhich an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect amajority of the board of directors of such corporation (irrespective of whether, at the time, Stockof any other class or classes of such corporation shall have or might have voting power by reason ofthe happening of any contingency) is at the time, directly or indirectly, owned legally orbeneficially by such Person or one or more Subsidiaries of such Person, or with respect to which anysuch Person has the right to vote or designate the vote of 50% or more of such Stock whether byproxy, agreement, operation of law or otherwise, and (b) any partnership or limited liabilitycompany in which such Person and/or one or more Subsidiaries of such Person shall have an interest(whether in the form of voting or participation in profits or capital contribution) of more than 50%or of which any such Person is a general partner or may exercise the powers of a general partner.Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to aSubsidiary of a Borrower.

"Supporting Obligations" means all "supporting obligations" as suchterm is defined in the Code, including letters of credit and guaranties issued in support ofAccounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property.

"Taking" means any awards made with respect to any Real Property Asset as theresult of the exercise of the power of eminent domain, including, without limitation, any awards ofthe changes of the grade of streets and/or as the result of any other damage to any Real PropertyAssets for which compensation shall be given by any Governmental Authority.

"Taxes" means taxes, levies, imposts, deductions, Charges or withholdings, andall liabilities with respect thereto, excluding (i) taxes (and all liabilities imposed withrespect thereto) imposed on or measured by the net income of Agent or a Lender and franchise taxesimposed in lieu thereof (including, without limitation, branch profits taxes, minimum taxes andtaxes computed under alternate methods, at least one of which is based on net income) by thejurisdictions under the laws of which Agent or such Lender is organized or conducts or has conductedbusiness or any political subdivision thereof; and (ii) any Taxes (and all liabilities imposedwith respect thereto) that would not have been imposed but for (A) the unexcused failure orunreasonable delay by Agent or any Lender, upon or following Borrower's reasonable written request,to complete, provide, file, update or renew properly completed and duly executed Certificates ofExemption (unless such failure or delay results from a change in applicable law after the date ofthe applicable Assignment Agreement or sale of a participation, which precludes such Agent or Lenderfrom continuing to qualify for a complete exemption from United States withholding tax),(B) the gross negligence or willful misconduct of Agent or any Lender, or (C) Agent or anyLender being treated as a "conduit entity" within the meaning of Treasury RegulationSection 1.881-3 or any successor provisions thereto.

"Term Loan" or "Term Loans" has the meaning ascribed to it inSection 1.1.

"Term Loan Repayment Amount" means, at any time, (i) as to any Lender, theamount of its Term Loan repaid by Borrower and (ii) as to all Lenders, the total amount repaidto the Lenders under the Term Loans, excluding, in each case, any amounts allocated to the EscrowFund pursuant to Section 5.2(c).

"Termination Date" means the date on which (a) the Loans have beenindefeasibly repaid in full, and (b) all other Obligations under the Agreement and the otherLoan Documents have been completely discharged.

"Title Company" means First American Title Insurance Company or any other titleinsurance company of recognized national standing which is acceptable to Agent in its solediscretion.

"Title IV Plan" means a Pension Plan (other than a Multiemployer Plan), that iscovered by Title IV of ERISA, and that Borrower or ERISA Affiliate maintains, contributes to or hasan obligation to contribute to on behalf of participants who are or were employed by any ofthem.

"Trademark Security Agreements" means the Trademark Security Agreements made infavor of Agent, on behalf of Lenders, by Borrower.

"Trademark License" means rights under any written agreement now owned orhereafter acquired by Borrower granting any right to use any Trademark.

"Trademarks" means all of the following now owned or hereafter existing oradopted or acquired by Borrower:  (a) all trademarks, trade names, corporate names, businessnames, trade styles, service marks, logos, other source or business identifiers, prints and labelson which any of the foregoing have appeared or appear, designs and general intangibles of likenature (whether registered or unregistered), all registrations and recordings thereof, and allapplications in connection therewith, including registrations, recordings and applications in theUnited States Patent and Trademark Office or in any similar office or agency of the United States,any state or territory thereof, or any other country or any political subdivision thereof;(b) all reissues, extensions or renewals thereof; and (c) all goodwill associated with orsymbolized by any of the foregoing.

"Unfunded Pension Liability" means, at any time, the aggregate amount, if any,of the sum of (a) the amount by which the present value of all accrued benefits under eachTitle IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to suchbenefits in accordance with Title IV of ERISA, all determined as of the most recent valuation datefor each such Title IV Plan using the actuarial assumptions for funding purposes in effect undersuch Title IV Plan, and (b) for a period of 5 years following a transaction which mightreasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or notaccrued) that could be avoided by Borrower or any ERISA Affiliate as a result of suchtransaction.

"Welfare Plan" means a Plan described in Section 3(i) of ERISA.

All accounting terms not otherwise defined used in this Agreement or the other Loan Documentsshall have the respective meanings accorded to them under GAAP.  The undefined terms contained inany of the Loan Documents shall, unless the context indicates otherwise, have the meanings providedfor by the Code to the extent the same are used or defined therein; in the event that any term isdefined differently in different Articles or Divisions of the Code, the definition contained inArticle or Division 9 shall control.  Unless otherwise specified, references in the Agreement or anyof the Appendices to a Section, subsection or clause refer to such Section, subsection or clause ascontained in the Agreement.  The words "herein," "hereof" and"hereunder" and other words of similar import refer to the Agreement as a whole, includingall Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated,modified or supplemented, and not to any particular section, subsection or clause contained in theAgreement or any such Annex, Exhibit or Schedule.

Wherever from the context it appears appropriate, each term stated in either the singular orplural shall include the singular and the plural, and pronouns stated in the masculine, feminine orneuter gender shall include the masculine, feminine and neuter genders.  The words"including," "includes" and "include" shall be deemed to be followedby the words "without limitation"; the word "or" is not exclusive; references toPersons include their respective successors and assigns (to the extent and only to the extentpermitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding to therelevant functions of such Persons; and all references to statutes and related regulations shallinclude any amendments of the same and any successor statutes and regulations.  Whenever anyprovision in any Loan Document refers to the knowledge (or an analogous phrase) of Borrower, suchwords are intended to signify that Borrower has actual knowledge or awareness of a particular factor circumstance or that Borrower, if it had exercised reasonable diligence, would have known or beenaware of such fact or circumstance.

 
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