**Exhibit 10.5**

 

CONFORMED AS EXECUTED

 

 

CREDIT AGREEMENT

 

Dated as of October 31, 2006

 

among

 

MICHAELS STORES, INC.,

 

as Borrower,

 

DEUTSCHE BANK AG NEW YORK BRANCH,

 

as Administrative Agent,

 

THE OTHER LENDERS PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,

 

as Syndication Agent,

 

and

 

BANK OF AMERICA, N.A. and

 

CREDIT SUISSE,

 

as Co-Documentation Agents

 

 

DEUTSCHE BANK SECURITIES INC.,

J.P. MORGAN SECURITIES INC. and

BANC OF AMERICA SECURITIES LLC,

as Co-Lead Arrangers and Joint Bookrunners

 

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Table of Contents

 
| ** **                                                                                              | ** ** | **Page** |
|---------------------------------------------------------------------------------------------------------|------------|----------|
|                                                                                                    |       |     |
| ARTICLE I Definitions and Accounting Terms                                                              |       | 1        |
| SECTION 1.01. Defined Terms                                                                             |       | 1        |
| SECTION 1.02. Other Interpretive Provisions                                                             |       | 58       |
| SECTION 1.03. Accounting Terms                                                                          |       | 59       |
| SECTION 1.04. Rounding                                                                                  |       | 60       |
| SECTION 1.05. References to Agreements,  Laws, Etc                                                      |       | 60       |
| SECTION 1.06. Times of Day                                                                              |       | 61       |
| SECTION 1.07. Timing of Payment or  Performance                                                         |       | 61       |
| SECTION 1.08. Currency Equivalents  Generally                                                           |       | 61       |
| SECTION 1.09. Change of Currency                                                                        |       | 61       |
| ARTICLE II The Commitments and Credit Extensions                                                        |       | 61       |
| SECTION 2.01. The Loans                                                                                 |       | 61       |
| SECTION 2.02. Borrowings, Conversions and  Continuations of Loans                                       |       | 61       |
| SECTION 2.03. [Reserved]                                                                                |       | 63       |
| SECTION 2.04. [Reserved]                                                                                |       | 63       |
| SECTION 2.05. Prepayments                                                                               |       | 63       |
| SECTION 2.06. Termination of Commitments                                                                |       | 67       |
| SECTION 2.07. Amortization of Loans                                                                     |       | 67       |
| SECTION 2.08. Interest                                                                                  |       | 67       |
| SECTION 2.09. Fees                                                                                      |       | 67       |
| SECTION 2.10. Computation of Interest and  Fees                                                         |       | 67       |
| SECTION 2.11. Evidence of Indebtedness                                                                  |       | 68       |
| SECTION 2.12. Payments Generally                                                                        |       | 68       |
| SECTION 2.13. Sharing of Payments                                                                       |       | 70       |
| SECTION 2.14. Provisions Applicable to  Canadian Loan Parties                                           |       | 71       |
| ARTICLE III Taxes, Increased Costs Protection and Illegality                                            |       | 71       |
| SECTION 3.01. Taxes                                                                                     |       | 71       |
| SECTION 3.02. Illegality                                                                                |       | 74       |
| SECTION 3.03. Inability to Determine Rates                                                              |       | 74       |
| SECTION 3.04. Increased Cost and Reduced  Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans |       | 74       |
| SECTION 3.05. Funding Losses                                                                            |       | 76       |
| SECTION 3.06. Matters Applicable to All  Requests for Compensation                                      |       | 76       |
| SECTION 3.07. Replacement of Lenders under  Certain Circumstances                                       |       | 77       |
| SECTION 3.08. Survival                                                                                  |       | 78       |
| ARTICLE IV Conditions Precedent to Credit Extensions                                                    |       | 78       |
| SECTION 4.01. Conditions of Making of Loans                                                             |       | 78       |
| ARTICLE V Representations and Warranties                                                                |       | 81       |
| SECTION 5.01. Existence, Qualification and  Power; Compliance with Laws                                 |       | 81       |
| SECTION 5.02. Authorization; No  Contravention                                                          |       | 81       |
| SECTION 5.03. Governmental Authorization;  Other Consents                                               |       | 82       |

 

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| ** **                                                                                                     | ** ** | **Page** |
|----------------------------------------------------------------------------------------------------------------|------------|----------|
|                                                                                                           |       |     |
| SECTION 5.04. Binding Effect                                                                                   |       | 82       |
| SECTION 5.05. Financial Statements; No  Material Adverse Effect                                                |       | 82       |
| SECTION 5.06. Litigation                                                                                       |       | 83       |
| SECTION 5.07. No Default                                                                                       |       | 83       |
| SECTION 5.08. Ownership of Property; Liens                                                                     |       | 84       |
| SECTION 5.09. Environmental Compliance                                                                         |       | 84       |
| SECTION 5.10. Taxes                                                                                            |       | 85       |
| SECTION 5.11. ERISA Compliance                                                                                 |       | 85       |
| SECTION 5.12. Subsidiaries; Equity  Interests                                                                  |       | 86       |
| SECTION 5.13. Margin Regulations;  Investment Company Act                                                      |       | 86       |
| SECTION 5.14. Disclosure                                                                                       |       | 86       |
| SECTION 5.15. Intellectual Property;  Licenses, Etc                                                            |       | 86       |
| SECTION 5.16. Solvency                                                                                         |       | 87       |
| SECTION 5.17. Subordination of Junior  Financing                                                               |       | 87       |
| SECTION 5.18. Labor Matters                                                                                    |       | 87       |
| ARTICLE VI Affirmative Covenants                                                                               |       | 87       |
| SECTION 6.01. Financial Statements                                                                             |       | 87       |
| SECTION 6.02. Certificates; Other  Information                                                                 |       | 89       |
| SECTION 6.03. Notices                                                                                          |       | 91       |
| SECTION 6.04. Payment of Obligations                                                                           |       | 91       |
| SECTION 6.05. Preservation of Existence,  Etc                                                                  |       | 91       |
| SECTION 6.06. Maintenance of Properties                                                                        |       | 92       |
| SECTION 6.07. Maintenance of Insurance                                                                         |       | 92       |
| SECTION 6.08. Compliance with Laws                                                                             |       | 93       |
| SECTION 6.09. Books and Records                                                                                |       | 93       |
| SECTION 6.10. Inspection Rights                                                                                |       | 93       |
| SECTION 6.11. Covenant to Guarantee  Obligations and Give Security                                             |       | 93       |
| SECTION 6.12. Compliance with Environmental  Laws                                                              |       | 96       |
| SECTION 6.13. Further Assurances and  Post-Closing Conditions                                                  |       | 96       |
| SECTION 6.14. Corporate Separateness                                                                           |       | 97       |
| SECTION 6.15. Pension Plans                                                                                    |       | 98       |
| ARTICLE VII Negative Covenants                                                                                 |       | 98       |
| SECTION 7.01. Asset Sales                                                                                      |       | 98       |
| SECTION 7.02. Limitation on Restricted  Payments                                                               |       | 99       |
| SECTION 7.03. Limitation on Incurrence of  Indebtedness and Issuance of Disqualified Stock and Preferred Stock |       | 107      |
| SECTION 7.04. Liens                                                                                            |       | 112      |
| SECTION 7.05. Consolidated Secured Debt  Ratio                                                                 |       | 112      |
| SECTION 7.06. Merger, Amalgamation,  Consolidation or Sale of All or Substantially All Assets                  |       | 113      |
| SECTION 7.07. Transactions with Affiliates                                                                     |       | 115      |
| SECTION 7.08. Dividend and Other Payment  Restrictions Affecting Restricted Subsidiaries                       |       | 117      |
| SECTION 7.09. Limitation on Guarantees of  Indebtedness by Restricted Subsidiaries                             |       | 118      |

 

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| ** **                                                          | ** ** | **Page** |
|---------------------------------------------------------------------|------------|----------|
|                                                                |       |     |
| SECTION 7.10. Change in Nature of Business                          |       | 119      |
| SECTION 7.11. [Reserved]                                            |       | 119      |
| SECTION 7.12. Use of Proceeds                                       |       | 119      |
| SECTION 7.13. Accounting Changes                                    |       | 119      |
| SECTION 7.14. Amendments of Indebtedness,  Etc                      |       | 120      |
| ARTICLE VIII Events Of Default and Remedies                         |       | 120      |
| SECTION 8.01. Events of Default                                     |       | 120      |
| SECTION 8.02. Remedies Upon Event of  Default                       |       | 123      |
| SECTION 8.03. Exclusion of Immaterial  Subsidiaries                 |       | 124      |
| SECTION 8.04. Application of Funds                                  |       | 124      |
| SECTION 8.05. Company’s Right to Cure                          |       | 125      |
| ARTICLE IX Administrative Agent and Other  Agents                   |       | 125      |
| SECTION 9.01. Appointment and Authorization  of Agents              |       | 125      |
| SECTION 9.02. Delegation of Duties                                  |       | 126      |
| SECTION 9.03. Liability of Agents                                   |       | 126      |
| SECTION 9.04. Reliance by Agents                                    |       | 126      |
| SECTION 9.05. Notice of Default                                     |       | 127      |
| SECTION 9.06. Credit Decision; Disclosure  of Information by Agents |       | 127      |
| SECTION 9.07. Indemnification of Agents                             |       | 128      |
| SECTION 9.08. Agents in their Individual  Capacities                |       | 128      |
| SECTION 9.09. Successor Agents                                      |       | 128      |
| SECTION 9.10. Administrative Agent May File  Proofs of Claim        |       | 129      |
| SECTION 9.11. Collateral and Guaranty  Matters                      |       | 130      |
| SECTION 9.12. Other Agents; Arrangers and  Managers                 |       | 131      |
| SECTION 9.13. Appointment of Supplemental  Administrative Agents    |       | 131      |
| SECTION 9.14. Solidary Interests/Quebec  Liens (Hypothecs)          |       | 132      |
| ARTICLE X Miscellaneous                                             |       | 133      |
| SECTION 10.01. Amendments, Etc                                      |       | 133      |
| SECTION 10.02. Notices and Other  Communications; Facsimile Copies  |       | 134      |
| SECTION 10.03. No Waiver; Cumulative  Remedies                      |       | 135      |
| SECTION 10.04. Attorney Costs and Expenses                          |       | 136      |
| SECTION 10.05. Indemnification by the  Borrower                     |       | 136      |
| SECTION 10.06. Payments Set Aside                                   |       | 137      |
| SECTION 10.07. Successors and Assigns                               |       | 137      |
| SECTION 10.08. Confidentiality                                      |       | 141      |
| SECTION 10.09. Setoff                                               |       | 141      |
| SECTION 10.10. Interest Rate Limitation                             |       | 142      |
| SECTION 10.11. Counterparts                                         |       | 142      |
| SECTION 10.12. Integration                                          |       | 142      |
| SECTION 10.13. Survival of Representations  and Warranties          |       | 142      |
| SECTION 10.14. Severability                                         |       | 143      |
| SECTION 10.15. Tax Forms                                            |       | 143      |
| SECTION 10.16. GOVERNING LAW                                        |       | 145      |

 

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| ** **                                                                        | ** ** | **Page** |
|-----------------------------------------------------------------------------------|------------|----------|
|                                                                              |       |     |
| SECTION 10.17. WAIVER OF RIGHT TO TRIAL BY  JURY                                  |       | 145      |
| SECTION 10.18. Binding Effect                                                     |       | 146      |
| SECTION 10.19. Lender Action                                                      |       | 146      |
| SECTION 10.20. USA PATRIOT Act; Proceeds of  Crime Act                            |       | 146      |
| SECTION 10.21. Judgment Currency                                                  |       | 146      |
| SECTION 10.22. Other Liens on Collateral;  Terms of Intercreditor Agreement; Etc. |       | 147      |
| SECTION 10.23. Assignment of Obligations                                          |       | 147      |

 

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| SCHEDULES |                                                              |   |
|-----------|-------------------------------------------------------------------|--------|
|      |                                                              |   |
| 1.01A     | [Reserved]                                                        |   |   |
| 1.01B     | Collateral Documents                                              |   |   |
| 1.01C     | [Reserved]                                                        |   |   |
| 1.01D     | Mortgaged Properties                                              |   |   |
| 1.01E     | Excluded Subsidiary                                               |   |   |
| 1.01F     | Foreign Subsidiary                                                |   |   |
| 2.01      | Commitments                                                       |   |   |
| 5.05      | Financial Statement Exceptions                                    |   |   |
| 5.10      | Taxes                                                             |   |   |
| 5.11      | ERISA and other Pension Plan Compliance                           |   |   |
| 5.12      | Subsidiaries and Other Equity Investments                         |   |   |
| 6.07      | Insurance                                                         |   |   |
| 7.03      | Existing Indebtedness                                             |   |   |
| 7.04      | Existing Liens                                                    |   |   |
| 10.02     | Administrative Agent’s Office, Certain Addresses for Notices |   |   |

 

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| EXHIBITS  |                                           |   |   |
|-----------|------------------------------------------------|--------|--------|
|      |                                           |   |   |
| *Form of* |                                           |   |   |
| * *  |                                           |   |   |
| A         | Committed Loan Notice                          |   |   |
| B         | [Reserved]                                     |   |   |
| C         | Note                                           |   |   |
| D         | Compliance Certificate                         |   |   |
| E         | Assignment and Assumption                      |   |   |
| F-1       | Domestic Guaranty                              |   |   |
| F-2       | Canadian Guarantee                             |   |   |
| G-1       | Security Agreement                             |   |   |
| G-2       | Canadian Security Agreement                    |   |   |
| H         | Intercreditor Agreement                        |   |   |
| I         | Opinion Matters — Counsel to Loan Parties |   |   |
| J         | Intercompany Note                              |   |   |

 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“**Agreement**”)is entered into as of October 31, 2006, among MICHAELS STORES, INC., a Delawarecorporation (the “**Borrower**”),DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent, each lender fromtime to time party hereto (collectively, the “**Lenders**”and individually, a “**Lender**”),JPMORGAN CHASE BANK, N.A., as Syndication Agent, and BANK OF AMERICA, N.A. andCREDIT SUISSE, as Co-Documentation Agents.

 

PRELIMINARY STATEMENTS

 

Pursuant to the Recapitalization Agreement (as this and othercapitalized terms used in these preliminary statements are defined in Section1.01 below), Bain Paste Mergerco, Inc. and Blackstone Paste Mergerco, Inc.(collectively, the “**MergerCos**”)shall be merged with the Borrower, with the Borrower as the survivingcorporation (the “**Recapitalization**”).

 

The Borrower has requested that simultaneously with the consummation ofthe Recapitalization, the Lenders make Loans to the Borrower in an initialaggregate principal amount of $2,400,000,000.

 

The proceeds of the Loans made on the Closing Date, together with theproceeds of (i) the issuance of the New Notes, (ii) the funding of $400,000,000under the ABL Credit Agreement on the Closing Date and (iii) the EquityContribution, will be used to finance the Debt Prepayment and pay the MergerConsideration and the Transaction Expenses.

 

The Lenders have indicated their willingness to lend on the terms andsubject to the conditions set forth herein.

 

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

 

# **ARTICLE I**

#  

# **Definitions and Accounting Terms**

#  

## SECTION 1.01.  Defined Terms.  As used in this Agreement, the followingterms shall have the meanings set forth below:

 

“**ABL Collateral Agent**”shall mean the “Collateral Agent” as defined in the ABL Credit Agreement.

 

“**ABL Collateral Documents**”shall mean the “Security Documents” as defined in the ABL Credit Agreement.

 

“**ABL Credit Agreement**”shall mean the Credit Agreement, dated as of October 31, 2006, among theBorrower, as the lead borrower, the other borrowers named therein, the facilityguarantors identified therein, Bank of America, N.A., as administrative agentand as collateral agent, and the lenders identified therein, as the same may beamended, restated, 

 

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modified, supplemented,extended, renewed, refunded, replaced or refinanced from time to time in one ormore agreements or indentures (in each case with the same or new lenders,institutional investors or agents), including any agreement or indentureextending the maturity thereof or otherwise restructuring all or any portion ofthe Indebtedness thereunder or increasing the amount loaned or issuedthereunder or altering the maturity thereof (so long as, in the case of anyreplacement or refinancing, all commitments under the agreements or indenturesso replaced or refinanced shall have been terminated, all unpaid amountsthereunder (other than indemnities) shall have been paid in full and allparties to any replacement or refinancing agreements or indentures, or a trusteeor agent on their behalf, shall have become party to the IntercreditorAgreement as of the applicable date of replacement or refinancing, as the casemay be).

 

“**ABL Lenders**” shall meanthe “Lenders” as defined in the ABL Credit Agreement.

 

“**ABL Loan Documents**” shallmean the ABL Credit Agreement and the related guaranties, pledge agreements,security agreements, mortgages, notes and other agreements and instrumentsentered into in connection with the ABL Credit Agreement.

 

“**ABL Loans**” shall mean the“Revolving Credit Loans” as defined in the ABL Credit Agreement.

 

“**ABL Priority Collateral**”means, collectively, all “ABL Priority Collateral” as defined in theIntercreditor Agreement.

 

“**ACH**” means automatedclearing house transfers.

 

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

 

“**Acquisition**” means, withrespect to a specified Person, (a) an Investment in or a purchase of a 50% orgreater interest in the Capital Stock of any other Person, (b) a purchase oracquisition of all or substantially all of the assets of any other Person, (c)a purchase or acquisition of a real estate portfolio or Stores from any otherPerson or assets constituting a business unit, line of business or division ofany other Person, or (d) any merger, amalgamation or consolidation of suchPerson with any other Person or other transaction or series of transactionsresulting in the acquisition of all or substantially all of the assets, or a50% or greater interest in the Capital Stock of, any Person, in each case inany transaction or group of transactions which are part of a common plan.

 

“**Act**” has the meaning setforth in Section 10.20.

 

“**Additional Assets**” means(a) any asset used or useful in a Similar Business, including any such assetacquired through any capital expenditure, (b) the Capital Stock of a Personthat becomes a Restricted Subsidiary as a result of the acquisition of suchCapital Stock 

 

2

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by the Borrower or anotherRestricted Subsidiary or is merged or amalgamated with or into the Borrower oranother Restricted Subsidiary and that is primarily engaged in a SimilarBusiness, (c) Capital Stock constituting a minority interest in any Person thatat such time is a Restricted Subsidiary that is primarily engaged in a SimilarBusiness, (d) all or substantially all of the assets of a Similar Business or(e) any other asset that replaces an asset that is the subject of an AssetSale.

 

“**Additional Interest**”means all additional interest then owing with respect to any New Notes pursuantto the relevant Registration Rights Agreement.

 

“**Administrative Agent**”means Deutsche Bank AG New York Branch, in its capacity as administrative agentunder any of the Loan Documents, or any successor administrative agent.  Unless the context otherwise requires, theterm “Administrative Agent” as used herein and in the other Loan Documentsshall include the Collateral Agent.

 

“**Administrative Agent’s Office**”means the Administrative Agent’s address and account as set forth on Schedule10.02, or such other address or account as the Administrative Agent may fromtime to time notify the Borrower and the Lenders.

 

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

 

“**Affiliate**” of anyspecified Person means any other Person directly or indirectly controlling orcontrolled by or under direct or indirect common control with such specifiedPerson.  For purposes of this definition,“control” (including, with correlative meanings, the terms “controlling,” “controlledby” and “under common control with”), as used with respect to any Person, shallmean the possession, directly or indirectly, of the power to direct or causethe direction of the management or policies of such Person, whether through theownership of voting securities, by agreement or otherwise.

 

“**Affiliate Transaction**”has the meaning set forth in Section 7.07(a).

 

“**Agent-Related Persons**”means the Agents, together with their respective Affiliates, and the officers,directors, employees, agents and attorneys-in-fact of such Persons andAffiliates.

 

“**Agents**” means,collectively, the Administrative Agent, the Collateral Agent, the SyndicationAgent, the Co-Documentation Agents and the Supplemental Administrative Agents(if any).

 

“**Aggregate Commitments**”means the Commitments of all the Lenders.

 

“**Agreement**” means thisCredit Agreement.

 

“**Agreement Currency**” hasthe meaning provided in Section 10.21.

 

“**Alternative Average Monthly Balance**”means, with respect to any Indebtedness incurred by the Borrower or itsRestricted Subsidiaries under a revolving credit 

 

3

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facility, the quotient of (x)the sum of each Alternative Individual Monthly Balance for each fiscal monthended on or prior to such date of determination and included in the RelevantReference Period divided by (y) 12.

 

“**Alternative Individual MonthlyBalance**” means, with respect to any Indebtedness incurred by theBorrower or its Restricted Subsidiaries under a revolving credit facilityduring any fiscal month of the Borrower, the quotient of (x) the sum of theaggregate outstanding principal amount of all such Indebtedness at the end ofeach day of such fiscal month divided by (y) the number of days in such fiscalmonth.

 

“**Applicable Rate**” means apercentage per annum equal to (i) in the case of Eurocurrency Rate Loans, 3.00%and (ii) in the case of Base Rate Loans, 2.00%, *less*, in each case the sum of (i) if (but only if) theConsolidated Total Leverage Ratio as set forth in the most recent ComplianceCertificate received by the Administrative Agent pursuant toSection 6.02(b) is less than 5.50 to 1.00, 0.25% *and* (ii) if (but only if) the Moody’sApplicable Corporate Rating then most recently published is B1 or higher (withat least a stable outlook), 0.25%.  Any increaseor decrease in the Applicable Rate resulting from a change in the ConsolidatedTotal Leverage Ratio or the Moody’s Applicable Corporate Rating shall becomeeffective as of the first Business Day immediately following the date aCompliance Certificate is delivered pursuant to Section 6.02(b) or thethen most recent Moody’s Applicable Corporate Rating is published, as the casemay be; *provided* that at theoption of the Administrative Agent or the Required Lenders, no deduction shallapply (x) in the case of clause (i) above, as of the first Business Day afterthe date on which a Compliance Certificate was required to have been deliveredbut was not delivered, and shall continue not to apply to and including thedate on which a subsequent Compliance Certificate is actually delivered (withany deduction as otherwise determined in accordance with this definition toapply thereafter), (y) in the case of clause (ii) above, as of the firstBusiness Day after the date on which Moody’s ceases to maintain or publish aMoody’s Applicable Corporate Rating (of any level), and shall continue not toapply to and including the date on which a new Moody’s Applicable CorporateRating is so published (with any deduction as otherwise determined inaccordance with this definition to apply thereafter), and (z) in the case ofclauses (i) and (ii) above, as of the first Business Day after an Event ofDefault under Section 8.01(a), (f) or (g) shall have occurred and becontinuing, and shall continue not to apply to but excluding the date on whichsuch Event of Default is cured or waived (with any deduction as otherwisedetermined in accordance with this definition to apply thereafter).

 

“**Approved Fund**” means anyFund that is administered, advised or managed by (a) a Lender, (b) an Affiliateof a Lender or (c) an entity or an Affiliate of an entity that administers,advises or manages a Lender.

 

“**Arrangers**” means DeutscheBank Securities Inc., J.P. Morgan Securities Inc. and Banc of AmericaSecurities LLC, each in its capacity as a Joint Bookrunner and a Co-LeadArranger under this Agreement.

 

“**Asset Sale**” means (a) thesale, conveyance, transfer or other disposition, whether in a singletransaction or a series of related transactions, of property or assets(including by way of a Sale and Lease-Back Transaction) of the Borrower or anyof its Restricted Subsidiaries (each referred to in this definition as a “disposition”)or (b) the issuance or sale of 

 

4

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Equity Interests of any RestrictedSubsidiary, whether in a single transaction or a series of related transactions(other than directors’ qualifying shares and shares issued to foreign nationalsas required under applicable law); in each case, other than:

 

#### (i)            any disposition of Cash Equivalents orInvestment Grade Securities or obsolete or worn out property or equipment inthe ordinary course of business or any disposition of inventory or goods (orother assets) held for sale in the ordinary course of business (it beingunderstood that the sale of inventory or goods (or other assets) in bulk inconnection with the closing of any number of Stores in the ordinary course ofbusiness shall be considered a sale in the ordinary course of business);

####  

#### (ii)           the disposition of all or substantially allof the assets of the Borrower in a manner permitted pursuant to Section 7.06 orany disposition that constitutes a Change of Control;

####  

#### (iii)          the making of any Restricted Payment that ispermitted to be made, and is made, under Section 7.02 or the making of anyPermitted Investment;

####  

#### (iv)          (x) any disposition of assets or issuance orsale of Equity Interests of any Restricted Subsidiary, in each case that do notor would not upon disposition or issuance constitute TL Priority Collateral, inany transaction or series of transactions with an aggregate fair market valueof less than $25,000,000 and (y) any disposition of assets or issuance or saleof Equity Interests of any Restricted Subsidiary, in each case thatconstitutes, or upon disposition or issuance would constitute, TL PriorityCollateral in any transaction or series of transactions with an aggregate fairmarket value of less than $10,000,000;

####  

#### (v)           any disposition of property or assets orissuance of securities by a Restricted Subsidiary of the Borrower to theBorrower or by the Borrower or a Restricted Subsidiary of the Borrower toanother Restricted Subsidiary of the Borrower;

####  

#### (vi)          to the extent allowable under Section 1031 ofthe Code, any exchange of like property (excluding any boot thereon) for use ina Similar Business;

####  

#### (vii)         the lease, assignment, sublease, license orsublicense of any real or personal property in the ordinary course of business;

####  

#### (viii)        any issuance or sale of Equity Interests in, orIndebtedness or other securities of, an Unrestricted Subsidiary;

####  

#### (ix)           foreclosures on or expropriations of assets;

####  

#### (x)            (A) sales of accounts receivable, orparticipations therein, in connection with any Receivables Facility, or (B) thedisposition of an account 

 

5

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#### receivable in connection with the collection or compromise thereof inthe ordinary course of business and not as part of a financing transaction;

####  

#### (xi)           the granting of a Lien that is a PermittedLien or a Permitted Collateral Lien;

####  

#### (xii)          the issuance by a Restricted Subsidiary ofPreferred Stock or Disqualified Stock that is permitted by Section 7.03; and

####  

#### (xiii)         any financing transaction with respect toproperty built or acquired by the Borrower or any Restricted Subsidiary afterthe Closing Date, including asset securitizations permitted by this Agreementbut excluding any Sale and Lease-Back Transaction.

####  

“**Asset Sale/Casualty Event Offer**”has the meaning set forth in Section 2.05(c)(iii).

 

“**Assignees**” has themeaning specified in Section 10.07(b).

 

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

 

“**Attorney Costs**” means andincludes all reasonable fees, expenses and disbursements of any law firm orother external legal counsel.

 

“**Audited Financial Statements**”means the audited consolidated balance sheets of the Borrower and itsSubsidiaries as of each of January 28, 2006 and January 29, 2005, and therelated audited consolidated statements of income, stockholders’ equity andcash flows for the Borrower and its Subsidiaries for the fiscal years endedJanuary 28, 2006, January 29, 2005 and January 31, 2004, respectively.

 

“**Average Monthly Balance**”means, as of any date of determination, with respect to any Indebtedness of theBorrower and/or its Restricted Subsidiaries under a revolving credit facility,the quotient of (a) the sum of each Individual Monthly Balance for each fiscalmonth ended on or prior to such date of determination and included in theRelevant Reference Period divided by (b) 12; *provided*that (i) if any Indebtedness under a revolving credit facility is incurredduring the Relevant Reference Period ended on or prior to such date ofdetermination to finance an Acquisition, an Investment or any other RestrictedPayment (which incurrence shall be notified to the Administrative Agent asrequired by Section 6.02(h)), each Individual Monthly Balance for a fiscalmonth included in such Relevant Reference Period and ended prior to the date ofthe respective incurrence of such Indebtedness shall be increased by theaggregate principal amount of all such Indebtedness incurred to finance suchAcquisition, Investment or Restricted Payment, as the case may be, and theAverage Monthly Balance shall be calculated using each such Individual MonthlyBalance as so increased and (ii) if any Indebtedness under a revolving creditfacility is repaid with the net cash proceeds of a Material Disposition duringthe Relevant Reference Period ended on or prior to such date of determination(and is notified to the Administrative Agent pursuant to a certificatedelivered pursuant to Section 6.02(h)), each Individual Monthly Balance for afiscal month included in such Relevant Reference Period and 

 

6

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ended prior to the date of therespective repayment of such Indebtedness shall be decreased by the aggregateprincipal amount of such Indebtedness so repaid (it being understood that anotice delivered in good faith by a Responsible Officer of the Borrower pursuantto Section 6.02(h), and any judgment made in good faith by a ResponsibleOfficer of the Borrower that no notice is required to be delivered pursuant tothe terms of Section 6.02(h) in connection with a given incurrence or repaymentof Indebtedness under a revolving credit facility (e.g., because proceeds of arevolving credit facility are not then being applied to finance an Acquisition,Investment or other Restricted Payment), shall be conclusive for purposes ofany determination of an increase or decrease of the Average Monthly Balancepursuant to this proviso). Notwithstanding the foregoing, the Individual Monthly Balance for eachfiscal month occurring prior to the Closing Date and used in determining the AverageMonthly Balance in respect of a Relevant Reference Period ending on or prior toOctober 31, 2007 shall be deemed to be the following:

 
| **Fiscal Month Ended** | ** ** | **Individual Monthly Balance ($ million)** | ** ** |
|------------------------|------------|-------------------------------------------------|------------|
|                   |       |                                            |       |
| November 30,  2005     |       | 316.7                                           |       |
| December 31,  2005     |       | 194.6                                           |       |
| January 31,  2006      |       | 170.8                                           |       |
| February 28,  2006     |       | 154.4                                           |       |
| March 31,  2006        |       | 197.6                                           |       |
| April 30,  2006        |       | 154.1                                           |       |
| May 31, 2006           |       | 190.0                                           |       |
| June 30,  2006         |       | 235.5                                           |       |
| July 31,  2006         |       | 221.3                                           |       |
| August 31,  2006       |       | 273.0                                           |       |
| September  30, 2006    |       | 315.5                                           |       |
| October 31,  2006      |       | 308.4                                           |       |

 

“**Base Rate**” means for anyday a fluctuating rate per annum equal to the higher of (a) the Federal FundsRate *plus* 1/2 of 1% and (b) therate of interest in effect for such day as publicly announced from time to timeby DBNY as its “prime rate.”  The “primerate” is a rate set by DBNY based upon various factors including DBNY costs anddesired return, general economic conditions and other factors, and is used as areference point for pricing some loans, which may be priced at, above, or belowsuch announced rate.  Any change in suchrate 

 

7

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announced by DBNY shall takeeffect at the opening of business on the day specified in the publicannouncement of such change.

 

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

 

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

 

“**Borrower**” has the meaningprovided in the introductory paragraph of this Agreement; *provided* that when used in the context ofdetermining the fair market value of an asset or liability under thisAgreement, “Borrower” shall, unless otherwise expressly stated, be deemed tomean the Board of Directors of the Borrower when the fair market value of suchasset or liability is equal to or in excess of $100,000,000 (unless otherwiseexpressly stated).

 

“**Borrower Guaranty**” meansthe Borrower Guaranty made by the Borrower in favor of the Administrative Agenton behalf of the Secured Parties, substantially in the form of Exhibit F-1.

 

“**Borrowing**” means aborrowing consisting of simultaneous Loans of the same Type and, in the case ofEurocurrency Rate Loans, having the same Interest Period made by each of theLenders pursuant to Section 2.01.

 

“**Business Day**” means anyday other than a Saturday, Sunday or other day on which commercial banks areauthorized to close under the Laws of, or are in fact closed in, the statewhere the Administrative Agent’s Office is located and if such day relates toany interest rate settings as to a Eurocurrency Rate Loan, any fundings,disbursements, settlements and payments in respect of any such EurocurrencyRate Loan, or any other dealings to be carried out pursuant to this Agreementin respect of any such Eurocurrency Rate Loan, means any such day on whichdealings in deposits in Dollars are conducted by and between banks in theLondon interbank eurodollar market.

 

“**Canadian Guarantee**”means, collectively, (a) the Canadian Guarantee made by the Canadian SubsidiaryGuarantors in favor of the Administrative Agent on behalf of the SecuredParties, substantially in the form of Exhibit F-2 and (b) each other guarantyand Guaranty Supplement delivered by a Canadian Subsidiary Guarantor pursuantto Section 6.11.

 

“**Canadian Security Agreement**”means, collectively, (a) the Security Agreement executed by the CanadianSubsidiary Guarantors, substantially in the form of Exhibit G-2, and (b) anyDeed of Immovable and Moveable Hypothec, together with, in each case, eachother security agreement supplement executed and delivered by a CanadianSubsidiary Guarantor pursuant to Section 6.11.

 

“**Canadian Subsidiary**”means any Subsidiary that is organized under the laws of Canada or any provincethereof.

 

8

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“**Canadian Subsidiary Guarantors**”means, collectively, (i) Michaels of Canada ULC and (ii) each other CanadianSubsidiary of the Borrower that, in the sole discretion of the Borrower, shallhave entered into the Canadian Guarantee and complied with the requirements ofclause (b) of the definition of “Collateral and Guarantee Requirement”.

 

“**Capital Expenditures**”means, for any period, the aggregate of (a) all expenditures (whether paid incash or accrued as liabilities) by the Borrower and the Restricted Subsidiariesduring such period that, in conformity with GAAP, are or are required to beincluded as additions during such period to property, plant or equipmentreflected in the consolidated balance sheet of the Borrower and the RestrictedSubsidiaries and (b) the value of all assets under (or subject to) CapitalizedLease Obligations incurred by the Borrower and the Restricted Subsidiariesduring such period; *provided* thatthe term “Capital Expenditures” shall not include (i) expenditures made inconnection with the replacement, substitution, restoration or repair of assetsto the extent financed with (x) insurance proceeds paid on account of the lossof or damage to the assets being replaced, restored or repaired or (y) awardsof compensation arising from the taking by eminent domain or condemnation ofthe assets being replaced, (ii) the purchase price of equipment that ispurchased simultaneously with the trade-in of existing equipment to the extentthat the gross amount of such purchase price is reduced by the credit grantedby the seller of such equipment for the equipment being traded in at such time,(iii) the purchase of plant, property or equipment or software to the extentfinanced with the proceeds of Asset Sales that are not required to be appliedto prepay Loans pursuant to Section 2.05(c), (iv) expenditures that areaccounted for as capital expenditures by the Borrower or any RestrictedSubsidiary and that actually are paid for by a Person other than the Borroweror any Restricted Subsidiary, to the extent neither the Borrower nor anyRestricted Subsidiary has provided or is required to provide or incur, directlyor indirectly, any consideration or obligation to such Person or any otherPerson (whether before, during or after such period), (v) the book value of anyasset owned by the Borrower or any Restricted Subsidiary prior to or duringsuch period to the extent that such book value is included as a capitalexpenditure during such period as a result of such Person reusing or beginningto reuse such asset during such period without a corresponding expenditureactually having been made in such period, *provided*that (A) any expenditure necessary in order to permit such asset to be reusedshall be included as a Capital Expenditure during the period in which suchexpenditure actually is made and (B) such book value shall have been includedin Capital Expenditures when such asset was originally acquired, (vi)expenditures that constitute Acquisitions permitted hereunder, (vii) anyexpenditure which but for this clause (vii) would otherwise constitute a “CapitalExpenditure”, to the extent financed with the proceeds of the sale or issuanceof any Equity Interests of the Borrower or (viii) that portion of interest onIndebtedness incurred for Capital Expenditures which is paid in cash andcapitalized in accordance with GAAP during such period.

 

“**Capital Stock**” means (a)in the case of a corporation, shares in the capital of such corporation; (b) inthe case of an association or business entity, any and all shares, interests,participations, rights or other equivalents (however designated) of capitalstock; (c) in the case of a partnership or limited liability company,partnership or membership interests (whether general or limited); and (d) anyother interest or participation that confers on a Person the right to receive ashare of the profits and losses of, or distributions of assets of, the issuingPerson.

 

9

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

 

“**Cash Collateral Account**”means a blocked account at DBNY (or another commercial bank selected incompliance with Section 9.09) in the name of the Administrative Agent and underthe sole dominion and control of the Administrative Agent, and otherwiseestablished in a manner reasonably satisfactory to the Administrative Agent.

 

“**Cash Equivalents**” means:

 

### (a)           UnitedStates dollars and Canadian dollars;

###  

### (b)           (i)  euro, or any national currency of anyparticipating member state of the EMU; or

###  

(ii)           in the case of any Foreign Subsidiary thatis a Restricted Subsidiary, such local currencies held by them from time totime in the ordinary course of business;

 

### (c)           securitiesissued or directly and fully and unconditionally guaranteed or insured by theU.S. government or any agency or instrumentality thereof the securities ofwhich are unconditionally guaranteed as a full faith and credit obligation ofsuch government with maturities of 24 months or less from the date ofacquisition;

###  

### (d)           certificatesof deposit, time deposits and eurodollar time deposits with maturities of oneyear or less from the date of acquisition, bankers’ acceptances with maturitiesnot exceeding one year and overnight bank deposits, in each case with anycommercial bank having capital and surplus of not less than $250,000,000 in thecase of U.S. banks and, in the case of any Foreign Subsidiary that is aRestricted Subsidiary, $100,000,000 (or the U.S. dollar equivalent as of thedate of determination) in the case of non-U.S. banks, and in each case in acurrency permitted under clauses (a) or (b) above;

###  

### (e)           repurchaseobligations for underlying securities of the types described in clauses (c) and(d) entered into with any financial institution meeting the qualificationsspecified in clause (d) above and in each case in a currency permitted underclauses (a) or (b) above;

###  

### (f)            commercialpaper rated at least P-2 by Moody’s or at least A-2 by S&P and in each casematuring within 24 months after the date of creation thereof and in each casein a currency permitted under clauses (a) or (b) above;

###  

### (g)           marketableshort term money market and similar securities having a rating of at least P-2or A-2 from either Moody’s or S&P, respectively (or, if at any time neitherMoody’s nor S&P shall be rating such obligations, an equivalent rating fromanother Rating Agency) and in each case maturing within 24 months after thedate of creation thereof and in each case in a currency permitted under clauses(a) or (b) above;

###  

10

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### (h)           readilymarketable direct obligations issued by any state, commonwealth or territory ofthe United States or any political subdivision or taxing authority thereofhaving an Investment Grade Rating from either Moody’s or S&P withmaturities of 24 months or less from the date of acquisition;

###  

### (i)            Indebtednessor Preferred Stock issued by Persons with a rating of A or higher from S&Por A2 or higher from Moody’s with maturities of 24 months or less from the dateof acquisition and in each case in a currency permitted under clauses (a) or(b) above;

###  

### (j)            Investmentswith average maturities of 12 months or less from the date of acquisition inmoney market funds rated AAA- (or the equivalent thereof) or better by S&Por Aaa3 (or the equivalent thereof) or better by Moody’s and in each case in acurrency permitted under clauses (a) or (b) above;

###  

### (k)           investmentfunds investing substantially all of their assets in securities of the typedescribed in clauses (a) through (j) above; and

###  

### (l)            creditcard receivables and debit card receivables so long as same are payable by afinancial institution and are considered “cash equivalents” in accordance withGAAP and are so reflected on the Borrower’s balance sheet.

###  

Notwithstanding the foregoing, Cash Equivalents shall include amountsdenominated in currencies other than those set forth in clauses (a) and (b)above, *provided* that such amountsare converted into any currency listed in clauses (a) and (b) as promptly aspracticable and in any event within ten Business Days following the receipt ofsuch amounts.

 

“**Cash Management Services**”means any of the following to the extent not constituting a line of credit: ACHtransactions, treasury and/or cash management services, including, withoutlimitation, controlled disbursement services, foreign exchange facilities,deposit and other accounts and merchant services.

 

“**Casualty Event**” means anyevent that gives rise to the receipt by the Borrower or any RestrictedSubsidiary of any insurance proceeds or condemnation awards in respect of anyequipment, fixed assets or real property (including any improvements thereon)to replace or repair such equipment, fixed assets or real property.

 

“**CERCLA**” means theComprehensive Environmental Response, Compensation and Liability Act of 1980,as subsequently amended.

 

“**CERCLIS**” means theComprehensive Environmental Response, Compensation and Liability InformationSystem maintained by the U.S. Environmental Protection Agency.

 

“**Change of Control**” meansthe occurrence of any of the following after the Closing Date:

 

### (a)           thesale, lease or transfer, in one or a series of related transactions (other thanby way of merger or consolidation), of all or substantially all of the assetsof the 

 

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### Borrower and its Subsidiaries, taken as a whole, to any Person otherthan one or more Permitted Holders; or

###  

### (b)           theBorrower becomes aware of (by way of a report or any other filing pursuant toSection 13(d) of the Exchange Act, proxy, vote, written notice or otherwise)the acquisition by (i) any Person (other than one or more Permitted Holders) or(ii) Persons (other than one or more Permitted Holders) that together are (1) agroup (within the meaning of Section 13(d)(3) or Section 14(d)(2) of theExchange Act, or any successor provision), or (2) acting for the purpose ofacquiring, holding or disposing of securities (within the meaning of Rule13d-5(b)(1) under the Exchange Act) as a group in a single transaction or in arelated series of transactions, by way of merger, consolidation or otherbusiness combination or purchase of beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act, or any successor provision) of 50% or moreof the total voting power of the Voting Stock of the Borrower or any of itsdirect or indirect parent companies holding directly or indirectly 100% of thetotal voting power of the Voting Stock of the Borrower; or

###  

### (c)           any“Change of Control” (or any comparable term) in any document pertaining to (i)the ABL Credit Agreement, (ii) the Senior Notes, the Senior Subordinated Notes,the Subordinated Discount Notes or any Refinancing Indebtedness in respect ofthe foregoing with an aggregate outstanding principal amount in excess of theThreshold Amount or (iii) any Disqualified Stock with an aggregate liquidationpreference in excess of the Threshold Amount.

###  

“**Civil Code**” means theCivil Code of Quebec and all regulations thereunder, as amended from time totime, and any successor statutes.

 

“**Closing Date**” means thefirst date on which all the conditions precedent in Section 4.01 are satisfiedor waived in accordance with Section 4.01.

 

“**Code**” means the U.S.Internal Revenue Code of 1986, as amended, and rules and regulations relatedthereto.

 

“**Co-Documentation Agent**”means Bank of America, N.A. and Credit Suisse, as Co-Documentation Agents underthis Agreement.

 

“**Collateral**” means all the“Collateral” as defined in any Collateral Document and shall include theMortgaged Properties.

 

“**Collateral Access Agreement**”means an agreement reasonably satisfactory in form and substance to theCollateral Agent executed by (a) a bailee or other Person in possession ofCollateral, and (b) each landlord of real property leased by any Loan Party,pursuant to which such Person (i) acknowledges the Collateral Agent’s Lien onthe Collateral, (ii) releases or subordinates such Person’s Liens in theCollateral held by such Person or located on such real property, (iii) agreesto furnish the Collateral Agent with access to the Collateral in such Person’spossession or on the real property for the purposes of conducting a liquidationand (iv) makes such other agreements with the Collateral Agent as theCollateral Agent may reasonably require.

 

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“**Collateral Agent**” meansthe Administrative Agent, in its capacity as collateral agent under any of theLoan Documents, or any successor collateral agent.

 

“**Collateral and Guarantee Requirement**”means, at any time, the requirement that:

 

### (a)           theAdministrative Agent shall have received (x) each Collateral Document requiredto be delivered on the Closing Date pursuant to Section 4.01(a)(iii) orpursuant to Section 6.11 at such time, and (y) the Intercreditor Agreement, ineach case duly executed by each Loan Party thereto;

###  

### (b)           allObligations shall have been unconditionally guaranteed by the Borrower (in thecase of Obligations under clause (y) of the first sentence of the definitionthereof), each Restricted Subsidiary that is a Domestic Subsidiary and not anExcluded Subsidiary and, after the formation thereof, Holdco;

###  

### (c)           allguarantees issued or to be issued in respect of the Senior Subordinated Notesand the Subordinated Discount Notes shall be subordinated to the Guaranties tothe same extent that the Senior Subordinated Notes or the Subordinated DiscountNotes, as the case may be, are subordinated to the Obligations;

###  

### (d)           theObligations and the Guaranties shall have been secured by a first prioritysecurity interest (subject to the terms of the Intercreditor Agreement) in allEquity Interests (other than Equity Interests of Unrestricted Subsidiaries andany Equity Interest of any Restricted Subsidiary pledged to secure Indebtednesspermitted under Section 7.03(b)(xix)) of each Wholly Owned Subsidiary directlyowned by any Guarantor; provided that pledges of voting Equity Interests of eachForeign Subsidiary (including each Foreign Subsidiary held by a CanadianSubsidiary Guarantor) shall be limited to 65% of the total combined votingpower of all Equity Interests of such Foreign Subsidiary at any time; *provided further* that in the case ofCanadian Subsidiary Guarantor that owns Equity Interests in a ForeignSubsidiary, the pledge of voting Equity Interests of such Canadian SubsidiaryGuarantor shall be limited to 65% of the total combined voting power of allEquity Interests of such Canadian Subsidiary Guarantor (or, if such CanadianSubsidiary Guarantor is an unlimited liability company, such lesser percentageas is acceptable to the Collateral Agent);

###  

### (e)           exceptto the extent otherwise permitted hereunder or under any Collateral Document,the Obligations and the Guaranties shall have been secured by a securityinterest in, and mortgages on, substantially all tangible and intangible assetsof the Borrower and each other Guarantor (including accounts, inventory,equipment, investment property, contract rights, intellectual property, othergeneral intangibles, owned real property and proceeds of the foregoing), ineach case, with the priority required by the Collateral Documents and theIntercreditor Agreement; *provided*that security interests in real property shall be limited to the MortgagedProperties;

###  

### (f)            noneof the Collateral shall be subject to any Liens other than Liens permitted bySection 7.04; and

###  

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### (g)           theCollateral Agent shall have received (i) counterparts of a Mortgage withrespect to each owned property required to be delivered pursuant to Section6.11 (the “Mortgaged Properties”) duly executed and delivered by the recordowner of such property, (ii) a policy or policies of title insurance issued bya nationally recognized title insurance company insuring the Lien of each suchMortgage as a valid first priority Lien on the property described therein(subject to the applicable provisions of the Intercreditor Agreement), free of anyother Liens except as expressly permitted by Section 7.04, together with suchendorsements, coinsurance and reinsurance as the Administrative Agent mayreasonably request, (iii) such existing surveys, existing abstracts, existingappraisals and other documents as the Administrative Agent may reasonablyrequest with respect to any such Mortgaged Property and (iv) to the extentrequired by applicable law, flood certificates covering each Mortgaged Propertyin form and substance reasonably acceptable to the Collateral Agent, certifiedto the Collateral Agent in its capacity as such and certifying whether or notsuch Mortgaged Property is located in a flood hazard zone by reference to theapplicable FEMA map.

###  

The foregoing definition shall not require the creation or perfectionof pledges of or security interests in, or the obtaining of title insurance orsurveys with respect to, particular assets if and for so long as, in thereasonable judgment of the Collateral Agent (confirmed in writing by notice tothe Borrower), the cost of creating or perfecting such pledges or securityinterests in such assets or obtaining title insurance or surveys in respect ofsuch assets shall be excessive in view of the benefits to be obtained by theLenders therefrom.  The Collateral Agentmay grant extensions of time for the perfection of security interests in or theobtaining of title insurance with respect to particular assets (includingextensions beyond the Closing Date for the perfection of security interests inthe assets of the Loan Parties on such date) where it reasonably determines, inconsultation with the Borrower, that perfection cannot be accomplished withoutundue effort or expense by the time or times at which it would otherwise berequired by this Agreement or the Collateral Documents.

 

Notwithstanding the foregoing provisions of this definition or anythingin this Agreement or any other Loan Document to the contrary, Liens required tobe granted from time to time pursuant to the Collateral and Guarantee Requirementshall be subject to exceptions and limitations set forth in the CollateralDocuments as in effect on the Closing Date and, to the extent appropriate inthe applicable jurisdiction, as agreed between the Collateral Agent and theBorrower.

 

“**Collateral Documents**”means, collectively, the Security Agreement, the Mortgages, the CanadianSecurity Agreement, each of the mortgages, collateral assignments, SecurityAgreement Supplements, security agreements, pledge agreements or other similaragreements delivered to the Collateral Agent and the Lenders pursuant toSection 6.11 or Section 6.13 and each of the other agreements, instruments ordocuments that creates or purports to create a Lien in favor of the CollateralAgent for the benefit of the Secured Parties.

 

“**Commitment**” means, as toeach Lender, its obligation to make a Loan to the Borrower pursuant to Section2.01 in an aggregate principal amount not to exceed the amount set forthopposite such Lender’s name on Schedule 2.01 under the caption “Commitment” orin the Assignment and Assumption pursuant to which such Lender becomes a partyhereto, as 

 

14

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applicable, as such amount maybe adjusted from time to time in accordance with this Agreement.  The initial aggregate amount of theCommitments is $2,400,000,000.

 

“**Committed Loan Notice**”means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type tothe other, or (c) a continuation of Eurocurrency Rate Loans, pursuant toSection 2.02(a), which, if in writing, shall be substantially in the form ofExhibit A.

 

“**Compensation Period**” hasthe meaning specified in Section 2.12(c)(ii).

 

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

 

“**Consolidated Depreciation and AmortizationExpense**” means with respect to any Person for any period, the totalamount of depreciation and amortization expense, including the amortization ofdeferred financing fees of such Person and its Restricted Subsidiaries for suchperiod on a consolidated basis and otherwise determined in accordance withGAAP.

 

“**Consolidated Interest Expense**”means, with respect to any Person for any period, without duplication, the sumof:

 

### (a)           consolidatedinterest expense of such Person and its Restricted Subsidiaries for suchperiod, to the extent such expense was deducted (and not added back) incomputing Consolidated Net Income (including (i) amortization of original issuediscount resulting from the issuance of Indebtedness at less than par, (ii) allcommissions, discounts and other fees and charges owed with respect to lettersof credit or bankers acceptances, (iii) non-cash interest payments (butexcluding any non cash interest expense attributable to the movement in themark to market valuation of Hedging Obligations or other derivative instrumentspursuant to GAAP), (iv) the interest component of Capitalized LeaseObligations, and (v) net payments, if any, made (less net payments, if any,received) pursuant to interest rate Hedging Obligations with respect toIndebtedness, and excluding (v) penalties and interest related to taxes, (w)any Additional Interest with respect to the New Notes, (x) amortization ofdeferred financing fees, debt issuance costs, discounted liabilities,commissions, fees and expenses, (y) any expensing of bridge, commitment andother financing fees and (z) commissions, discounts, yield and other fees andcharges (including any interest expense) related to any Receivables Facility); *plus*

###  

### (b)           consolidatedcapitalized interest of such Person and its Restricted Subsidiaries for suchperiod, whether paid or accrued; less

###  

### (c)           interestincome for such period.

###  

For purposes of this definition, interest on a Capitalized LeaseObligation shall be deemed to accrue at an interest rate reasonably determinedby such Person to be the rate of interest implicit in such Capitalized LeaseObligation in accordance with GAAP.  Forpurposes of determining Consolidated Interest Expense for any period endingprior to the first anniversary of the Closing Date, Consolidated InterestExpense shall be $92.5 million for the fiscal quarter ended January 28, 2006,$91.4 million for the fiscal quarter ended April 29, 2006 and $92.5

 

15

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million for the fiscal quarterended July 29, 2006; *provided*that the foregoing amounts shall be subject to pro forma adjustment ascontemplated by the definition of “Fixed Charge Coverage Ratio” for relevantSpecified Transactions occurring after the Closing Date.

 

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

 

### (a)           anyafter-tax effect of extraordinary, non–recurring or unusual gains or losses(less all fees and expenses relating thereto) or expenses, Transaction Expensesto the extent incurred on or prior to December 31, 2007, severance, relocationcosts, costs related to the Perfect Store Initiative, Hybrid DistributionNetwork Costs, Public Company Costs, integration costs, pre-opening, opening,consolidation and closing costs for facilities (including Stores), signing,retention or completion bonuses, transition costs, costs incurred in connectionwith acquisitions after the Closing Date, restructuring costs, Specified LegalExpenses and curtailments or modifications to pension and post–retirementemployee benefit plans shall be excluded,

###  

### (b)           theNet Income for such period shall not include the cumulative effect of a changein accounting principles during such period,

###  

### (c)           anynet after-tax gains or losses on disposal of disposed, abandoned ordiscontinued operations shall be excluded,

###  

### (d)           anyafter–tax effect of gains or losses (less all fees and expenses relatingthereto) attributable to asset dispositions other than in the ordinary courseof business, as determined in good faith by the Borrower, shall be excluded,

###  

### (e)           theNet Income for such period of any Person that is not a Subsidiary, or is anUnrestricted Subsidiary, or that is accounted for by the equity method ofaccounting, shall be excluded; *provided*that Consolidated Net Income of the Borrower shall be increased by the amountof dividends or distributions or other payments that are actually paid in cash(or to the extent converted into cash) to the referent Person or a RestrictedSubsidiary thereof in respect of such period by such Person,

###  

### (f)            [Reserved],

###  

### (g)           effectsof adjustments (including the effects of such adjustments pushed down to theBorrower and its Restricted Subsidiaries) in the merchandise inventory,property and equipment, intangible assets, goodwill, deferred revenue and debtline items in such Person’s consolidated financial statements pursuant to GAAPresulting from the application of purchase accounting in relation to theTransaction or any consummated acquisition or the amortization or write-off ofany amounts thereof, net of taxes, shall be excluded,

###  

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### (h)           anyafter–tax effect of income (loss) from the early extinguishment or conversionof Indebtedness or Hedging Obligations or other derivative instruments shall beexcluded,

###  

### (i)            anyimpairment charge or asset write-off or write-down, in each case, pursuant toGAAP and the amortization of intangibles arising pursuant to GAAP shall beexcluded,

###  

### (j)            anynon-cash compensation charge or expense including any such charge or expensearising from the grant of stock appreciation or similar rights, stock options,restricted stock or other equity-incentive programs shall be excluded,

###  

### (k)           anyfees and expenses incurred during such period, or any amortization thereof forsuch period, in connection with any acquisition, Investment, Asset Sale,issuance or repayment of Indebtedness, issuance of Equity Interests,refinancing transaction or amendment or modification of any debt instrument (ineach case, including any such transaction consummated prior to the Closing Dateand any such transaction undertaken but not completed) and any charges ornon-recurring merger costs incurred during such period as a result of any suchtransaction shall be excluded,

###  

### (l)            accrualsand reserves that are established within twelve months after the Closing Datethat are so required to be established as a result of the Transaction inaccordance with GAAP shall be excluded,

###  

### (m)          anynet gain or loss resulting from currency translation gains or losses related tocurrency remeasurements of Indebtedness (including any net loss or gainresulting from hedge agreements for currency exchange risk) and any foreigncurrency translation gains or losses shall be excluded, and

###  

### (n)           anyunrealized net gains and losses resulting from Hedging Obligations and theapplication of Statement of Financial Accounting Standards No. 133 shall beexcluded.

###  

In addition, to the extent not already included in the Net Income ofsuch Person and its Restricted Subsidiaries, notwithstanding anything to thecontrary in the foregoing, Consolidated Net Income shall include the amount ofproceeds received from business interruption insurance and reimbursements ofany expenses and charges that are covered by indemnification or otherreimbursement provisions in connection with any Permitted Investment or anysale, conveyance, transfer or other disposition of assets permitted hereunder.

 

Notwithstanding the foregoing, for the purpose of Section 7.02 only(other than Section 7.02(a)(iii)(D)), there shall be excluded from ConsolidatedNet Income any income arising from any sale or other disposition of RestrictedInvestments made by the Borrower and its Restricted Subsidiaries, anyrepurchases and redemptions of Restricted Investments from the Borrower and itsRestricted Subsidiaries, any repayments of loans and advances which constituteRestricted Investments by the Borrower or any of its Restricted Subsidiaries,any sale of the stock of an Unrestricted Subsidiary or any distribution ordividend from an Unrestricted 

 

17

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Subsidiary, in each case onlyto the extent such amounts increase the amount of Restricted Payments permittedpursuant to Section 7.02(a)(iii)(D).

 

“**Consolidated Secured Debt Ratio**”means, as of any date of determination, the ratio of (a) Consolidated TotalIndebtedness of the Borrower and its Restricted Subsidiaries that is secured byLiens as at the last day of the Relevant Reference Period to (b) the Borrower’sEBITDA for the Relevant Reference Period, in each case with such proformaadjustments to Consolidated Total Indebtedness (other than Indebtedness under arevolving credit facility) and EBITDA as are appropriate and consistent withthe proforma adjustment provisions set forth in the definitionof “Fixed Charge Coverage Ratio”; *provided*that (x) in the event that any Indebtedness under a revolving credit facilityis incurred after the last day of the Relevant Reference Period ended prior tosuch date of determination to finance an Acquisition, an Investment or anyother Restricted Payment (which incurrence shall be notified to theAdministrative Agent as required by Section 6.02(h)), (i) each IndividualMonthly Balance for a fiscal month included in such Relevant Reference Periodand ended prior to the date of the respective incurrence of such Indebtednessshall be increased by the aggregate principal amount of all such Indebtednessincurred to finance such Acquisition, Investment or Restricted Payment, as thecase may be, (ii) the Average Monthly Balance included in the determination ofConsolidated Total Indebtedness as at the last day of such Relevant ReferencePeriod shall be calculated using each such Individual Monthly Balance as soincreased, and (iii) Consolidated Total Indebtedness as at the last day of suchRelevant Reference Period shall be recalculated to give proformaeffect to the adjustments contemplated by preceding clauses (i) and (ii), and(y) in the event that any Indebtedness under a revolving credit facility isrepaid after the last day of the Relevant Reference Period ended prior to suchdate of determination with the net cash proceeds of a Material Disposition (andis notified to the Administrative Agent pursuant to a certificate deliveredpursuant to Section 6.02(h)), (i) each Individual Monthly Balance for a fiscalmonth included in such Relevant Reference Period and ended prior to the date ofthe respective repayment of such Indebtedness shall be decreased by theaggregate principal amount of all such Indebtedness so repaid with the net cashproceeds of such Material Disposition, (ii) the Average Monthly Balanceincluded in the determination of Consolidated Total Indebtedness as at the lastday of such Relevant Reference Period shall be calculated using each suchIndividual Monthly Balance as so decreased, and (iii) Consolidated TotalIndebtedness as at the last day of such Relevant Reference Period shall berecalculated to give proforma effect to the adjustmentscontemplated by preceding clauses (i) and (ii) (it being understood that anotice delivered in good faith by a Responsible Officer of the Borrowerpursuant to Section 6.02(h), and any judgment made in good faith by aResponsible Officer of the Borrower that no notice is required to be deliveredpursuant to the terms of Section 6.02(h) in connection with a given incurrenceor repayment of Indebtedness under a revolving credit facility (e.g.,because proceeds of a revolving credit facility are not then being applied tofinance an Acquisition, Investment or other Restricted Payment), shall beconclusive for purposes of any determination of an increase or decrease of theAverage Monthly Balance pursuant to this proviso).

 

“**Consolidated Total Indebtedness**”means, as at any date of determination, an amount equal to the remainder of (i)the sum of (a) the aggregate amount of all outstanding Indebtedness of theBorrower and its Restricted Subsidiaries on a consolidated basis consisting ofIndebtedness for borrowed money, Obligations in respect of Capitalized LeaseObligations and debt obligations evidenced by promissory notes, bonds,debentures, letters of credit, bankers’ 

 

18

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acceptances and similarinstruments (and excluding, for the avoidance of doubt, (x) any undrawn lettersof credit and bankers’ acceptances and reimbursement obligations in respect ofcommercial and trade letters of credit and (y) all obligations relating toReceivables Facilities), (b) the aggregate amount of all outstandingDisqualified Stock of the Borrower and all Preferred Stock of its RestrictedSubsidiaries on a consolidated basis, with the amount of such DisqualifiedStock and Preferred Stock equal to the greater of their respective voluntary orinvoluntary liquidation preferences and maximum fixed repurchase prices, ineach case determined on a consolidated basis in accordance with GAAP, and (c)any Contingent Obligations of the Borrower and its Restricted Subsidiaries inrespect of the obligations described in clauses (a) and (b) above, *less* (ii) the aggregate amount ofUnrestricted cash and Cash Equivalents included on the consolidated balancesheet of the Borrower and any Restricted Subsidiaries as of such date; *provided* that Indebtedness of the Borrowerand its Restricted Subsidiaries under any revolving credit facility as at anydate of determination included in the calculation of Consolidated TotalIndebtedness shall be determined using the Average Monthly Balance of suchIndebtedness for the Relevant Reference Period (or, in the case of anydetermination of the Consolidated Total Leverage Ratio (other than as used inthe definitions of “Applicable Rate” and “Required Percentage”), theAlternative Average Monthly Balance of such Indebtedness for the RelevantReference Period).  For purposes hereof,the “**maximum fixed repurchase price**”of any Disqualified Stock or Preferred Stock that does not have a fixedrepurchase price shall be calculated in accordance with the terms of suchDisqualified Stock or Preferred Stock as if such Disqualified Stock orPreferred Stock were purchased on any date on which Consolidated TotalIndebtedness shall be required to be determined pursuant to this Agreement, andif such price is based upon, or measured by, the fair market value of suchDisqualified Stock or Preferred Stock, such fair market value shall be determinedreasonably and in good faith by the Borrower.

 

“**Consolidated Total Leverage Ratio**”means, as of any date of determination, the ratio of (a) Consolidated TotalIndebtedness of the Borrower and its Restricted Subsidiaries as at the last dayof the Relevant Reference Period to (b) the Borrower’s EBITDA for the RelevantReference Period, in each case with such proforma adjustments toConsolidated Total Indebtedness (other than a calculation thereof pursuant tothe definitions of “Applicable Rate” and “Required Percentage”) and EBITDA asare appropriate and consistent with the proforma adjustmentprovisions set forth in the definition of “Fixed Charge Coverage Ratio”.

 

“**Consolidated Working Capital**”means, at any date, the excess of (a) the sum of all amounts (other than cashand Cash Equivalents) that would, in conformity with GAAP, be set forthopposite the caption “total current assets” (or any like caption) on aconsolidated balance sheet of the Borrower and the Restricted Subsidiaries atsuch date over (b) the sum of all amounts that would, in conformity with GAAP,be set forth opposite the caption “total current liabilities” (or any likecaption) on a consolidated balance sheet of the Borrower and the RestrictedSubsidiaries on such date, including deferred revenue but excluding, withoutduplication, (i) the current portion of any Funded Debt, (ii) all Indebtednessconsisting of Loans, ABL Loans and Capitalized Lease Obligations, to the extentotherwise included therein, (iii) the current portion of interest and (iv) thecurrent portion of current and deferred income taxes.

 

“**Contingent Obligations**”means, with respect to any Person, any obligation of such Person guaranteeingany leases, dividends or other obligations that do not constitute Indebtedness(“**primary obligations**”) of anyother Person (the “**primary obligor**”)in any 

 

19

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manner, whether directly orindirectly, including, without limitation, any obligation of such Person,whether or not contingent, (a) to purchase any such primary obligation or anyproperty constituting direct or indirect security therefor, (b) to advance orsupply 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 thenet worth or solvency of the primary obligor, or (c)         to purchase property, securities or servicesprimarily for the purpose of assuring the owner of any such primary obligationof the ability of the primary obligor to make payment of such primaryobligation against loss in respect thereof.

 

“**Contract Consideration**”has the meaning set forth in the definition of “Excess Cash Flow”.

 

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

 

“**Control**” has the meaningspecified in the definition of “Affiliate.”

 

“**Cumulative Retained Excess Cash FlowAmount**” shall mean, at any date, an amount equal to the sum of theRetained Percentage of Excess Cash Flow (which may not be less than zero forany Excess Cash Flow Period) for all Excess Cash Flow Periods ending after theClosing Date and prior to such date.

 

“**Customs Broker Agreement**”means an agreement in substantially the form attached as Exhibit B to the ABLCredit Agreement (as in effect on the Closing Date) among a Loan Party, acustoms broker or other carrier, and the Collateral Agent, in which the customsbroker or other carrier acknowledges that it has control over and holds thedocuments evidencing ownership of the subject inventory or other property forthe benefit of the Collateral Agent, and agrees, upon notice from theCollateral Agent (which notice shall be delivered only upon the occurrence andduring the continuance of an Event of Default), to hold and dispose of thesubject inventory and other property solely as directed by the CollateralAgent.

 

“**DBNY**” means Deutsche BankAG New York Branch and any successor thereto by merger, consolidation orotherwise.

 

“**DBSI**” means Deutsche BankSecurities Inc. and any successor thereto by merger, consolidation orotherwise.

 

“**Debt Prepayment**” meansthe prepayment by the Borrower on the Closing Date of any and all Indebtednessoutstanding under the Existing Credit Agreement.

 

“**Debtor Relief Laws**” meansthe Bankruptcy Code of the United States, the Companies’ Creditors ArrangementAct of Canada, the Bankruptcy and Insolvency Act of Canada, and all otherliquidation, conservatorship, bankruptcy, assignment for the benefit ofcreditors, moratorium, rearrangement, receivership, insolvency, reorganization,or similar debtor relief Laws of the United States, Canada or other applicablejurisdictions from time to time in effect and affecting the rights of creditorsgenerally.

 

20

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

 

“**Default Rate**” means aninterest rate equal to (a) the Base Rate *plus*(b) the Applicable Rate, if any, applicable to Base Rate Loans *plus* (c) 2.0% per annum; *provided* that with respect to a EurocurrencyRate Loan, the Default Rate shall be an interest rate equal to the interestrate (including any Applicable Rate) otherwise applicable to such Loan *plus* 2.0% per annum, in each case, to thefullest extent permitted by applicable Laws.

 

“**Defaulting Lender**” meansany Lender that (a) has failed to fund any portion of the Loans required to befunded by it hereunder within one (1) Business Day of the date required to befunded by it hereunder, unless the subject of a good faith dispute orsubsequently cured, (b) has otherwise failed to pay over to the AdministrativeAgent or any other Lender any other amount required to be paid by it hereunderwithin one (1) Business Day of the date when due, unless the subject of a goodfaith dispute or subsequently cured, or (c) has been deemed insolvent or becomethe subject of a bankruptcy or insolvency proceeding.

 

“**Designated Non-cash Consideration**”means the fair market value of non-cash consideration received by the Borroweror a Restricted Subsidiary in connection with an Asset Sale that is sodesignated as Designated Non-cash Consideration pursuant to an Officer’sCertificate, setting forth the basis of such valuation, executed by theprincipal financial officer of the Borrower, less the amount of Cash Equivalentsreceived in connection with a subsequent sale, redemption, repurchase of orcollection or payment on, such Designated Non-cash Consideration.

 

“**Designated Preferred Stock**”means Preferred Stock of the Borrower or any parent company thereof (in eachcase other than Disqualified Stock) that is issued for cash (other than to aRestricted Subsidiary or an employee stock ownership plan or trust establishedby the Borrower or any of its Subsidiaries) and is so designated as DesignatedPreferred Stock, pursuant to an Officer’s Certificate executed by the principalfinancial officer of the Borrower or the applicable parent company thereof, asthe case may be, on the issuance date thereof, the cash proceeds of which areexcluded from the calculation set forth in Section 7.02(a)(iii).

 

“**Disqualified Stock**”means, with respect to any Person, any Capital Stock of such Person which, byits terms, or by the terms of any security into which it is convertible or forwhich it is putable or exchangeable, or upon the happening of any event, (a)matures or is mandatorily redeemable (other than solely as a result of a changeof control or asset sale, so long as any rights of the holders thereof upon theoccurrence of a change of control or asset sale event shall be subject to theprior repayment in full of the Loans and all other Obligations that are accruedand payable) pursuant to a sinking fund obligation or otherwise, or isredeemable at the option of the holder thereof (other than solely as a resultof a change of control or asset sale, so long as any rights of the holdersthereof upon the occurrence of a change of control or asset sale event shall besubject to the prior repayment in full of the Loans and all other Obligationsthat are accrued and payable), in whole or in part, or (b) provides for thescheduled payments of dividends in cash, in each case prior to the date 91 daysafter the earlier of the Maturity Date or the date Loans are no longeroutstanding; *provided, however*,that if such Capital Stock is issued to any plan for the benefit of employeesof the Borrower or its Subsidiaries or by any such plan 

 

21

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to such employees, such CapitalStock shall not constitute Disqualified Stock solely because it may be requiredto be repurchased by the Borrower or its Subsidiaries in order to satisfyapplicable statutory or regulatory obligations.

 

“**Disposition**” has themeaning set forth in the definition of “Excess Cash Flow”.

 

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

 

“**Domestic Subsidiary**”means (i) any Subsidiary that is organized under the Laws of the United States,any state thereof or the District of Columbia and (ii) unless otherwiseexpressly provided herein, each Canadian Subsidiary that, in the sole discretionof the Borrower, elects to become (and, upon such election, becomes) a CanadianSubsidiary Guarantor.

 

“**Domestic Subsidiary Guarantors**”means, collectively, each Domestic Subsidiary of the Borrower that is not aCanadian Subsidiary and that shall have entered into the Subsidiary Guarantyand complied with the requirements of clause (b) of the definition of “Collateraland Guarantee Requirement”.

 

“**EBITDA**” means, withrespect to any Person for any period, the Consolidated Net Income of suchPerson for such period

 

### (a)           increased(without duplication) by:

###  

#### (i)            provision for taxes based on income orprofits or capital, including, without limitation, state, franchise and similartaxes (such as the Pennsylvania capital tax and Texas margin tax) and foreign withholdingtaxes of such Person paid or accrued during such period deducted (and not addedback) in computing Consolidated Net Income; *plus*

####  

#### (ii)           Fixed Charges of such Person for such period*plus* bank fees and costs ofsurety bonds in connection with financing activities, *plus* amounts excluded from ConsolidatedInterest Expense as set forth in clauses (v), (w), (x), (y) and (z) in thedefinition thereof, to the extent the same were deducted (and not added back)in calculating such Consolidated Net Income; *plus*

####  

#### (iii)          Consolidated Depreciation and AmortizationExpense of such Person for such period to the extent the same was deducted (andnot added back) in computing Consolidated Net Income; *plus*

####  

#### (iv)          any expenses or charges (other thandepreciation or amortization expense) related to any Equity Offering, PermittedInvestment, acquisition, disposition, recapitalization or the incurrence ofIndebtedness permitted to be incurred by this Agreement (including arefinancing thereof) (whether or not successful), including (A) such fees,expenses or charges related to the offering of the New Notes, this Agreementand the ABL Credit Agreement and (B) any amendment or other modification of theNew Notes, this Agreement and the ABL Credit Agreement in each case, deducted(and not added back) in computing Consolidated Net Income; *plus*

####  

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#### (v)           the amount of any restructuring charge orreserve deducted (and not added back) in such period in computing ConsolidatedNet Income; *plus*

####  

#### (vi)          any other non cash charges, including (v) anywrite offs or write downs, (w) equity-based awards compensation expense, (x)losses on sales, disposals or abandonment of, or any impairment charge or assetwrite off related to, intangible assets, long-lived assets and investments indebt and equity securities, (y) all losses from investments recorded using theequity method, and (z) other non-cash charges, non-cash expenses or non-cashlosses, in each case reducing Consolidated Net Income for such period (*provided* that if any such non-cash chargesrepresent an accrual or reserve for potential cash items in any future period,the cash payment in respect thereof in such future period shall be subtractedfrom EBITDA to such extent, and excluding amortization of a prepaid cash itemthat was paid in a prior period); *plus*

####  

#### (vii)         the amount of any minority interest expenseconsisting of Subsidiary income attributable to minority equity interests ofthird parties in any non-Wholly Owned Subsidiary deducted (and not added back)in such period in calculating Consolidated Net Income; *plus*

####  

#### (viii)        the amount of management, monitoring,consulting and advisory fees (including termination fees) and relatedindemnities and expenses paid or accrued in such period to the Investors to theextent otherwise permitted under Section 7.07 and to the extent deducted (andnot added back) in such period in computing Consolidated Net Income; *plus*

####  

#### (ix)           the amount of net cost savings projected bythe Borrower in good faith to be realized as a result of specified actionstaken during such period (calculated on a pro forma basis as though such costsavings had been realized on the first day of such period), net of the amountof actual benefits realized during such period from such actions; *provided* that (x) such cost savings arereasonably identifiable and factually supportable, (y) such actions are takenwithin 36 months after the Closing Date and (z) the aggregate amount of costsavings added pursuant to this clause (ix) shall not exceed $25,000,000 for anyfour consecutive quarter period (which adjustments may be incremental to proforma adjustments made pursuant to the definition of “Fixed Charge CoverageRatio”); *plus*

####  

#### (x)            the amount of loss on sale of receivablesand related assets to the Receivables Subsidiary in connection with aReceivables Facility; *plus*

####  

#### (xi)           any costs or expense incurred by theBorrower or a Restricted Subsidiary pursuant to any management equity plan orstock option plan or any other management or employee benefit plan or agreementor any stock subscription or shareholder agreement, to the extent that suchcost or expenses are funded with cash proceeds contributed to the capital ofthe Borrower or net cash proceeds of an issuance of Equity Interests of the Borrower(other than 

 

23

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#### Disqualified Stock) solely to the extent that such net cash proceedsare excluded from the calculation set forth in Section 7.02(a)(iii); *plus*

####  

#### (xii)          any net loss from disposed or discontinuedoperations; *plus*

####  

#### (xiii)         cash receipts (or any netting arrangementsresulting in reduced cash expenditures) not representing EBITDA or Net Incomein any period to the extent non-cash gains relating to such income werededucted in the calculation of EBITDA pursuant to clause (b) below for anyprevious period and not added back; and

####  

### (b)           decreased(without duplication) by:  (i) non–cashgains increasing Consolidated Net Income of such Person for such period,excluding any non-cash gains to the extent they represent the reversal of anaccrual or reserve for a potential cash item that reduced EBITDA in any priorperiod and any non-cash gains with respect to cash actually received in a priorperiod so long as such cash did not increase EBITDA in such prior period, *plus*

###  

(ii)           anynet income from disposed or discontinued operations; and

 

### (c)           increasedor decreased by (without duplication), as applicable, any adjustments resultingfrom the application of FASB Interpretation No. 45 (Guarantees).

###  

For purposes of calculating EBITDA for any period, the impact ofchanges in estimates for inventory cost capitalization and the initial adoptionof an accounting policy for gift card breakage made in the fourth quarter offiscal year 2005 shall be excluded.

 

“**Eligible Assignee**” meansany Assignee permitted by and consented to in accordance with Section 10.07(b);*provided* that in any event, “EligibleAssignee” shall not include any natural person.

 

“**EMU**” means the economicand monetary union as contemplated in the Treaty on European Union.

 

“**Environmental Laws**” meansany and all Federal, state, provincial, local, and foreign statutes, Laws,regulations, ordinances, rules, judgments, orders, decrees, permits,concessions, grants, franchises, licenses, agreements or governmentalrestrictions relating to pollution, the protection of the environment, naturalresources, or, to the extent relating to exposure to Hazardous Materials, humanhealth or to the release of any materials into the environment, including thoserelated to Hazardous Materials, air emissions and discharges to waste or publicsystems.

 

“**Environmental Liability**”means any liability, contingent or otherwise (including any liability fordamages, costs of environmental remediation, fines, penalties or indemnities),of the Borrower, any other Loan Party or any of their respective Subsidiariesdirectly or indirectly resulting from or based upon (a) violation of anyEnvironmental Law, (b) the generation, use, handling, transportation, storage,treatment or disposal of any Hazardous Materials, (c) exposure to any HazardousMaterials, (d) the release or threatened release of any

 

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Hazardous Materials into the environment or (e) any contract, agreementor other consensual arrangement pursuant to which liability is assumed orimposed with respect to any of the foregoing.

 

“**Environmental Permit**”means any permit, approval, identification number, license or otherauthorization required under any Environmental Law.

 

“**Equity Contributions**”means the contribution of cash in an aggregate amount of not less than$1,630,000,000 to the MergerCos as common equity and/or preferred equity havingterms reasonably satisfactory to the Arrangers.

 

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

 

“**Equity Offering**” meansany public or private sale of common stock or Preferred Stock of the Borroweror any of its direct or indirect parent companies (excluding DisqualifiedStock), other than (a) public offerings with respect to the Borrower’s or anydirect or indirect parent company’s common stock registered on Form S-8; (b)issuances to any Subsidiary of the Borrower; and (c) any such public or privatesale that constitutes an Excluded Contribution.

 

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

 

“**ERISA Affiliate**” meansany trade or business (whether or not incorporated) that is under commoncontrol with any Loan Party within the meaning of Section 414 of the Code orSection 4001 of ERISA.

 

“**ERISA Event**” means, inthe case of a Plan or Multiemployer Plan subject to ERISA, (a) a ReportableEvent with respect to a Pension Plan; (b) a withdrawal by any Loan Party or anyERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during aplan year in which it was a substantial employer (as defined in Section4001(a)(2) of ERISA) or a cessation of operations that is treated as such awithdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawalby any Loan Party or any ERISA Affiliate from a Multiemployer Plan ornotification that a Multiemployer Plan is in reorganization; (d) the filing ofa notice of intent to terminate, the treatment of a Pension Plan amendment as atermination under Sections 4041 or 4041A of ERISA, or the commencement ofproceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)an event or condition which constitutes grounds under Section 4042 of ERISA forthe termination of, or the appointment of a trustee to administer, any PensionPlan or Multiemployer Plan; (f) the imposition of any liability under Title IVof ERISA, other than for PBGC premiums due but not delinquent under Section4007 of ERISA, upon any Loan Party or any ERISA Affiliate or (g) the failure ofany Pension Plan to satisfy the minimum funding standard required for any planyear or part thereof under Section 412 of the Code or Section 302 of ERISA or awaiver of such standard or extension of any amortization period is sought orgranted under Section 412 of the Code or Section 303 or 304 of ERISA.

 

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

 

“**Eurocurrency Rate**”means (a) the offered quotation to first-class banks in the New Yorkinterbank Eurodollar market by the Administrative Agent for Dollar deposits ofamounts in immediately available funds comparable to the outstanding principalamount of the Eurocurrency Rate Loan of the Administrative Agent (in itscapacity as a Lender) (or, if the Administrative Agent is not a Lender withrespect thereto, taking the average principal amount of the Eurocurrency RateLoans then being made by the various Lenders pursuant thereto)) with maturitiescomparable to the Interest Period applicable to such Eurocurrency Rate Loancommencing two Business Days thereafter as of 10:00 A.M. (New York Citytime) on the applicable date of determination, divided (and rounded upward tothe nearest 1/16 of 1%) by (b) a percentage equal to 100% *minus* the then stated maximum rate of all reserverequirements (including, without limitation, any marginal, emergency,supplemental, special or other reserves required by applicable law) applicableto any member bank of the Federal Reserve System in respect of Eurocurrencyfunding or liabilities as defined in Regulation D (or any successor category ofliabilities under Regulation D).

 

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

 

“**Event of Default**”has the meaning specified in Section 8.01.

 

“**Excess Cash Flow**”means, for any period, an amount equal to the excess of:

 

### (a)           thesum, without duplication, of:

###  

#### (i)            ConsolidatedNet Income for such period,

####  

#### (ii)           anamount equal to the amount of all non-cash charges incurred during such period,to the extent deducted in arriving at such Consolidated Net Income,

####  

#### (iii)          decreasesin Consolidated Working Capital and long-term account receivables for suchperiod (other than any such decreases arising from Acquisitions by the Borrowerand the Restricted Subsidiaries completed during such period), and

####  

#### (iv)          anamount equal to the aggregate net non-cash loss on the sale, lease, transfer orother disposition (each, a “**Disposition**”)of assets by the Borrower and its Restricted Subsidiaries during such period(other than Dispositions in the ordinary course of business) to the extentdeducted in arriving at such Consolidated Net Income; over

####  

### (b)           thesum, without duplication, of:

###  

#### (i)            anamount equal to the amount of all non-cash credits included in arriving at suchConsolidated Net Income and cash charges added back to

 

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#### ConsolidatedNet Income pursuant to clauses (a) through (n) of the definition thereof,

####  

#### (ii)           withoutduplication of amounts deducted pursuant to clause (xi) below in prior fiscalyears, the amount of Capital Expenditures made in cash during such period,except to the extent that such Capital Expenditures were financed with theproceeds of Indebtedness of the Borrower or the Restricted Subsidiaries,

####  

#### (iii)          theaggregate amount of all principal payments of Indebtedness of the Borrower andthe Restricted Subsidiaries (including (A) the principal component ofpayments in respect of Capitalized Lease Obligations and (B) the amount ofany mandatory prepayment of Loans pursuant to Section 2.05(c) withthe proceeds of an Asset Sale, to the extent such Asset Sale resulted in anincrease to Consolidated Net Income and not in excess of the amount of suchincrease, but excluding all other prepayments of Loans) made during such period(other than in respect of any revolving credit facility to the extent there isnot an equivalent permanent reduction in commitments thereunder), except to theextent financed with the proceeds of other Indebtedness of the Borrower or theRestricted Subsidiaries,

####  

#### (iv)          anamount equal to the aggregate net non-cash gain on the Disposition of assets bythe Borrower and the Restricted Subsidiaries during such period (other thanDispositions in the ordinary course of business) to the extent included inarriving at such Consolidated Net Income,

####  

#### (v)           increasesin Consolidated Working Capital and long-term account receivables for suchperiod (other than any such increases arising from Acquisitions by the Borrowerand the Restricted Subsidiaries during such period),

####  

#### (vi)          cashpayments by the Borrower and the Restricted Subsidiaries during such period inrespect of long-term liabilities of the Borrower and the RestrictedSubsidiaries other than Indebtedness,

####  

#### (vii)         [Reserved],

####  

#### (viii)        theamount of Restricted Payments paid during such period pursuant to Section 7.02(b)(xi),to the extent such Restricted Payments were financed with internally generatedcash flow of the Borrower and the Restricted Subsidiaries,

####  

#### (ix)           theaggregate amount of expenditures actually made by the Borrower and theRestricted Subsidiaries in cash during such period (including expenditures forthe payment of financing fees), to the extent that such expenditures are notexpensed during such period,

####  

#### (x)            theaggregate amount of any premium, make-whole or penalty payments actually paidin cash by the Borrower and the Restricted Subsidiaries

 

27

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#### during suchperiod that are required to be made in connection with any prepayment ofIndebtedness,

####  

#### (xi)           withoutduplication of amounts deducted from Excess Cash Flow in prior periods, theaggregate consideration (to the extent to be funded by internally generatedcash) required to be paid in cash by the Borrower or any of the RestrictedSubsidiaries pursuant to binding contracts (the “**Contract Consideration**”) entered into prior to or during suchperiod relating to Acquisitions or Capital Expenditures to be consummated ormade during the period of four consecutive fiscal quarters of the Borrowerfollowing the end of such period, *provided* thatto the extent the aggregate amount of internally generated cash actuallyutilized to finance such Acquisitions or Capital Expenditures during suchperiod of four consecutive fiscal quarters is less than the ContractConsideration, the amount of such shortfall shall be added to the calculationof Excess Cash Flow at the end of such period of four consecutive fiscalquarters, and

####  

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

####  

“**Excess Cash Flow Period**”shall mean each fiscal year of the Borrower, commencing with the fiscal year ofthe Borrower ending on February 2, 2008.

 

“**Excess Proceeds**”has the meaning set forth in Section 2.05(c)(ii).

 

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

 

“**Excluded Contribution**”means net cash proceeds, marketable securities or Qualified Proceeds receivedby the Borrower from (a) contributions to its common equity capital, and (b) thesale (other than to a Subsidiary of the Borrower or to any management equityplan or stock option plan or any other management or employee benefit plan oragreement of the Borrower) of Capital Stock (other than Disqualified Stock andDesignated Preferred Stock) of the Borrower, in each case designated asExcluded Contributions pursuant to an Officer’s Certificate executed by theprincipal financial officer of the Borrower on the date such capital contributionsare made or the date such Equity Interests are sold, as the case may be,which are excluded from the calculation set forth in Section 7.02(a)(iii) *provided* that the term “Excluded Contribution” shall notinclude the net cash proceeds from any Permitted Cure Issuance.

 

“**Excluded Subsidiary**”means (a) any Subsidiary that is not a Wholly-Owned Subsidiary, (b) anyReceivables Subsidiary, (c) each Subsidiary listed on Schedule 1.01Ehereto, (d) any Subsidiary that is prohibited by applicable Law fromguaranteeing the Obligations, (e) any Domestic Subsidiary that is aSubsidiary of a Foreign Subsidiary, (f) any Restricted Subsidiary acquiredpursuant to an Acquisition permitted hereunder financed with SecuredIndebtedness incurred pursuant to Section 7.03(b)(xix) and each RestrictedSubsidiary thereof that guarantees such Indebtedness; *provided*that each such Restricted Subsidiary shall cease to

 

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be an Excluded Subsidiary under this clause (f) ifsuch Secured Indebtedness is repaid or becomes unsecured or if such RestrictedSubsidiary ceases to guarantee such Secured Indebtedness, as applicable, (g) anyImmaterial Subsidiary and (h) any other Subsidiary with respect to which,in the reasonable judgment of the Administrative Agent (confirmed in writing bynotice to the Borrower), the cost or other consequences (including any adversetax consequences) of providing a Guaranty shall be excessive in view of thebenefits to be obtained by the Lenders therefrom.

 

“**Existing Credit Agreement**”means that certain Credit Agreement, dated as of, November 18, 2005, amongthe Borrower, the lenders referred to therein, and Bank of America, N.A. asAdministrative Agent.

 

“**Fair Market Value**”means, with respect to any asset or liability, the fair market value of suchasset or liability as determined by the Borrower in good faith; *provided* that if the fair market value is equal to orexceeds $100.0 million, such determination shall be made by the Board ofDirectors of the Borrower.

 

“**Federal Funds Rate**”means, for any period, a fluctuating interest rate equal for each day duringsuch period to the weighted average of the rates on overnight Federal Fundstransactions with members of the Federal Reserve System arranged by FederalFunds brokers, as published for such day (or, if such day is not a BusinessDay, for the next preceding Business Day) by the Federal Reserve Bank of NewYork, or, if such rate is not so published for any day which is a Business Day,the average of the quotations for such day on such transactions received by theAdministrative Agent from three Federal Funds brokers of recognized standingselected by the Administrative Agent.

 

“**Fixed Charge CoverageRatio**” means, with respect to any Person for any Relevant ReferencePeriod, the ratio of EBITDA of such Person for such Relevant Reference Periodto the Fixed Charges of such Person for such Relevant Reference Period. In theevent that the Borrower or any Restricted Subsidiary incurs, assumes,guarantees, redeems, retires or extinguishes any Indebtedness (other thanIndebtedness incurred or repaid under any revolving credit facility in theordinary course of business for working capital purposes) or issues or redeemsDisqualified Stock or Preferred Stock subsequent to the commencement of theRelevant Reference Period for which the Fixed Charge Coverage Ratio is beingcalculated but prior to or simultaneously with the event for which thecalculation of the Fixed Charge Coverage Ratio is made (the “**Fixed Charge Coverage Ratio Calculation Date**”), then theFixed Charge Coverage Ratio shall be calculated giving proformaeffect to such incurrence, assumption, guarantee, redemption, retirement orextinguishment of Indebtedness, or such issuance or redemption of DisqualifiedStock or Preferred Stock, as if the same had occurred at the beginning of theapplicable Relevant Reference Period.

 

For purposes of making the computation referred toabove, Investments, acquisitions, dispositions, amalgamations, mergers, andconsolidations (as determined in accordance with GAAP) that have been made bythe Borrower or any of its Restricted Subsidiaries during the RelevantReference Period or subsequent to such Relevant Reference Period and on orprior to or simultaneously with the Fixed Charge Coverage Ratio CalculationDate shall be calculated on a proforma basis assuming that allsuch Investments, acquisitions,

 

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dispositions, amalgamations, mergers andconsolidations (and the change in any associated fixed charge obligations andthe change in EBITDA resulting therefrom) had occurred on the first day of theRelevant Reference Period. If since the beginning of such Relevant ReferencePeriod any Person that subsequently became a Restricted Subsidiary or wasmerged, amalgamated or consolidated with or into the Borrower or any of itsRestricted Subsidiaries since the beginning of such Relevant Reference Periodshall have made any Investment, acquisition, disposition, amalgamation, mergeror consolidation that would have required adjustment pursuant to thisdefinition, then the Fixed Charge Coverage Ratio shall be calculated giving proforma effect thereto for such Relevant Reference Period as if such Investment,acquisition, disposition, merger and consolidation had occurred at thebeginning of the applicable Relevant Reference Period.

 

For purposes of this definition, whenever proformaeffect is to be given to an Investment, acquisition, disposition, amalgamation,merger or consolidation (including the Transaction) and the amount of income orearnings relating thereto, the proforma calculations shall bemade in good faith by a responsible financial or accounting officer of theBorrower (and may include, for the avoidance of doubt, cost savings andoperating expense reductions resulting from such Investment, acquisition,disposition, amalgamation, merger or consolidation (including the Transaction)which is being given proforma effect that have been or areexpected to be realized). If any Indebtedness bears a floating rate of interestand is being given proforma effect, the interest on suchIndebtedness shall be calculated as if the rate in effect on the Fixed ChargeCoverage Ratio Calculation Date had been the applicable rate for the RelevantReference Period (taking into account any Hedging Obligations applicable tosuch Indebtedness). Interest on a Capitalized Lease Obligation shall be deemedto accrue at an interest rate reasonably determined by a responsible financialor accounting officer of the Borrower to be the rate of interest implicit insuch Capitalized Lease Obligation in accordance with GAAP. Interest onIndebtedness that may optionally be determined at an interest rate basedupon a factor of a prime or similar rate, a eurocurrency interbank offeredrate, or other rate, shall be deemed to have been based upon the rate actuallychosen, or, if none, then based upon such optional rate chosen as the Borrower may designate.

 

“**Fixed Charge CoverageRatio Calculation Date**” has the meaning specified in the definitionof “Fixed Charge Coverage Ratio”.

 

“**Fixed Charge CoverageRatio Incurrence Test**” means, at a given date of determination, thatthe Fixed Charge Coverage Ratio for the Relevant Reference Period would havebeen at least 2.00 to 1.00, determined on a proforma basis aftergiving effect to the incurrence of $1.00 of additional Indebtedness or theissuance of Disqualified Stock or Preferred Stock with a liquidation preferenceof $1.00 (including a proforma application of the net proceedstherefrom), as if the additional Indebtedness had been incurred, or theDisqualified Stock had been issued, as the case may be, and theapplication of the proceeds therefrom had occurred at the beginning of suchRelevant Reference Period.

 

“**Fixed Charges**”means, with respect to any Person for any period, the sum, without duplication,of (a) Consolidated Interest Expense of such Person for such period; (b) allcash dividends or other distributions paid (excluding items eliminated inconsolidation) on any series of Preferred Stock during such period; and (c) allcash dividends or other distributions paid 

 

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(excluding items eliminated in consolidation) on any series ofDisqualified Stock during such period.

 

“**Foreign Lender**”has the meaning specified in Section 10.15(a).

 

“**Foreign Subsidiary**”means any direct or indirect Restricted Subsidiary of the Borrower which (a) isnot a Domestic Subsidiary or (b) is set forth on Schedule 1.01F.

 

“**FRB**” means theBoard of Governors of the Federal Reserve System of the United States or anysuccessor thereto.

 

“**Fund**” means anyPerson (other than a natural person) that is engaged in making, purchasing,holding or otherwise investing in commercial loans and similar extensions ofcredit in the ordinary course.

 

“**Funded Debt**”means all Indebtedness of the Borrower and the Restricted Subsidiaries forborrowed money that matures more than one year from the date of its creation ormatures within one year from such date that is renewable or extendable, at theoption of such Person, to a date more than one year from such date or arisesunder a revolving credit or similar agreement that obligates the lender orlenders to extend credit during a period of more than one year from such date,including Indebtedness in respect of the Loans.

 

“**GAAP**” meansgenerally accepted accounting principles in the United States which are ineffect (a) for purposes of Sections 5.05(a)(i), 6.01 and 6.09 only, forthe accounting period in respect of which reference to GAAP is being made, and (b) forall other purposes, on the Closing Date.

 

“**Governmental Authority**”means any nation or government, any state provincial, municipal or otherpolitical subdivision thereof, any agency, authority, instrumentality, regulatorybody, court, administrative tribunal, central bank or other entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrative powersor functions of or pertaining to government.

 

“**Granting Lender**”has the meaning specified in Section 10.07(h).

 

“**guarantee**”means a guarantee (other than by endorsement of negotiable instruments forcollection in the ordinary course of business), direct or indirect, in anymanner (including letters of credit and reimbursement agreements in respectthereof), of all or any part of any Indebtedness or other obligations.

 

“**Guarantors**”means the Borrower, each Subsidiary Guarantor and, on and after the executionand delivery of the Holdco Guaranty, Holdco.

 

“**Guaranty**”means, collectively, the Borrower Guaranty, the Subsidiary Guaranty, theCanadian Guarantee and, on and after the execution and delivery thereof, theHoldco Guaranty.

 

“**Guaranty Supplement**”has the meaning provided in the respective Guaranty.

 

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

 

“**Hedge Bank**”means any Person that is a Lender or an Affiliate of a Lender at the time itenters into a Secured Hedge Agreement, in its capacity as a party thereto, andsuch Person’s successors and assigns.

 

“**Hedging Obligations**”means, with respect to any Person, the obligations of such Person under anyinterest rate swap agreement, interest rate cap agreement, interest rate collaragreement, commodity swap agreement, commodity cap agreement, commodity collaragreement, foreign exchange contract, currency swap agreement or similaragreement providing for the transfer or mitigation of interest rate, commodityprice or currency risks either generally or under specific contingencies.

 

“**Highfields**”means Highfields Capital I LP, Highfields Capital II LP and Highfields CapitalIII LP and each Affiliate thereof (excluding portfolio companies of any of theforegoing).

 

“**Holdco**” means aholding company to be formed as the direct parent company of the Borrower, theprimary purpose of which is to own the Capital Stock of the Borrower.

 

“**Holdco Guaranty**”means  the guaranty to be made (or, afterexecution and delivery, made) by Holdco in favor of the Administrative Agent onbehalf of the Secured Parties substantially in the form of Exhibit F-1(with appropriate modifications to reference Holdco) and otherwise in a form andsubstance reasonably satisfactory to the Administrative Agent.

 

“**Hybrid DistributionNetwork Costs**” shall mean costs associated with the implementationof enhancements to the Borrower’s and its Restricted Subsidiaries’ distributionnetwork intended to increase the Borrower’s and its Restricted Subsidiaries’basic merchandise inventories that are shipped through distribution centers.

 

“**incur**” has themeaning set forth in Section 7.03.

 

“**Immaterial Subsidiary**”means a Subsidiary of the Borrower for which (a) the assets of suchSubsidiary constitute less than or equal to 1% of the total assets of theBorrower and its Restricted Subsidiaries on a consolidated basis andcollectively with all Immaterial Subsidiaries, less than or equal to 5% of thetotal assets of the Borrower and its Restricted Subsidiaries on a consolidatedbasis, and (b) the revenues of such Subsidiary account for less than orequal to 1% of the total revenues of the Borrower and its RestrictedSubsidiaries on a consolidated basis and collectively with all ImmaterialSubsidiaries, less than or equal to 5% of the total revenues of the Borrowerand its Restricted Subsidiaries on a consolidated basis.

 

“**Indebtedness**”means, with respect to any Person at a particular time, without duplication:

 

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### (a)           anyindebtedness (including principal and premium) of such Person, whether or notcontingent:

###  

#### (i)            inrespect of borrowed money;

####  

#### (ii)           evidencedby bonds, notes, debentures or similar instruments or letters of credit orbankers’ acceptances (or, without duplication, reimbursement agreements inrespect thereof);

####  

#### (iii)          representingthe balance deferred and unpaid of the purchase price of any property orservices (including Capitalized Lease Obligations), except (A) any suchbalance that constitutes an obligation in respect of a commercial letter ofcredit, a trade payable or similar obligation to a trade creditor, in each caseaccrued in the ordinary course of business and (B) any earn-outobligations until such obligation becomes a liability on the balance sheet ofsuch Person in accordance with GAAP and is not paid after becoming due andpayable; or

####  

#### (iv)          representingany Hedging Obligations;

####  

if and to theextent that any of the foregoing Indebtedness (other than letters of credit andHedging Obligations) would appear as a liability upon a balance sheet(excluding the footnotes thereto) of such Person prepared in accordance withGAAP;

 

### (b)           tothe extent not otherwise included, any obligation by such Person to be liablefor, or to pay, as obligor, guarantor or otherwise, on the obligations of thetype referred to in clause (a) of a third Person (whether or not suchitems would appear upon the balance sheet of the such obligor or guarantor),other than by endorsement of negotiable instruments for collection in theordinary course of business;

###  

### (c)           tothe extent not otherwise included, the obligations of the type referred to inclause (a) of a third Person secured by a Lien on any asset owned by suchfirst Person, whether or not such Indebtedness is assumed by such first Personand whether or not such obligations would appear upon the balance sheet of suchPerson; *provided* that the amount of suchIndebtedness will be the lesser of the fair market value of such asset at thedate of determination and the amount of Indebtedness so secured;

###  

### (d)           themaximum amount (after giving effect to any prior drawings or reductions which may havebeen reimbursed) of all letters of credit (other than commercial letters ofcredit), bankers’ acceptances, bank guaranties, surety bonds, performance bondsand similar instruments issued or created by or for the account of such Person;and

###  

### (e)           allobligations of such Person in respect of Disqualified Capital Stock;

###  

*provided, however*, that notwithstanding the foregoing, Indebtednessshall be deemed not to include (x) Contingent Obligations incurred in theordinary course of business, (y) obligations under or in respect of ReceivablesFacilities or (z) obligations under or in respect of commercial letters ofcredit.

 

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

 

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

 

“**Independent FinancialAdvisor**” means an accounting, appraisal, investment banking firm orconsultant to Persons engaged in Similar Businesses of nationally recognizedstanding that is, in the good faith judgment of the Borrower, qualified to perform thetask for which it has been engaged.

 

“**Individual Monthly Balance**”means, with respect to any Indebtedness incurred by the Borrower and/or itsRestricted Subsidiaries under a revolving credit facility during any fiscalmonth of the Borrower, the quotient of (a) the sum of the aggregateoutstanding principal amount of all such Indebtedness at the end of each day ofsuch fiscal month divided by (b) the number of days in such fiscal month.

 

“**Information**”has the meaning specified in Section 10.08.

 

“**Intercompany Note**”means the Intercompany Note, substantially in the form attached as Exhibit J.

 

“**Intercreditor Agreement**”means the Intercreditor Agreement executed by the Collateral Agent, the ABLCollateral Agent and the Loan Parties, substantially in the form of Exhibit H.

 

“**Interest Payment Date**”means, (a) as to any Loan other than a Base Rate Loan, the last day of eachInterest Period applicable to such Loan and the Maturity Date; *provided* that if any Interest Period for a Eurocurrency RateLoan exceeds three months, the respective dates that fall every three monthsafter the beginning of such Interest Period shall also be Interest PaymentDates; and (b) as to any Base Rate Loan, the last Business Day of eachJanuary, April, July and October and the Maturity Date.

 

“**Interest Period**”means, as to each Eurocurrency Rate Loan, the period commencing on the datesuch Eurocurrency Rate Loan is disbursed or converted to or continued as aEurocurrency Rate Loan and ending on the date one, two, three or six monthsthereafter, or to the extent agreed to by each Lender of such Eurocurrency RateLoan, nine or twelve months or less than one month thereafter, as selected bythe Borrower in its Committed Loan Notice; *provided* that:

 

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

###  

### (b)           anyInterest Period that begins on the last Business Day of a calendar month (or ona day for which there is no numerically corresponding day in the calendar monthat the end of such Interest Period) shall end on the last Business Day of thecalendar month at the end of such Interest Period; and

 

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### (c)           no Interest Period shall extend beyond theMaturity Date.

###  

“**Investment Grade Rating**”means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s andBBB– (or the equivalent) by S&P, or, in either case, an equivalent ratingby any other Rating Agency.

 

“**Investment GradeSecurities**” means (a) securities issued or directly and fullyguaranteed or insured by the United States government or any agency orinstrumentality thereof (other than Cash Equivalents), (b) debt securitiesor debt instruments with an Investment Grade Rating, but excluding any debtsecurities or instruments constituting loans or advances among the Borrower andits Subsidiaries, (c) investments in any fund that invests exclusively ininvestments of the type described in clauses (a) and (b) which fund may alsohold immaterial amounts of cash pending investment or distribution, and (d) correspondinginstruments in countries other than the United States customarily utilized forhigh quality investments.

 

“**Investments**”means, with respect to any Person, all investments by such Person in otherPersons (including Affiliates) in the form of loans (includingguarantees), advances or capital contributions (excluding accounts receivable,credit card and debit card receivables constituting Cash Equivalents, tradecredit, advances to customers, commission, travel and similar advances toofficers and employees, in each case made in the ordinary course of business),purchases or other acquisitions for consideration of Indebtedness, EquityInterests or other securities issued by any other Person and investments thatare required by GAAP to be classified on the balance sheet (excluding thefootnotes) of the Borrower in the same manner as the other investments includedin this definition to the extent such transactions involve the transfer of cashor other property. For purposes of the definition of “Unrestricted Subsidiary”and Section 7.02, (a) “Investments” shall include the portion(proportionate to the Borrower’s equity interest in such Subsidiary) of thefair market value of the net assets of a Subsidiary of the Borrower at the timethat such Subsidiary is designated an Unrestricted Subsidiary; *provided, however*, that upon a redesignation of suchSubsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continueto have a permanent “Investment” in an Unrestricted Subsidiary in an amount (ifpositive) equal to (i) the Borrower’s “Investment” in such Subsidiary atthe time of such redesignation less (ii) the portion (proportionate to theBorrower’s equity interest in such Subsidiary) of the fair market value of thenet assets of such Subsidiary at the time of such redesignation; and (b) anyproperty transferred to or from an Unrestricted Subsidiary shall be valued atits fair market value at the time of such transfer, in each case as determinedin good faith by the Borrower.

 

“**Investors**”means Bain Capital, LLC and The Blackstone Group LP, each of their respectiveAffiliates and any investment funds advised or managed by any of the foregoing,but not including, however, any portfolio companies of any of the foregoing;provided, that, for purposes of Section 4.01(e) and the definitionsof “EBITDA” and “Sponsor Management Agreement” only, the term “Investors” shallinclude Highfields.

 

“**IP Rights**” hasthe meaning set forth in Section 5.15.

 

“**IRS**” means theUnited States Internal Revenue Service.

 

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“**ITA**” means theIncome Tax Act (Canada) and the regulations promulgated thereunder, as amendedfrom time to time.

 

“**Judgment Currency**”has the meaning provided in Section 10.21.

 

“**Junior FinancingDocumentation**” shall mean the Senior Subordinated Notes, the SeniorSubordinated Notes Indenture, the Subordinated Discount Notes, the SubordinatedDiscount Notes Indenture and the documentation governing any other SubordinatedIndebtedness of the Borrower or any of its Restricted Subsidiaries.

 

“**Laws**” means,collectively, all international, foreign, Federal, state, provincial, municipaland local statutes, treaties, rules, guidelines, regulations, ordinances, codesand administrative or judicial precedents or authorities, including theinterpretation or administration thereof by any Governmental Authority chargedwith the enforcement, interpretation or administration thereof, and all applicableadministrative orders, directed duties, requests, licenses, authorizations andpermits of, and agreements with, any Governmental Authority, in each casewhether or not having the force of law.

 

“**Lender**” has themeaning specified in the introductory paragraph to this Agreement and includestheir respective successors and assigns as permitted hereunder, each of whichis referred to herein as a “Lender”.

 

“**Lending Office**”means, as to any Lender, the office or offices of such Lender described as suchin such Lender’s Administrative Questionnaire, or such other office or officesas a Lender may from time to time notify the Borrower and theAdministrative Agent.

 

“**Lien**” means,with respect to any asset, any mortgage, lien (statutory or otherwise), pledge,hypothecation, charge, security interest, preference, priority or encumbranceof any kind in respect of such asset, whether or not filed, recorded orotherwise perfected under applicable law, including any conditional sale orother title retention agreement, any lease in the nature thereof, any option orother agreement to sell or give a security interest in and any filing of oragreement to give any financing statement under the Uniform CommercialCode or registration statement under the PPSA (or equivalent statutes) of anyjurisdiction, including the Civil Code; *provided* thatin no event shall an operating lease be deemed to constitute a Lien.

 

“**Loan**” means themaking of a term loan by a Lender to a Borrower pursuant to Section 2.01.

 

“**Loan Documents**”means, collectively, (a) this Agreement, (b) the Notes, (c) theGuaranty, (d) the Intercreditor Agreement, and (e) the CollateralDocuments.

 

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

 

“**Master Agreement**”has the meaning specified in the definition of “Swap Contract.”

 

“**Material Adverse Change**”means any change, effect, event, occurrence or state of facts that (a) ismaterially adverse to the business, financial condition or results ofoperations

 

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of the Borrower and its Subsidiaries, taken as a wholeor (b) prevents or materially impedes, interferes with, hinders or delaysbeyond the Outside Date (as defined in the Recapitalization Agreement) theconsummation by the Borrower of the Recapitalization or the other transactionscontemplated by the Recapitalization Agreement, in each case, other than anychange, effect, event, occurrence or state of facts (i) relating toeconomic, financial market or geopolitical conditions in general, (ii) relatingto changes in Law or applicable accounting regulations or principles orinterpretations thereof, (iii) relating to the specialty retail industrygenerally, to the extent such change, effect, event, occurrence or state offact does not materially, disproportionately impact the Borrower and itsSubsidiaries, taken as a whole, (iv) consisting of any change in theBorrower’s stock price or trading volume, in and of itself, or any failure, inand of itself, by the Borrower to meet published revenue or earningsprojections (it being understood that the facts or occurrences giving rise orcontributing to such change or failure may be deemed to constitute, or betaken into account in determining whether there has been or would reasonably beexpected to be, a Material Adverse Effect, and it being further understood thatany such change or failure may be taken into account in determiningwhether the facts or occurrences giving rise or contributing to such change orfailure are materially adverse to the business, financial condition or resultsof operations of the Borrower and its Subsidiaries, taken as a whole), (v) relatingto any outbreak or escalation of hostilities or war or any act of terrorism,and (vi) relating to the announcement of the Recapitalization Agreementand the transactions contemplated hereby and performance of and compliance withthe terms of the Recapitalization Agreement.

 

“**Material Adverse Effect**”means (a) a material adverse effect on the business, operations, assets,liabilities (actual or contingent) or financial condition of the Borrower andits Restricted Subsidiaries, taken as a whole, (b) a material adverseeffect on the validity or enforceability of this Agreement or any other LoanDocument, taken as a whole, or (c) a material adverse effect on the rightsand remedies of the Lenders under any Loan Document.

 

“**Material Disposition**”means, with respect to a specified Person, a sale, divestiture, spin-off,transfer or other disposition (whether through a single transaction or series oftransactions which are part of a common plan and whether pursuant to anyDebtor Relief Law or otherwise) of (a) a 50% or greater interest in theCapital Stock of any other Person, (b) all or substantially all of theassets of such Person, (c) a real estate portfolio or Stores to any otherPerson or (d) assets constituting a business unit, line of business ordivision to any other Person.

 

“**Maturity Date**”means October 31, 2013.

 

“**Maximum Rate**”has the meaning specified in Section 10.10.

 

“**Merger Consideration**”means the total funds required to consummate the Recapitalization.

 

“**MergerCos**” hasthe meaning set forth in the preliminary statements to this Agreement.

 

“**Moody’s**” meansMoody’s Investors Service, Inc. and any successor to its rating agencybusiness.

 

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“**Moody’s ApplicableCorporate Rating**” shall mean the corporate family rating assigned tothe Borrower by Moody’s.

 

“**Mortgage**”means, collectively, the deeds of trust, trust deeds, hypothecs, charges andmortgages of real property or interests therein made by the Loan Parties infavor or for the benefit of the Collateral Agent on behalf of the SecuredParties in form and substance reasonably satisfactory to the CollateralAgent (taking account of relevant local Law matters), and any other mortgagesexecuted and delivered pursuant to Section 6.11.

 

“**Mortgage Policies**”has the meaning specified in Section 6.13(b)(ii).

 

“**Mortgaged Properties**”has the meaning specified in paragraph (g) of the definition of “Collateraland Guarantee Requirement”.

 

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

 

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

 

“**Net Proceeds**”means:

 

### (a)           withrespect to any Asset Sale or Casualty Event, the aggregate cash proceedsreceived by the Borrower or any of its Restricted Subsidiaries in respect ofsuch Asset Sale or Casualty Event, including any cash received upon the sale orother disposition of any Designated Non-cash Consideration received in respectof such Asset Sale or Casualty Event, net of the direct costs relating to suchAsset Sale or Casualty Event and the sale or disposition of such DesignatedNon-cash Consideration, including legal, accounting and investment bankingfees, and brokerage and sales commissions, any relocation expenses incurred asa result thereof, taxes paid or payable as a result thereof (after taking intoaccount any available tax credits or deductions and any tax sharingarrangements), amounts required to be applied to the repayment of principal,premium, if any, and interest on Indebtedness that is secured by the assetsubject to such Asset Sale or Casualty Event and that is required to be repaid(and is timely repaid) in connection with such Asset Sale or Casualty Event(other than as required by Section 2.05(c)) and any deduction ofappropriate amounts to be provided by the Borrower or any of its RestrictedSubsidiaries as a reserve in accordance with GAAP against any liabilitiesassociated with the asset disposed of in such transaction and retained by theBorrower or any of its Restricted Subsidiaries after such sale or otherdisposition thereof, including pension and other post–employment benefitliabilities and liabilities related to environmental matters or against anyindemnification obligations associated with such transaction *provided, however*, that, upon the reversal (without thesatisfaction of any applicable liabilities in cash in a corresponding amount)of any reserve described above, or if such liabilities have not been satisfiedin cash and such reserve is not reversed within three hundred and

 

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### sixty five(365) days after such Asset Sale or Casualty Event, “Net Proceeds” shallinclude the amount of such reserve; and

 

### (b)           withrespect to the incurrence or issuance of any Indebtedness or Capital Stock bythe Borrower or any Restricted Subsidiary, the excess, if any, of (i) thesum of the cash received in connection with such incurrence or issuance over (ii) theinvestment banking fees, underwriting discounts, commissions, costs and otherout-of-pocket expenses and other customary expenses, incurred by the Borroweror such Restricted Subsidiary in connection with such incurrence or issuance.

###  

“**New Notes**”means the Senior Notes, the Senior Subordinated Notes and the SubordinatedDiscount Notes.

 

“**New Notes Documentation**”means the New Notes, and all documents executed and delivered with respect tothe New Notes, including the Senior Notes Indenture, the Senior SubordinatedNotes Indenture and the Subordinated Discount Notes Indenture.

 

“**Non-Consenting Lenders**”has the meaning specified in Section 3.07(c).

 

“**Note**” means apromissory note of the Borrower payable to any Lender or its registeredassigns, in substantially the form of Exhibit C hereto, evidencingthe aggregate Indebtedness of the Borrower to such Lender resulting from theLoans made by such Lender.

 

“**Notice of Intent to Cure**”has the meaning specified in Section 6.02(b).

 

“**NPL**” means theNational Priorities List under CERCLA.

 

“**Obligations**”means all (x) advances to, and debts, liabilities, obligations, covenants andduties of, any Loan Party and its Subsidiaries arising under any Loan Documentor otherwise with respect to any Loan, whether direct or indirect (includingthose acquired by assumption), absolute or contingent, due or to become due,now existing or hereafter arising, and (y) obligations of any Loan Party and itsSubsidiaries arising under any Secured Hedge Agreement, in each of clauses (x)and (y) including interest and fees that accrue after the commencement by oragainst any Loan Party or Subsidiary of any proceeding under any Debtor ReliefLaws naming such Person as the debtor in such proceeding, regardless of whethersuch interest and fees are allowed claims in such proceeding. Without limitingthe generality of the foregoing, the Obligations of the Loan Parties under theLoan Documents (and of their Subsidiaries to the extent they have obligationsunder the Loan Documents) include (a) the obligation (including guaranteeobligations) to pay principal, interest, reimbursement obligations, charges,expenses, fees, Attorney Costs, indemnities and other amounts payable by anyLoan Party or its Subsidiaries under any Loan Document and (b) theobligation of any Loan Party or any of its Subsidiaries to reimburse any amountin respect of any of the foregoing that any Lender, in its sole discretion, may electto pay or advance on behalf of such Loan Party or such Subsidiary.

 

“**Officer**” meansthe Chairman of the Board, the Chief Executive Officer, the President, anyExecutive Vice President, Senior Vice President or Vice President, theTreasurer or the Secretary of the Borrower.

 

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“**Officer’s Certificate**”means a certificate signed on behalf of the Borrower by an Officer of theBorrower, who must be the principal executive officer, the principal financialofficer, the treasurer or the principal accounting officer of the Borrower,that meets any applicable requirements set forth in this Agreement.

 

“**Opinion of Counsel**”means a written opinion from legal counsel who is reasonably acceptable to theAdministrative Agent. The counsel may be an employee of or counsel to theBorrower or the Administrative Agent.

 

“**Organization Documents**”means (a) with respect to any corporation, the certificate or articles ofincorporation and the bylaws (or equivalent or comparable constitutive documentswith respect to any non-U.S. jurisdiction); (b) with respect to anylimited liability company, the certificate or articles of formation ororganization and operating agreement; (c) with respect to any unlimitedliability company, the memorandum of association; and (d) with respect toany partnership, joint venture, trust or other form of business entity,the partnership, joint venture or other applicable agreement of formation ororganization and, if applicable, any agreement, instrument, filing or noticewith respect thereto filed in connection with its formation or organizationwith the applicable Governmental Authority in the jurisdiction of its formationor organization and, if applicable, any certificate or articles of formation ororganization of such entity.

 

“**Other PariPassuLien Obligations**” means (i) any Indebtedness constituting debtsecurities incurred pursuant to an indenture with an institutional trustee orloans incurred in the bank credit market (including institutional investor participationtherein) and (ii) all obligations with respect to such Indebtedness, ineach case incurred in compliance with Section 7.03(b) and notconstituting Subordinated Indebtedness, which Indebtedness and otherobligations are secured on an equal and ratable basis with the Obligationspursuant to intercreditor arrangements reasonably satisfactory to theCollateral Agent.

 

“**Other Taxes**”has the meaning specified in Section 3.01(b).

 

“**Outstanding Amount**”means with respect to the Loans, on any date, the outstanding principal amountthereof after giving effect to any borrowings and prepayments or repayments ofLoans occurring on such date.

 

“**Participant**”has the meaning specified in Section 10.07(e).

 

“**PBA**” means thePension Benefits Act (Ontario) or similar legislation of any other Canadianfederal or provincial jurisdiction, and the regulations promulgated thereunder,as amended from time to time.

 

“**PBGC**” means thePension Benefit Guaranty Corporation or any Governmental Authority of anotherjurisdiction exercising similar functions in respect of any Pension Plan of aLoan Party (including the Pension Benefit Guarantee Fund of Ontario).

 

“**Pension Event**”means (a) the whole or partial withdrawal of a Loan Party or anySubsidiary from a Pension Plan during a Pension Plan year; or (b) thefiling of a notice of interest to terminate in whole or in part a PensionPlan or the treatment of a Pension Plan

 

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amendment as a termination or partial termination; or (c) theinstitution of proceedings by any Governmental Authority to terminate in wholeor in part or have a trustee appointed to administer a Pension Plan; or (d) anyother event or condition which might constitute grounds for the termination of,winding up or partial termination or winding up or the appointment of trusteeto administer, any Pension Plan.

 

“**Pension Plan**”means (a) any “employee pension benefit plan” (as such term is defined in Section 3(2) ofERISA), other than a Multiemployer Plan, that is subject to Section 412 ofthe Code or Section 302 or Title IV of ERISA, or (b) Pension Plancovered by any other Laws (including the PBA and the ITA) and is sponsored ormaintained by any Loan Party or any ERISA Affiliate or to which any Loan Partyor any ERISA Affiliate contributes or has an obligation to contribute, or inthe case of a multiple employer or other plan described in Section 4064(a) ofERISA, has made contributions at any time during the immediately preceding five(5) plan years.

 

“**Perfect Store Initiative**”shall mean the initiative related to the Borrower’s and its RestrictedSubsidiaries’ store standardization and remodeling program, pursuant to whichretail store layouts will be modified into a configuration intended to enhancethe customer in-store experience.

 

“**Permitted Asset Swap**”means the concurrent purchase and sale or exchange of Related Business Assetsor a combination of Related Business Assets and Cash Equivalents between theBorrower or any of its Restricted Subsidiaries and another Person; *provided* that any Net Proceeds received must be applied inaccordance with Section 2.05(c).

 

“**Permitted Collateral Liens**”means:

 

### (a)           Lienssecuring any Other Pari Passu Lien Obligations; *provided,however*, that, at the time of incurrence and after giving pro formaeffect thereto, the Consolidated Secured Debt Ratio would be no greater than4.25 to 1.00 (or, if less, the covenant level then required to be maintainedpursuant to Section 7.05);

###  

### (b)           Liens existing on the Closing Date;

###  

### (c)           Liensdescribed in clauses (a), (b), (c), (d), (e), (f) (but only with respectto Section 7.03(b)(iv) referred to therein), (h), (i), (k), (l) (asto assets other than inventory), (m), (n), (p), (r) (but only with respect toclauses (f) (but only with respect to Section 7.03(b)(iv) referredto therein), (g), (h) and (i) referred to therein), (s), (u), (v),(w), (x), (y), (z), (aa), (bb), (cc), (dd), (ee), (ff), (gg) (as to assetsother than inventory), (ii) (as to assets other than inventory), (jj),(kk) and (ll) of the definition of “Permitted Liens”; and

###  

### (d)           Lienson the TL Priority Collateral in favor of the Collateral Agent relating to theCollateral Agent’s administrative expenses with respect to the TL PriorityCollateral.

###  

“**Permitted Cure Issuance**”has the meaning provided in Section 8.05

 

“**Permitted Debt**”has the meaning set forth in Section 7.03(b).

 

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“**Permitted Holders**”means each of the Investors and members of management of the Borrower (or itsdirect parent) who are holders of Equity Interests of the Borrower (or any ofits direct or indirect parent companies) on the Closing Date.

 

“**Permitted Investments**”means:

 

### (a)           anyInvestment in the Borrower or any of its Restricted Subsidiaries;

###  

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

###  

### (c)           anyInvestment by the Borrower or any of its Restricted Subsidiaries in a Personthat is engaged in a Similar Business if as a result of such Investment:

###  

#### (i)            suchPerson becomes a Restricted Subsidiary; or

####  

#### (ii)           suchPerson, in one transaction or a series of related transactions, is merged,amalgamated or consolidated with or into, or transfers or conveys substantiallyall of its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary,

####  

and, in each case,any Investment held by such Person; *provided* thatsuch Investment was not acquired by such Person in contemplation of suchacquisition, merger, consolidation or transfer;

 

### (d)           anyInvestment in securities or other assets not constituting cash, CashEquivalents or Investment Grade Securities and received in connection with anAsset Sale made pursuant to Section 7.01 or any other disposition ofassets not constituting an Asset Sale;

###  

### (e)           anyInvestment existing on the Closing Date and any extension, modification,replacement or renewal of any such Investment, but only to the extent notinvolving additional advances, contributions or other Investments of cash orother assets or other increases thereof other than as a result of the accrualor accretion of interest or original issue discount or the issuance ofpay-in-kind securities, in each case, pursuant to the terms of such Investmentas in effect on the Closing Date (or as subsequently amended or otherwisemodified in a manner not disadvantageous to the Lenders in any materialrespect);

###  

### (f)            anyInvestment acquired by the Borrower or any of its Restricted Subsidiaries (i) inexchange for any other Investment or accounts receivable held by the Borroweror any such Restricted Subsidiary in connection with or as a result of abankruptcy, workout, reorganization or recapitalization of the issuer of suchother Investment or accounts receivable, or (ii) as a result of aforeclosure by the Borrower or any of its Restricted Subsidiaries with respectto any secured Investment or other transfer of title with respect to anysecured Investment in default;

###  

### (g)           HedgingObligations permitted under Section 7.03(b)(x);

 

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### (h)           anyInvestment in a Similar Business having an aggregate fair market value, takentogether with all other Investments made pursuant to this clause (h) thatare at that time outstanding, not to exceed $75,000,000 (with the fair marketvalue of each Investment being measured at the time made and without givingeffect to subsequent changes in value);

###  

### (i)            Investmentsthe payment for which consists of Equity Interests (exclusive of DisqualifiedStock) of the Borrower, or any of its direct or indirect parent companies; *provided, however*, that such Equity Interests will notincrease the amount available for Restricted Payments under Section 7.02(a)(iii);

###  

### (j)            guaranteesof Indebtedness of the Borrower or any Restricted Subsidiary permitted under Section 7.03,performance guarantees and Contingent Obligations in the ordinary course ofbusiness and the creation of liens on the assets of the Borrower or any of itsRestricted Subsidiaries in compliance with the covenant described in Section 7.04;

###  

### (k)           anytransaction to the extent it constitutes an Investment that is permitted andmade in accordance with the provisions of Section 7.07(b) (excepttransactions described in clauses (ii), (v) and (ix) thereof);

###  

### (l)            Investmentsconsisting of purchases and acquisitions of inventory, supplies, material orequipment;

###  

### (m)          additionalInvestments having an aggregate fair market value, taken together with allother Investments made pursuant to this clause (m) that are at that timeoutstanding (without giving effect to the sale of an Unrestricted Subsidiary tothe extent the proceeds of such sale do not consist of, or have not beensubsequently sold or transferred for cash or marketable securities), not toexceed $100,000,000 (with the fair market value of each Investment beingmeasured at the time made and without giving effect to subsequent changes invalue); *provided* that no Investment may bemade in reliance on this clause (m) unless immediately after giving pro formaeffect to such Investment and any related financing transaction, theConsolidated Total Leverage Ratio is less than 6.00 to 1.00;

###  

### (n)           Investmentsrelating to a Receivables Subsidiary that, in the good faith determination ofthe Borrower are necessary or advisable to effect any Receivables Facility;

###  

### (o)           advancesto, or guarantees of Indebtedness of, employees not in excess of $15,000,000outstanding at any one time, in the aggregate;

###  

### (p)           loansand advances to officers, directors and employees for business-related travelexpenses, moving expenses and other similar expenses, in each case incurred inthe ordinary course of business or consistent with past practices or to fundsuch Person’s purchase of Equity Interests of the Borrower or any direct orindirect parent company thereof; and

 

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### (q)           Investmentsconsisting of licensing of intellectual property pursuant to joint marketingarrangements with other Persons.

###  

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

 

### (a)           pledges,deposits or security by such Person under workmen’s compensation laws,unemployment insurance, employers’ health tax and other social security orstatutory laws or similar legislation, or good faith deposits in connectionwith bids, tenders, contracts (other than for the payment of Indebtedness) orleases to which such Person is a party, or deposits to secure public orstatutory obligations of such Person or deposits of cash or U.S. governmentbonds to secure surety or appeal bonds to which such Person is a party, ordeposits as security for contested taxes or import duties or for the payment ofrent or deposits, in each case incurred in the ordinary course of business;

###  

### (b)           Liensimposed by law, such as landlords’, carriers’, warehousemen’s, materialmen’s,repairmen’s and mechanics’ Liens, in each case for sums not yet overdue for aperiod of more than 30 days or being contested in good faith by appropriateactions or other Liens arising out of judgments or awards against such Personwith respect to which such Person shall then be proceeding with an appeal orother proceedings for review if adequate reserves with respect thereto aremaintained on the books of such Person in accordance with GAAP; *provided* that any such Liens granted in favor of landlordsin the Providence of Quebec securing the payment of rent shall be consensualand subordinated to the Lien of the Collateral Agent;

###  

### (c)           Liensfor taxes, assessments or other governmental charges not yet overdue for aperiod of more than 30 days or which are being contested in good faith byappropriate actions diligently conducted, if adequate reserves with respectthereto are maintained on the books of such Person in accordance with GAAP, orfor property taxes on property that the Borrower or one of its Subsidiaries hasdetermined to abandon if the sole recourse for such tax, assessment, charge,levy or claim is to such property;

###  

### (d)           Liensin favor of issuers of performance, surety, bid, indemnity, warranty, release,appeal or similar bonds or with respect to other regulatory requirements orletters of credit or bankers’ acceptances issued, and completion guaranteesprovided for, in each case pursuant to the request of and for the account ofsuch Person in the ordinary course of its business or consistent with pastpractice prior to the Closing Date;

###  

### (e)           minorsurvey exceptions, minor encumbrances, ground leases, easements or reservationsof, or rights of others for, licenses, rights–of–way, servitudes, sewers,electric lines, drains, telegraph and telephone and cable television lines, gasand oil pipelines and other similar purposes, or zoning, building codes orother restrictions (including, without limitation, minor defects orirregularities in title and similar encumbrances) as to the use of realproperties or Liens incidental, to the conduct of the business of such Person orto the ownership of its properties which were not incurred in connection withIndebtedness and which do not in the aggregate materially impair their use inthe operation of the business of such Person;

 

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### (f)            Lienssecuring Indebtedness permitted to be incurred pursuant to Section 7.03(b)(iv),(xviii) or (xix); *provided* that Liens securingIndebtedness permitted to be incurred pursuant to Section 7.03(b)(xviii)extend only to the assets of Foreign Subsidiaries and Liens securingIndebtedness permitted to be incurred pursuant to Section 7.03(b)(xix) aresolely on acquired property or the assets of the acquired entity, as the case may be;

###  

### (g)           Liensexisting on the Closing Date and set forth in Schedule 7.04;

###  

### (h)           Liensexisting on property or shares of stock of a Person at the time such Personbecomes a Subsidiary; *provided, however*,such Liens are not created or incurred in connection with, or in contemplationof, such other Person becoming such a Subsidiary; provided, further, however,that such Liens may not extend to any other property owned by the Borroweror any of its Restricted Subsidiaries;

###  

### (i)            Liensexisting on property at the time the Borrower or a Restricted Subsidiaryacquired the property, including any acquisition by means of a merger,amalgamation or consolidation with or into the Borrower or any of itsRestricted Subsidiaries; *provided, however*,that such Liens are not created or incurred in connection with, or incontemplation of, such acquisition, merger, amalgamation or consolidation;provided, further, however, that the Liens may not extend to any otherproperty owned by the Borrower or any of its Restricted Subsidiaries;

###  

### (j)            Lienssecuring Indebtedness or other obligations of a Restricted Subsidiary owing tothe Borrower or another Restricted Subsidiary permitted to be incurred inaccordance with Section 7.03;

###  

### (k)           Lienssecuring Hedging Obligations so long as the related Indebtedness is permittedto be incurred under this Agreement;

###  

### (l)            Lienson specific items of inventory or other goods and proceeds of any Personsecuring such Person’s obligations in respect of bankers’ acceptances orletters of credit issued or created for the account of such Person tofacilitate the purchase, shipment or storage of such inventory or other goods;

###  

### (m)          leases,subleases, licenses or sublicenses granted to others in the ordinary course ofbusiness which do not materially interfere with the ordinary conduct of thebusiness of the Borrower or any of its Restricted Subsidiaries and do notsecure any Indebtedness;

###  

### (n)           Liensarising from Uniform Commercial Code (or equivalent statutes) financingstatements or PPSA registration statements or recordation filings regardingoperating leases or consignments entered into by the Borrower and itsRestricted Subsidiaries in the ordinary course of business;

###  

### (o)           Liensin favor of the Borrower or any Subsidiary Guarantor;

 

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### (p)           Lienson equipment of the Borrower or any of its Restricted Subsidiaries granted inthe ordinary course of business to the Borrower’s clients at which suchequipment is located;

###  

### (q)           Lienson accounts receivable and related assets incurred in connection with aReceivables Facility;

###  

### (r)            Liensto secure any refinancing, refunding, extension, renewal or replacement (orsuccessive refinancing, refunding, extensions, renewals or replacements) as awhole, or in part, of any Indebtedness secured by any Lien referred to in theforegoing clauses (f), (g), (h) and (i); *provided,however*, that (i) such new Lien shall be limited to all or part ofthe same property that secured the original Lien (*plus*improvements on such property), and (ii) the Indebtedness secured by suchLien at such time is not increased to any amount greater than the sum of (A) theoutstanding principal amount or, if greater, committed amount of theIndebtedness described under clauses (f), (g), (h) and (i) at thetime the original Lien became a Permitted Lien under this Agreement, and (B) anamount necessary to pay any fees and expenses, including premiums, related tosuch refinancing, refunding, extension, renewal or replacement;

###  

### (s)           depositsmade or other security provided to secure liabilities to insurance carriersunder insurance or self-insurance arrangements in the ordinary course ofbusiness;

###  

### (t)            otherLiens securing obligations not exceeding $50,000,000 at any one timeoutstanding;

###  

### (u)           Lienssecuring judgments for the payment of money not constituting an Event ofDefault under Section 8.01(h), so long as such Liens are adequately bondedand any appropriate legal proceedings that may have been duly initiatedfor the review of such judgment have not been finally terminated or the periodwithin which such proceedings may be initiated has not expired;

###  

### (v)           Liensin favor of customs and revenue authorities arising as a matter of law tosecure payment of customs duties in connection with the importation of goods inthe ordinary course of business;

###  

### (w)          Liens(i) of a collection bank arising under Section 4–210 of the Uniform CommercialCode on items in the course of collection, (ii) attaching to commoditytrading accounts or other commodity brokerage accounts incurred in the ordinarycourse of business, and (iii) in favor of banking institutions arising asa matter of law encumbering deposits (including the right of set-off) and whichare within the general parameters customary in the banking industry;

###  

### (x)            Liensdeemed to exist in connection with Investments in repurchase agreements orother Cash Equivalents permitted under Section 7.03; *provided*that such Liens do not extend to any assets other than those that are thesubject of such repurchase agreement or other Cash Equivalent;

 

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### (y)           Liensencumbering reasonable customary initial deposits and margin deposits andsimilar Liens attaching to commodity trading accounts or other brokerageaccounts incurred in the ordinary course of business and not for speculativepurposes;

###  

### (z)            Liensthat are contractual rights of set-off (i) relating to the establishmentof depository relations with banks not given in connection with the issuance ofIndebtedness, (ii) relating to pooled deposit or sweep accounts of theBorrower or any of its Restricted Subsidiaries to permit satisfaction ofoverdraft or similar obligations incurred in the ordinary course of business ofthe Borrower and its Restricted Subsidiaries or (iii) relating to purchaseorders and other agreements entered into with customers of the Borrower or anyof its Restricted Subsidiaries in the ordinary course of business;

###  

### (aa)         Lienssecuring the Obligations and Liens securing Cash Management Services (asdefined in the ABL Credit Agreement);

###  

### (bb)         Lienssolely on any cash earnest money deposits made by the Borrower or any of itsRestricted Subsidiaries in connection with any letter of intent or purchaseagreement permitted under this Agreement;

###  

### (cc)         therights reserved or vested in any Person by the terms of any lease, license,franchise, grant or permit held by the Borrower or any of its RestrictedSubsidiaries or by a statutory provision, to terminate any such lease, license,franchise, grant or permit, or to require annual or periodic payments as acondition to the continuance thereof;

###  

### (dd)         restrictivecovenants affecting the use to which real property may be put, *provided, however*, that the covenants are complied with;

###  

### (ee)         securitygiven to a public utility or any municipality or Governmental Authority whenrequired by such utility or authority in connection with the operations of thatPerson in the ordinary course of business;

###  

### (ff)           zoningby-laws and other land use restrictions, including, without limitation, siteplan agreements, development agreements and contract zoning agreements;

###  

### (gg)         Liensarising out of conditional sale, title retention, consignment or similararrangements for sale of goods entered into by the Borrower or any RestrictedSubsidiary in the ordinary course of business;

###  

### (hh)         [Reserved];

###  

### (ii)           rightsof a seller of unpaid goods in respect of such goods at common law or under theBankruptcy and Insolvency Act (Canada) and other applicable legislation;

 

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### (jj)           thereservations, limitations, provisos and conditions, if any, expressed in anyoriginal grants from the crown under Canadian law and any statutory exceptionsto title under Canadian law;

###  

### (kk)         customarytransfer restrictions and purchase options in joint venture and similaragreements;

###  

### (ll)           Lienscreated pursuant to the ABL Collateral Documents, securing Indebtednessincurred pursuant to Section 7.03(b)(i)(x) in favor of the ABL CollateralAgent, so long as same is at all times subject to the Intercreditor Agreement;and

###  

### (mm)       Liensincurred to secure obligations in respect of any Indebtedness permitted to beincurred pursuant to Section 7.03; *provided* that,with respect to Liens securing obligations permitted under this clause (mm), atthe time of incurrence and after giving pro forma effect thereto, theConsolidated Secured Debt Ratio would be no greater than 4.50 to 1.0 (or, ifless, the covenant level then required to be maintained pursuant to Section 7.05).

###  

For purposes of this definition, the term “Indebtedness”shall be deemed to include interest on such Indebtedness.

 

“**Person**” meansany natural person, corporation, limited liability company, unlimited liabilitycompany, trust, joint venture, association, company, partnership, joint stockcompany, trust, unincorporated organization, Governmental Authority or other entity.

 

“**Plan**” means any“employee benefit plan” (as such term is defined in Section 3(3) ofERISA) established by any Loan Party or, with respect to any such plan that issubject to Section 412 of the Code or Section 302 or Title IV ofERISA, any ERISA Affiliate.

 

“**Pledged Debt**”has the meaning specified in the Security Agreement.

 

“**Pledged Equity**”has the meaning specified in the Security Agreement.

 

“**PPSA**” means thePersonal Property Security Act of Ontario (or any successor statute) or similarlegislation of any other Canadian jurisdiction, including, without limitation,the Civil Code of Quebec, the laws of which are required by such legislation tobe applied in connection with the issue, perfection, enforcement, opposability,validity or effect of security interests.

 

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

 

“**ProFormaBalance Sheet**” has the meaning set forth in Section 5.05(a)(ii).

 

“**ProFormaCompliance**” means, at any date of determination, that the Borrower and itsRestricted Subsidiaries shall be in compliance, on a proformabasis after giving effect on a proforma basis to the relevantSpecified Transactions in the manner contemplated by the definition of “ConsolidatedSecured Debt Ratio”, with the financial performance covenant set

 

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forth in Section 7.05 recomputed as at the lastday of the Relevant Reference Period, and the Borrower shall have delivered tothe Administrative Agent a certificate of a Responsible Officer of the Borrowerto such effect, together with all relevant financial information. In the eventany covenant or provision of this Agreement requires ProFormaCompliance with Section 7.05 prior to the last day of the Test Periodended closest to January 31, 2008, such ProForma Complianceshall be tested using the ratio specified in the table in Section 7.05 forthe Test Period ended closest to January 31, 2008.

 

“**ProFormaFinancial Statements**” has the meaning set forth in Section 5.05(a)(ii).

 

“**ProFormaStatements of Operations**” has the meaning set forth in Section 5.05(a)(ii).

 

“**ProRataShare**” means, with respect to each Lender, (i) at or prior to thefunding on the Closing Date, a fraction (expressed as a percentage, carried outto the ninth decimal place), the numerator of which is the amount of theCommitment of such Lender at such time and the denominator of which is theamount of the Aggregate Commitments of all Lenders at such time and (ii) atany time thereafter, a fraction (expressed as a percentage, carried out to theninth decimal place), the numerator of which is the principal amount of theLoans of such Lender at such time and the denominator of which is the aggregateprincipal amount of the Loans of all Lenders at such time.

 

“**Proceeds of Crime Act**”means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act(Canada) and the regulations promulgated thereunder, as amended from time totime.

 

“**Projections**” shallhave the meaning set forth in Section 6.01(c).

 

“**Public Company Costs**”shall mean costs relating to compliance with the Sarbanes-Oxley Act of 2002, asamended, and other expenses arising out of or incidental to the Borrower’sstatus as a public company, including costs, fees and expenses (includinglegal, accounting and other professional fees) relating to compliance withprovisions of the Securities Act of 1933, as amended, as applicable tocompanies with equity securities held by the public, the Securities ExchangeAct of 1934, as amended, the rules of national securities exchangecompanies with listed equity securities, directors’ compensation, fees andexpense reimbursement; costs of shareholder meetings and reports toshareholders; directors and officers’ insurance and other executive costs;legal and other professional fees; and listing fees, in each case incurred oraccrued prior to the Closing Date and that will not continue to be incurredimmediately after the Closing Date.

 

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

 

“**Rating Agencies**”means Moody’s and S&P or if Moody’s or S&P or both shall not make arating on the Loans publicly available, a nationally recognized statisticalrating

 

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agency or agencies, as the case may be, selectedby the Borrower which shall be substituted for Moody’s or S&P or both, asthe case may be.

 

“**Recapitalization**”has the meaning set forth in the preliminary statements to this Agreement.

 

“**Recapitalization Agreement**”means the Agreement and Plan of Merger, dated as of June 30, 2006, betweenthe MergerCos, Bain Paste Finco, LLC, Blackstone Paste Finco, LLC, and theBorrower, as amended by that certain First Amendment to Agreement and Plan ofMerger, dated as of September 1, 2006.

 

“**Receivables Facility**”means any of one or more receivables financing facilities as amended,supplemented, modified, extended, renewed, restated or refunded from time totime, the Obligations of which are non-recourse (except for customaryrepresentations, warranties, covenants and indemnities made in connection withsuch facilities) to the Borrower or any of its Restricted Subsidiaries (otherthan a Receivables Subsidiary) pursuant to which the Borrower or any of itsRestricted Subsidiaries sells its accounts receivable to either (a) aPerson that is not a Restricted Subsidiary or (b) a Receivables Subsidiarythat in turn sells its accounts receivable to a Person that is not a RestrictedSubsidiary.

 

“**Receivables Fees**”means distributions or payments made directly or by means of discounts with respectto any accounts receivable or participation interest therein issued or sold inconnection with, and other fees paid to a Person that is not a RestrictedSubsidiary in connection with, any Receivables Facility.

 

“**Receivables Subsidiary**”means any Subsidiary formed for the purpose of, and that solely engages only inone or more Receivables Facilities and other activities reasonably relatedthereto.

 

“**Refinanced Term Loans**”has the meaning specified in Section 10.01.

 

“**Refinancing Indebtedness**”has the meaning set forth in Section 7.03(b)(xiii).

 

“**Refunding Capital Stock**”has the meaning set forth in Section 7.02(b)(ii)(A).

 

“**Register**” hasthe meaning set forth in Section 10.07(d).

 

“**Registration RightsAgreement**” means, collectively, the Registration Rights Agreementsrelated to the Senior Notes, the Senior Subordinated Notes and the SubordinatedDiscount Notes, dated as of the Closing Date, among the Borrower, theSubsidiary Guarantors and the initial purchasers of the respective New Notesspecified therein.

 

“**Regulation D**”shall mean Regulation D of the FRB as from time to time in effect and anysuccessor to all or a portion thereof establishing reserve requirements.

 

“**Related Business Assets**”means assets (other than cash or Cash Equivalents) used or useful in a SimilarBusiness, *provided* that any assets received by theBorrower or a Restricted Subsidiary in exchange for assets transferred by theBorrower or a Restricted

 

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Subsidiary shall not be deemed to be Related BusinessAssets if they consist of securities of a Person, unless upon receipt of thesecurities of such Person, such Person would become a Restricted Subsidiary.

 

“**Relevant Reference Period**” means (i) inthe case of (x) any determination of EBITDA and Consolidated Total Indebtedness(and any component definitions used therein) for purposes of computingquarterly compliance with Section 7.05 and (y) any determination of theConsolidated Total Leverage Ratio (and the component definition thereof) asused in the definition of “Applicable Rate”, the Test Period then most recentlyended, (ii) in the case of any determination of EBITDA and ConsolidatedTotal Indebtedness (and any component definitions used therein) for purposes ofcomputing the Consolidated Total Leverage Ratio as used in the definition of “RequiredPercentage”, the Excess Cash Flow Period then most recently ended, and (iii) inthe case of any determination of (1) the Fixed Charge Coverage Ratio, (2) theFixed Charge Coverage Ratio Incurrence Test, (3) the Consolidated SecuredDebt Ratio, (4) the Consolidated Total Leverage Ratio (other than as usedin the definitions of “Applicable Rate” and “Required Percentage”), or (5) ProForma Compliance with Section 7.05 for purposes of Sections7.02(a)(ii), 7.02(b)(vi), 7.02(b)(vii) and 7.06(a)(iv) and thedefinition of “Unrestricted Subsidiary” (and the component definitions used inany of the foregoing), the Test Period then most recently ended for whichinternal financial statements are available immediately preceding the date onwhich the Specified Transaction for which such calculation is being made shalloccur.

 

“**Replacement Term Loans**”has the meaning specified in Section 10.01.

 

“**Reportable Event**”means any of the events set forth in Section 4043(c) of ERISA or theregulations issued thereunder, other than events for which the thirty (30) daynotice period has been waived, and includes a Pension Event.

 

“**Required Lenders**”means, as of any date of determination, Lenders having more than 50% of the sumof the (a) Total Outstandings and (b) aggregate unused Commitments; *provided* that the unused Commitment of, and the portion ofthe Total Outstandings held or deemed held by, any Defaulting Lender shall beexcluded for purposes of making a determination of Required Lenders.

 

“**Required Percentage**”shall mean, with respect to any Excess Cash Flow Period, 50%; provided, that (a) ifthe Consolidated Total Leverage Ratio at the end of the applicable Excess CashFlow Period is less than 6.00:1.00 but greater than or equal to 5.00:1.00, suchpercentage shall be 25%, and (b) if the Consolidated Total Leverage Ratioat the end of the applicable Excess Cash Flow Period is less than 5.00:1.00,such percentage shall be 0%.

 

“**Responsible Officer**”means the chief executive officer, president, vice president, chief financialofficer, treasurer or assistant treasurer or other similar officer of a LoanParty and, as to any document delivered on the Closing Date, any secretary orassistant secretary of a Loan Party. Any document delivered hereunder that issigned by a Responsible Officer of a Loan Party shall be conclusively presumedto have been authorized by all necessary corporate, partnership and/or otheraction on the part of such Loan Party and such Responsible Officer shallbe conclusively presumed to have acted on behalf of such Loan Party.

 

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“**Restricted**”shall mean, when referring to cash or Cash Equivalents of the Borrower or anyof its Subsidiaries, that such cash or Cash Equivalents (i) appears (orwould be required to appear) as “restricted” on a consolidated balance sheet ofthe Borrower or of any such Subsidiary (unless such appearance is related tothe Loan Documents or Liens created thereunder), (ii) are subject to anyLien in favor of any Person other than the Collateral Agent for the benefit ofthe Secured Parties (except for those Liens in favor of the ABL CollateralAgent for the benefit of the ABL Lenders and Liens securing Other PariPassuLien Obligations) or (iii) are not otherwise generally available for useby the Borrower or such Subsidiary.

 

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

 

“**Restricted Payments**”has the meaning specified in Section 7.02(a).

 

“**Restricted Subsidiary**”means, at any time, any direct or indirect Subsidiary of the Borrower(including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary;*provided, however*, that upon theoccurrence of an Unrestricted Subsidiary ceasing to be an UnrestrictedSubsidiary, such Subsidiary shall be included in the definition of “RestrictedSubsidiary”.

 

“**Retained Percentage**”shall mean, with respect to any Excess Cash Flow Period, (a) 100% *minus* (b) the Required Percentage with respect to suchExcess Cash Flow Period.

 

“**S&P**” meansStandard & Poor’s, a division of The McGraw-Hill Companies, Inc.,and any successor to its rating agency business.

 

“**Sale and Lease-BackTransaction**” means any arrangement providing for the leasing by theBorrower or any of its Restricted Subsidiaries of any real or tangible personalproperty, which property has been or is to be sold or transferred by theBorrower or such Restricted Subsidiary to a third Person in contemplation ofsuch leasing.

 

“**Same Day Funds**”means, with respect to disbursements and payments, immediately available fundsin Dollars.

 

“**SEC**” means theSecurities and Exchange Commission, or any Governmental Authority succeeding toany of its principal functions.

 

“**Secured Hedge Agreement**”means any Swap Contract permitted under Article 7 that is entered into byand between any Loan Party or any Restricted Subsidiary and any Hedge Bank andwith respect to which, at or prior to the time that such Swap Contract isentered into, the Borrower (or another Loan Party) and the Hedge Bank partythereto (except in the case of the Administrative Agent) shall have deliveredwritten notice to the Administrative Agent that such Swap Contract has beenentered into and that it constitutes a “Secured Hedge Agreement” entitled tothe benefits of the Collateral Documents and the Intercreditor Agreement.

 

“**Secured Indebtedness**”means any Indebtedness of the Borrower or any of its Restricted Subsidiariessecured by a Lien.

 

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“**Secured Obligations**”has the meaning specified in the Security Agreement.

 

“**Secured Parties**”means, collectively, the Administrative Agent, the Collateral Agent, theLenders, the Hedge Banks, the Supplemental Administrative Agent and each SupplementalAdministrative Agent appointed by the Administrative Agent from time to timepursuant to Section 9.13.

 

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

 

“**Security Agreement**”means, collectively, the Security Agreement executed by the Loan Parties,substantially in the form of Exhibit G-1, together with each other securityagreement supplement executed and delivered pursuant to Section 6.11.

 

“**Security AgreementSupplement**” has the meaning specified in the Security Agreement orthe Canadian Security Agreement, as applicable.

 

“**Senior Notes**”means $750,000,000 in aggregate principal amount of the Borrower’s 10% seniorunsecured notes due 2014.

 

“**Senior Notes Indenture**”means the Indenture for the Senior Notes, dated as of October 31, 2006.

 

“**Senior Subordinated Notes**”means $400,000,000 in aggregate principal amount of the Borrower’s 11-3/8%senior subordinated notes due 2016.

 

“**Senior Subordinated NotesIndenture**” means the Indenture for the Senior Subordinated Notes,dated as of October 31, 2006.

 

“**Similar Business**”means any business conducted or proposed to be conducted by the Borrower andits Restricted Subsidiaries on the Closing Date or any business that is areasonable extension, development or expansion of any of the foregoing or issimilar, reasonably related, incidental or ancillary thereto (including, for avoidanceof doubt, any sourcing companies created in connection with any of theforegoing).

 

“**Solvent**” and “**Solvency**” mean, with respect to any Person on any date ofdetermination, that on such date (a) the fair value of the property ofsuch Person is greater than the total amount of liabilities, includingcontingent liabilities, of such Person, (b) the present fair salable valueof the assets of such Person is not less than the amount that will be requiredto pay the probable liability of such Person on its debts as they becomeabsolute and matured, (c) such Person does not intend to, and does notbelieve that it will, incur debts or liabilities beyond such Person’s abilityto pay such debts and liabilities as they mature and (d) such Person isnot engaged in business or a transaction, and is not about to engage inbusiness or a transaction, for which such Person’s property would constitute anunreasonably small capital. The amount of contingent liabilities at any timeshall be computed as the amount that, in the light of all the facts andcircumstances existing at such time, represents the amount that can reasonablybe expected to become an actual or matured liability.

 

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“**SPC**” has themeaning specified in Section 10.07(h).

 

“**Specified Legal Expenses**”means all attorneys’ and experts’ fees and expenses and all other costs andexpenses paid or payable in connection with investigating or defending orpreparing to investigate or defend any threatened, pending, completed or futureclaim, demand, action, suit, proceeding, inquiry or investigation (whethercivil, criminal, administrative or investigative) arising out of or related to (i) theBorrower’s compensation practices (including option grants) prior to the ClosingDate, (ii) any disclosure or alleged lack of disclosure on the part ofthe Borrower or any of its directors or officers regarding the beneficialownership of any securities of the Borrower prior to the Closing Date by anysuch director or officer (or any trust established for the benefit of any suchdirector or officer or any family member thereof), (iii) any transactionprior to the Closing Date involving any securities of the Borrower alleged tohave been engaged in by any such Person, (iv) any alleged deficiencies inthe Borrower’s financial reporting, internal control over financial reportingor disclosure controls prior to the Closing Date and procedures relating to anyof the foregoing, and (v) any alleged bad faith, breach of fiduciary dutyor other act or omission on the part of any director or officer of theBorrower relating to any of the foregoing, together in each case with alldamages, losses, liabilities, judgments, fines, penalties and amounts paid insettlement arising out of or incurred in connection with any of the foregoing(including all amounts paid to or on behalf of other Persons in connection withany of the foregoing pursuant to any indemnification agreements, arrangementsor obligations).

 

“**Specified Transaction**”means, with respect to any period, any Investment, Disposition, incurrence orrepayment of Indebtedness, Restricted Payment, Subsidiary designation or othertransaction that by the terms of this Agreement requires “Pro Forma Compliance”with a test or covenant hereunder or requires such test or covenant to becalculated on a “proforma basis”.

 

“**Sponsor ManagementAgreement**” means the management agreements between certain of themanagement companies associated with the Investors and the Borrower, as ineffect on the Closing Date and as amended, supplemented, amended and restated,replaced or otherwise modified from time to time, *provided,however*, that the terms of any such amendment, supplement, amendmentand restatement or replacement agreement are not, taken as a whole, lessfavorable to the Lenders in any material respect than the original agreement ineffect on the Closing Date.

 

“**Store**” meansany retail store (which includes any real property, fixtures, equipment,inventory and other property related thereto) operated, or to be operated, byany Loan Party.

 

“**Subordinated DiscountNotes**” means the $469,449,000 aggregate principal amount at maturityof the Borrower’s 13% Subordinated Discount Notes due 2016 issued on theClosing Date.

 

“**Subordinated DiscountNotes Indenture**” means the Indenture for the Subordinated DiscountNotes, dated as of October 31, 2006.

 

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“**Subordinated Indebtedness**”means, with respect to the Obligations, any Indebtedness of the Borrower or anyGuarantor which is by its terms subordinated in right of payment to theObligations (including, in the case of a Guarantor, Obligations of suchGuarantor under its Guaranty).

 

“**Subsidiary**”means, with respect to any Person (a)               any corporation, association, unlimited liability company, or otherbusiness entity (other than a partnership, joint venture, limited liabilitycompany or similar entity) of which more than 50% of the total voting power ofshares of Capital Stock entitled (without regard to the occurrence of anycontingency) to vote in the election of directors, managers or trustees thereofis at the time of determination owned or controlled, directly or indirectly, bysuch Person or one or more of the other Subsidiaries of that Person or acombination thereof or is consolidated under GAAP with such Person at suchtime; and (b) any partnership, joint venture, limited liability company orsimilar entity of which (x) more than 50% of the capital accounts, distributionrights, total equity and voting interests or general or limited partnershipinterests, as applicable, are owned or controlled, directly or indirectly, bysuch Person or one or more of the other Subsidiaries of that Person or acombination thereof whether in the form of membership, general, special orlimited partnership or otherwise, and (y) such Person or any Subsidiary of suchPerson is a controlling general partner or otherwise controls such entity. Unlessotherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries”shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“**Subsidiary Guarantors**”means, collectively, the Domestic Subsidiary Guarantors and the CanadianSubsidiary Guarantors.

 

“**Subsidiary Guaranty**”means, collectively, (a) the Subsidiary Guaranty made by the DomesticSubsidiary Guarantors in favor of the Administrative Agent on behalf of theSecured Parties, substantially in the form of Exhibit F-1 and (b) eachother guaranty and Guaranty Supplement delivered pursuant to Section 6.11.

 

“**Successor Borrower**”has the meaning set forth in Section 7.06(a)(i).

 

“**Successor Guarantor**”has the meaning set forth in Section 7.06(c)(i)(A).

 

“**SupplementalAdministrative Agent**” has the meaning specified in Section 9.13and “Supplemental Administrative Agents” shall have the corresponding meaning.

 

“**Swap Contract**”means (a) any and all rate swap transactions, basis swaps, creditderivative transactions, forward rate transactions, commodity swaps, commodityoptions, forward commodity contracts, equity or equity index swaps or options,bond or bond price or bond index swaps or options or forward bond or forwardbond price or forward bond index transactions, interest rate options, forwardforeign exchange transactions, cap transactions, floor transactions, collartransactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), whether or not any such transaction isgoverned by or subject to any master agreement, and (b) any and alltransactions of any kind, and the related confirmations, which are subject tothe terms and conditions of, or governed by, any form of master agreementpublished by the International

 

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Swaps and Derivatives Association, Inc., anyInternational Foreign Exchange Master Agreement, or any other master agreement(any such master agreement, together with any related schedules, a “**Master Agreement**”), including any such obligations orliabilities under any Master Agreement.

 

“**Syndication Agent**”means JPMorgan Chase Bank, N.A., as Syndication Agent under this Agreement.

 

“**Taxes**” has themeaning specified in Section 3.01(a).

 

“**Test Period**”shall mean, on any date of determination, the period of four consecutive fiscalquarters of the Borrower then most recently ended (taken as one accountingperiod).

 

“**Threshold Amount**”means $50,000,000.

 

“**TL Priority Collateral**”means all “Term Loan Priority Collateral” as defined in the IntercreditorAgreement.

 

“**Total Assets**”means the total assets of the Borrower and its Restricted Subsidiaries on aconsolidated basis, as shown on the most recent balance sheet of the Borroweror such other Person as may be expressly stated.

 

“**Total Outstandings**”means the aggregate Outstanding Amount of all Loans.

 

“**Transaction**”means, collectively, (a) the execution, delivery and performance of theRecapitalization Agreement and all other material documents, instruments andcertificates contemplated by the Recapitalization Agreement and theconsummation of the Recapitalization and the other transactions contemplatedthereby, including the rollover of any Equity Interests in the Borrower, (b) theexecution, delivery and performance by the Loan Parties of the Loan Documentsto which they are a party and the making of the Borrowings hereunder, (c) theexecution, delivery and performance by the Borrower and the Subsidiaries of theBorrower party thereto of the New Notes Documentation and the issuance of theNew Notes, (d) the execution, delivery and performance of the ABL CreditAgreement and the other ABL Loan Documents and the making of borrowingsthereunder, (e) the execution, delivery and performance by all parties theretoof the Intercreditor Agreement, (f) the Debt Prepayment, (g) theconsummation of the Equity Contribution and (h) the payment of theTransaction Expenses.

 

“**Transaction Expenses**”means any fees or expenses incurred or paid by the Borrower or any RestrictedSubsidiary in connection with the Transaction, including payments to officers,employees and directors as change of control payments, severance payments,special or retention bonuses and charges for repurchase or rollover of, ormodifications to, stock options in connection therewith.

 

“**Treasury Capital Stock**”has the meaning set forth in Section 7.02(b)(ii)(A).

 

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

 

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“**Unaudited FinancialStatements**” has the meaning set forth in Section 4.01(f).

 

“**Unfunded Pension Liability**”means, at a point in time, the excess of a Pension Plan’s benefit liabilities,over the current value of that Pension Plan’s assets, determined in accordancewith the assumptions used for funding the Pension Plan pursuant to applicablelaws for the applicable plan year and includes any unfunded liability orsolvency deficiency as determined for the purposes of the PBA.

 

“**Uniform CommercialCode**” means the Uniform Commercial Code as the same may fromtime to time be in effect in the State of New York or the Uniform CommercialCode (or similar code or statute) of another jurisdiction, to the extent it may berequired to apply to any item or items of Collateral.

 

“**United States**”and “**U.S.**” mean the United States ofAmerica.

 

“**Unrestricted**”shall mean, when referring to cash or Cash Equivalents of the Borrower or anyof its Subsidiaries, that such cash or Cash Equivalents are not Restricted.

 

“**Unrestricted Subsidiary**”means (a) any Subsidiary of the Borrower which at the time ofdetermination is an Unrestricted Subsidiary (as designated by the Borrower, asprovided below) and (b) any Subsidiary of an Unrestricted Subsidiary. TheBorrower may designate any Subsidiary of the Borrower (including anyexisting Subsidiary and any newly acquired or newly formed Subsidiary) to be anUnrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries ownsany Equity Interests or Indebtedness of, or owns or holds any Lien on, anyproperty of, the Borrower or any Subsidiary of the Borrower (other than solelyany Subsidiary of the Subsidiary to be so designated); *provided*that

 

#### (i)                                     anyUnrestricted Subsidiary must be an entity of which the Equity Interestsentitled to cast at least a majority of the votes that may be cast by allEquity Interests having ordinary voting power for the election of directors orPersons performing a similar function are owned, directly or indirectly, by theBorrower;

####  

#### (ii)                                  suchdesignation complies with the covenants described under Section 7.02;

####  

#### (iii)                               eachof (A) the Subsidiary to be so designated and (B) its Subsidiarieshas not at the time of designation, and does not thereafter, create, incur,issue, assume, guarantee or otherwise become directly or indirectly liable withrespect to any Indebtedness pursuant to which the lender has recourse to any ofthe assets of the Borrower or any Restricted Subsidiary; and

####  

#### (iv)                              immediatelyafter giving effect to such designation, (I) no Default shall have occurred andbe continuing, and (II) the Borrower is in ProForma Compliancewith Section 7.05 (determined on a proforma basis takinginto account such designation).

####  

The Borrower may designate any UnrestrictedSubsidiary to be a Restricted Subsidiary; *provided* that,immediately after giving effect to such designation, (I) no Default shall haveoccurred and be continuing, (II) either (A) the Borrower could satisfy theFixed

 

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Charge Coverage Ratio Incurrence Test, on a proforma basis taking into account such designation or (B) immediatelyafter giving proforma effect to such designation, as if suchdesignation had occurred at the beginning of the applicable four-quarterperiod, the Fixed Charge Coverage Ratio for the Borrower and its RestrictedSubsidiaries would be greater than the Fixed Charge Coverage Ratio for theBorrower and its Restricted Subsidiaries immediately prior to such transactionand (III) the Borrower is in ProForma Compliance with Section 7.05(determined on a proforma basis taking into account suchdesignation).

 

Any such designation by the Borrower shall be notifiedby the Borrower to the Administrative Agent by promptly filing with theAdministrative Agent a copy of the resolution of the Board of Directors of theBorrower or any committee thereof giving effect to such designation and anOfficer’s Certificate certifying that such designation complied with theforegoing provisions.

 

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

 

“**Weighted Average Life toMaturity**” means, when applied to any Indebtedness, DisqualifiedStock or Preferred Stock, as the case may be, at any date, the quotientobtained by dividing (a) the sum of the products of the number of yearsfrom the date of determination to the date of each successive scheduledprincipal payment of such Indebtedness or redemption or similar payment withrespect to such Disqualified Stock or Preferred Stock multiplied by the amountof such payment; by (b) the sum of all such payments.

 

“**Wholly–Owned Subsidiary**”of any Person means a Subsidiary of such Person, 100% of the outstanding EquityInterests of which (other than directors’ qualifying shares and shares issuedto foreign nationals as required under applicable law) shall at the time beowned by such Person or by one or more Wholly–Owned Subsidiaries of such Personor by such Person and one or more Wholly–Owned Subsidiaries of such Person.

 

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

 

### (a)                                  Themeanings of defined terms are equally applicable to the singular and pluralforms of the defined terms.

###  

### (b)                                 (i)                                     Thewords “herein”, “hereto”, “hereof” and “hereunder” and words of similar importwhen used in any Loan Document shall refer to such Loan Document as a whole andnot to any particular provision thereof.

###  

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

####  

#### (iii)                               Theterm “including” is by way of example and not limitation.

 

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

####  

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

###  

### (d)                                 Section headingsherein and in the other Loan Documents are included for convenience ofreference only and shall not affect the interpretation of this Agreement or anyother Loan Document.

###  

### (e)                                  Forpurposes of any Collateral located in the Province of Quebec or charged by anydeed of hypothec (or any other Loan Document) and for all other purposespursuant to which the interpretation or construction of a Loan Document may besubject to the laws of the Province of Quebec or a court or tribunal exercisingjurisdiction in the Province of Québec, (q) “personal property” shall be deemedto include “movable property”, (r) “real property” shall be deemed to include “immovableproperty”, (s) “tangible property” shall be deemed to include “corporealproperty”, (t) “intangible property” shall be deemed to include “incorporealproperty”, (u) “security interest” and “mortgage” shall be deemed to include a “hypothec”,(v) all references to filing, registering or recording under the UCC orthe PPSA shall be deemed to include publication under the Civil Code of Québec,(w) all references to “perfection” of or “perfected” Liens shall be deemed toinclude a reference to the “opposability” of such Liens to third parties, (x)any “right of offset”, “right of setoff” or similar expression shall be deemedto include a “right of compensation”, (y) “goods” shall be deemed to include “corporealmovable property” other than chattel paper, documents of title, instruments,money and securities, and (z) an “agent” shall be deemed to include a “mandatary”.

###  

SECTION 1.03. Accounting Terms . (a) All accounting terms not specifically or completely defined herein shall beconstrued in conformity with, and all financial data (including financialratios and other financial calculations) required to be submitted pursuant tothis Agreement shall be prepared in conformity with, GAAP, except as otherwisespecifically prescribed herein.

 

(b)                                 Notwithstanding anything to the contraryherein, for purposes of determining compliance with any test or covenantcontained in this Agreement with respect to any period during which anySpecified Transaction occurs, the Consolidated Secured Debt Ratio, theConsolidated Total Leverage Ratio, Fixed Charge Coverage Ratio and compliancewith Section 7.05 shall be calculated with respect to such period and suchSpecified Transaction in a manner consistent with the proformaadjustments contemplated by the respective definition of Consolidated SecuredDebt Ratio, the Consolidated Total Leverage Ratio, Fixed Charge Coverage Ratioor Section 7.05, as the case may be.

 

(c)                                  The principal amount of any non-interestbearing or other discount security at any date shall be the principal amountthereof that would be shown on a balance sheet of the issuer dated such dateprepared in accordance with GAAP.

 

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SECTION 1.04. Rounding. Anyfinancial ratios required to be maintained by the Borrower pursuant to thisAgreement (or required to be satisfied in order for a specific action to bepermitted under this Agreement) shall be calculated by dividing the appropriatecomponent by the other component, carrying the result to one place more thanthe number of places by which such ratio is expressed herein and rounding theresult up or down to the nearest number (with a rounding-up if there is nonearest number).

 

SECTION 1.05. References toAgreements, Laws, Etc.   Unless otherwise expressly providedherein, (a) references to Organization Documents, agreements (includingthe Loan Documents) and other contractual instruments shall be deemed toinclude all subsequent amendments, restatements, extensions, supplements andother modifications thereto, but only to the extent that such amendments,restatements, extensions, supplements and other modifications are permitted by anyLoan Document; and (b) references to any Law shall include all statutoryand regulatory provisions consolidating, amending, replacing, supplementing orinterpreting such Law.

 

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SECTION 1.06. Times of Day. Unlessotherwise specified, all references herein to times of day shall be referencesto Eastern time (daylight or standard, as applicable).

 

SECTION 1.07. Timing of Payment orPerformance. When the payment of any obligation or the performance of any covenant,duty or obligation is stated to be due or performance required on a day whichis not a Business Day, the date of such payment (other than as described in thedefinition of Interest Period) or performance shall extend to the immediatelysucceeding Business Day.

 

SECTION 1.08. Currency EquivalentsGenerally. Any amount specified in this Agreement (other than in Articles2, 9 and 10) or any of the other Loan Documents to be in Dollars shall alsoinclude the equivalent of such amount in any currency other than Dollars, suchequivalent amount to be determined at the rate of exchange quoted by theReuters World Currency Page for the applicable currency at 11:00 a.m.(London time) on such day (or, in the event such rate does not appear on anyReuters World Currency Page, by reference to such other publicly availableservice for displaying exchange rates as may be agreed upon by theAdministrative Agent and the Borrower, or, in the absence of such agreement,such rate shall instead be the arithmetic average of the spot rates of exchangeof the Administrative Agent in the market where its foreign currency exchangeoperations in respect of such currency are then being conducted, at or about10:00 a.m. (New York City time) on such date for the purchase of Dollarsfor delivery two Business Days later). For purposes of determining compliancewith Section 7.05 and the Consolidated Secured Debt Ratio, the equivalentin Dollars of any Indebtedness denominated in a currency other than Dollarswill reflect the currency translation effects, determined in accordance withGAAP, of Swap Contracts for currency exchange risks with respect to theapplicable currency in effect on the date of determination of the Dollarequivalent of such other Indebtedness.

 

SECTION 1.09. Change of Currency.Each provision of this Agreement shall be subject to such reasonable changes ofconstruction as the Administrative Agent may from time to time specifywith the Borrower’s consent to appropriately reflect a change in currency ofany country and any relevant market conventions or practices relating to suchchange in currency.

 

# **ARTICLE II**

#  

# **The Commitments and Credit Extensions**

#  

SECTION 2.01. The Loans. Subjectto the terms and conditions set forth herein, each Lender severally agrees tomake to the Borrower a single loan denominated in Dollars in a principal amountequal to such Lender’s Commitment on the Closing Date. Amounts borrowed underthis Section 2.01 and repaid or prepaid may not be reborrowed. Loans may beBase Rate Loans or Eurocurrency Rate Loans, as further provided herein.

 

SECTION 2.02. Borrowings,Conversions and Continuations of Loans. (a)  Each Borrowing, each conversion of Loans fromone Type to the other, and each continuation of Eurocurrency Rate Loans shallbe made upon the Borrower’s irrevocable notice to the Administrative Agent,which may be given by telephone. Each such notice must be received by theAdministrative Agent not later than 12:30 p.m. (New York, New York time) (i) three(3)

 

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BusinessDays prior to the requested date of any Borrowing or continuation ofEurocurrency Rate Loans or any conversion of Base Rate Loans to EurocurrencyRate Loans, and (ii) one (1) Business Day before the requested dateof any Borrowing of Base Rate Loans or conversion of any Eurocurrency RateLoans to Base Rate Loans. Each telephonic notice by the Borrower pursuant tothis Section 2.02(a) must be confirmed promptly by delivery to theAdministrative Agent of a written Committed Loan Notice, appropriatelycompleted and signed by a Responsible Officer of the Borrower. Each Borrowingof, conversion to or continuation of Eurocurrency Rate Loans shall be in aprincipal amount of $2,500,000 or a whole multiple of $500,000 in excessthereof. Each Borrowing of or conversion to Base Rate Loans shall be in aprincipal amount of $500,000 or a whole multiple of $100,000 in excess thereof.Each Committed Loan Notice (whether telephonic or written) shall specify (i) whetherthe Borrower is requesting a Borrowing a conversion of Loans from one Type tothe other, or a continuation of Eurocurrency Rate Loans, (ii) therequested date of the Borrowing, conversion or continuation, as the case may be(which shall be a Business Day), (iii) the principal amount of Loans to beborrowed, converted or continued, (iv) the Type of Loans to be borrowed orto which existing Loans are to be converted, and (v) if applicable, theduration of the Interest Period with respect thereto. If the Borrower fails tospecify a Type of Loan in a Committed Loan Notice or fails to give a timelynotice requesting a conversion or continuation, then the applicable Loans shallbe made as, or converted to, Base Rate Loans. Any such automatic conversion toBase Rate Loans shall be effective as of the last day of the Interest Periodthen in effect with respect to the applicable Eurocurrency Rate Loans. If theBorrower requests a Borrowing of, conversion to, or continuation ofEurocurrency Rate Loans in any such Committed Loan Notice, but fails to specifyan Interest Period, it will be deemed to have specified an Interest Period ofone (1) month.

 

### (b)                                 Following receipt of aCommitted Loan Notice, the Administrative Agent shall promptly notify eachLender of the amount of its ProRata Share of the Loans, and ifno timely notice of a conversion or continuation is provided by the Borrower,the Administrative Agent shall notify each Lender of the details of anyautomatic conversion to Base Rate Loans or continuation described in Section 2.02(a).In the case of each Borrowing, each Lender shall make the amount of its Loanavailable to the Administrative Agent in Same Day Funds at the AdministrativeAgent’s Office not later than 1:00 p.m. on the Business Day specified inthe applicable Committed Loan Notice. Upon satisfaction of the applicableconditions set forth in Section 4.01, the Administrative Agent shall makeall funds so received available to the Borrower in like funds as received bythe Administrative Agent either by (i) crediting the account of theBorrower on the books of DBNY with the amount of such funds or (ii) wiretransfer of such funds, in each case in accordance with instructions providedto (and reasonably acceptable to) the Administrative Agent by the Borrower.

###  

### (c)                                  Except as otherwiseprovided herein, a Eurocurrency Rate Loan may be continued or convertedonly on the last day of an Interest Period for such Eurocurrency Rate Loanunless the Borrower pays the amount due, if any, under Section 3.05 inconnection therewith. During the existence of an Event of Default, theAdministrative Agent or the Required Lenders may require that no Loans may beconverted to or continued as Eurocurrency Rate Loans.

 

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### (d)                                 The AdministrativeAgent shall promptly notify the Borrower and the Lenders of the interest rateapplicable to any Interest Period for Eurocurrency Rate Loans upondetermination of such interest rate. The determination of the Eurocurrency Rateby the Administrative Agent shall be conclusive in the absence of manifesterror. At any time that Base Rate Loans are outstanding, the AdministrativeAgent shall notify the Borrower and the Lenders of any change in DBNY’s primerate used in determining the Base Rate promptly following the public announcementof such change.

###  

### (e)                                  After giving effectto all Borrowings, all conversions of Loans from one Type to the other, and allcontinuations of Loans as the same Type, there shall not be more than five (5) InterestPeriods in effect.

###  

### (f)                                    The failure of anyLender to make the Loan to be made by it as part of any Borrowing shallnot relieve any other Lender of its obligation, if any, hereunder to make itsLoan on the date of such Borrowing, but no Lender shall be responsible for thefailure of any other Lender to make the Loan to be made by such other Lender onthe date of any Borrowing.

###  

SECTION 2.03. [Reserved].

 

SECTION 2.04. [Reserved].

 

SECTION 2.05. Prepayments. (a)  *Optional*.(i)  The Borrower may, upon notice to the Administrative Agent, at anytime or from time to time voluntarily prepay Loans in whole or in part withoutpremium or penalty; *provided* that (1) suchnotice must be received by the Administrative Agent not later than 12:30 p.m.(New York, New York time) (A) three (3) Business Days prior to anydate of prepayment of Eurocurrency Rate Loans and (B) one (1) BusinessDay prior to any date of prepayment of Base Rate Loans; (2) any prepaymentof Eurocurrency Rate Loans shall be in a principal amount of $2,500,000 or awhole multiple of $500,000 in excess thereof; and (3) any prepayment ofBase Rate Loans shall be in a principal amount of $500,000 or a whole multipleof $100,000 in excess thereof or, in each case, if less, the entire principalamount thereof then outstanding. Each such notice shall specify the date andamount of such prepayment, the Type(s) of Loans to be prepaid and the manner inwhich such prepayment shall be applied to scheduled repayments of Loansrequired pursuant to Section 2.07; *provided* thatin the event such notice fails to specify the manner in which the respectiveprepayment shall be applied to scheduled repayments of Loans required pursuantto Section 2.07, such prepayment of Loans shall be applied in direct orderof maturity to scheduled repayments required pursuant to Section 2.07. TheAdministrative Agent will promptly notify each Lender of its receipt of eachsuch notice, and of the amount of such Lender’s ProRata Share ofsuch prepayment. If such notice is given by the Borrower, the Borrower shallmake such prepayment and the payment amount specified in such notice shall bedue and payable on the date specified therein. Any prepayment of a EurocurrencyRate Loan shall be accompanied by all accrued interest thereon, together withany additional amounts required pursuant to Section 3.05. Each prepaymentof the Loans pursuant to this Section 2.05(a) shall be paid to theLenders in accordance with their respective ProRata Shares.

 

(ii)                                  Notwithstanding anything to the contrarycontained in this Agreement, the Borrower may rescind any notice ofprepayment under Section 2.05(a)(i) if such prepayment

 

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would have resulted from a refinancing of all of theoutstanding Loans, which refinancing shall not be consummated or shall otherwisebe delayed.

 

### (b)                                 *Mandatory*.(i)  Within five (5) Business Days after financial statements havebeen delivered pursuant to Section 6.01(a) and the related ComplianceCertificate has been delivered pursuant to Section 6.02(b), the Borrowershall cause to be prepaid an aggregate principal amount of Loans in an amountequal to (A) the Required Percentage of Excess Cash Flow, if any, for theExcess Cash Flow Period covered by such financial statements *minus* (B) the aggregate amount of all voluntary prepaymentsof Loans during such Excess Cash Flow Period to the extent such prepayments arenot funded with the proceeds of Indebtedness.

###  

#### (ii)                                  If the Borrower orany Restricted Subsidiary incurs or issues any Indebtedness not expresslypermitted to be incurred or issued pursuant to Section 7.03, the Borrowershall cause to be prepaid an aggregate principal amount of Loans in an amountequal to 100% of all Net Proceeds received therefrom on or prior to the datewhich is five (5) Business Days after the receipt of such Net Proceeds.

####  

#### (iii)                               Each prepayment of Loanspursuant to this Section 2.05(b) shall be applied in direct order ofmaturity to scheduled repayments of Loans required pursuant to Section 2.07and each such prepayment shall be paid to the Lenders in accordance with theirrespective ProRata Shares.

####  

#### (iv)                              The Borrower shall notifythe Administrative Agent in writing of any mandatory prepayment of Loansrequired to be made pursuant to clauses (i) and (ii) of this Section 2.05(b) atleast three (3) Business Days prior to the date of such prepayment. Eachsuch notice shall specify the date of such prepayment and provide a reasonablydetailed calculation of the amount of such prepayment. The Administrative Agentwill promptly notify each Lender of the contents of the Borrower’s prepaymentnotice and of such Lender’s ProRata Share of the prepayment.

####  

### (c)                                  *AssetSale/Casualty Event Offer to Purchase*. (i)  Within 450 daysafter the receipt of any Net Proceeds of any Asset Sale or Casualty Event, theBorrower or the applicable Restricted Subsidiary, at its option, may applycash in an amount equal to the Net Proceeds from such Asset Sale or CasualtyEvent (A) (I) if the assets subject to the respective Asset Sale orCasualty Event constituted TL Priority Collateral (x) to make an offer to theLenders to prepay Loans in accordance with the procedures set forth below foran Asset Sale/Casualty Event Offer, or (y) to make an offer to purchase, prepayor permanently reduce Other PariPassu Lien Obligations incurredafter the Closing Date secured by a Permitted Collateral Lien; *provided, however*, that in connection with any prepayment,repayment or purchase of Indebtedness pursuant to clause (I)(y), (1) theBorrower or such Restricted Subsidiary shall permanently retire suchIndebtedness and, in the case of obligations under revolving credit facilitiesor other similar Indebtedness, shall correspondingly permanently reducecommitments with respect thereto (other than obligations owed to the Borroweror a Restricted Subsidiary) and (2) the Borrower or such RestrictedSubsidiary will equally and ratably reduce the amount of Indebtednessoutstanding under this Agreement by, at its option, prepaying Loans inaccordance with Section 2.05(a) or making an offer to all Lenders to prepaytheir Loans in accordance with the procedures set forth below for an Asset Sale/Casualty Event

 

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### Offer, or (II) if the assets subject to the respective Asset Sale orCasualty Event constituted ABL Priority Collateral, to repay outstanding ABLLoans as, and to the extent, required by any “cash sweep” provisions in the ABLCredit Agreement, or (B) so long as no Event of Default then exists, toacquire Additional Assets; *provided, however*,that, if the assets subject to the respective Asset Sale or Casualty Eventconstituted TL Priority Collateral, any such Additional Assets so acquiredshall constitute TL Priority Collateral and concurrently with their acquisitionshall be added to the Collateral securing the Secured Obligations in accordancewith the provisions of Section 6.11 and the Collateral Documents, andprovided, further, that to the extent such Additional Assets constitute theCapital Stock of any Person that is required to become a Guarantor pursuant tothe Collateral and Guarantee Requirement and Section 6.11, the assets ofsuch Person that may be used or useful in a Similar Business are, inaccordance with the provisions of Section 6.11 and the CollateralDocuments, concurrently with the acquisition added to the Collateral securingthe Secured Obligations. Notwithstanding the foregoing, if during such 450-dayperiod the Borrower or a Restricted Subsidiary enters into a definitive bindingagreement committing it to apply such Net Proceeds of any Asset Sale orCasualty Event to acquire Additional Assets pursuant to clause (B) of thisSection 2.05(c), then, so long as no Event of Default then exists, such450-day period will be extended with respect to the amount of Net Proceeds socommitted until such Net Proceeds are required to be applied in accordance withsuch agreement (but such extension will in no event be for a period longer than180 days) (or, if earlier, the date of termination of such agreement).

###  

#### (ii)                                  Any Net Proceeds fromthe Asset Sale or the Casualty Event, as the case may be, that are notinvested or applied as provided and within the time period set forth in Section 2.05(c)(i) willbe deemed to constitute “**Excess Proceeds**”.When the aggregate amount of Excess Proceeds exceeds $50,000,000, the Borrowershall (x) make an offer within ten (10) Business Days after the date thatExcess Proceeds exceed $50,000,000 to all Lenders in accordance with theprocedures set forth below for an Asset Sale/Casualty Event Offer, to prepaythe maximum aggregate principal amount of Loans that is an integral multiple of$1,000 that may be purchased out of the Excess Proceeds at a prepaymentprice in cash equal to 100% of the principal amount thereof, *plus* accrued and unpaid interest to the date of prepaymentin accordance with the terms contemplated in this Section 2.05(c); and (y)prepay all the Loans of Lenders properly accepting such offer of prepayment inaccordance with such Asset Sale/Casualty Event Offer (subject to the prorationprovisions set forth in paragraph (v) of this Section 2.05(c)). TheBorrower may satisfy the foregoing obligations with respect to any NetProceeds from an Asset Sale or a Casualty Event, as the case may be, bymaking an Asset Sale/Casualty Event Offer with respect to such Net Proceedsprior to the expiration of the relevant 450-day period or with respect toExcess Proceeds of $50,000,000 or less.

####  

#### (iii)                               An “**Asset Sale/Casualty Event Offer**” means anotice delivered to the Administrative Agent (which will promptly furnish suchnotice to the Lenders) stating:

####  

(I)                                    that an Asset Sale/Casualty Event Offeris being made pursuant to this Section 2.05(c) and that such Lenderhas the right to require the Borrower to prepay all or a portion of such Lender’sLoans (subject to the proration provisions set forth in paragraph (v) ofthis Section 2.05(c)) at a purchase price in cash equal to 100% of theprincipal amount thereof, *plus* accruedand unpaid interest to the date of prepayment; and

 

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(II)                                the prepayment date (which shall be noearlier than thirty (30) days nor later than sixty (60) days from the date suchnotice is mailed).

 

#### (iv)                              On the prepayment date,the Borrower (subject to the proration provisions set forth in paragraph (v) ofthis Section 2.05(c)) shall prepay the Loans of all Lenders who accept theAsset Sale/Casualty Event Offer at a purchase price in cash equal to 100% ofthe principal amount thereof, *plus* accruedand unpaid interest to the date of prepayment. If at the time of any prepaymentpursuant to this Section 2.05(c) there shall be outstandingBorrowings of different Types or Eurocurrency Rate Loans with differentInterest Periods, and if some but not all Lenders shall have accepted suchAsset Sale/Casualty Event Offer, then the aggregate amount of such prepaymentshall be allocated ratably to each outstanding Borrowing that comprises theLoans of the accepting Lenders. All prepayments of Loans under this Section 2.05(c) shallbe subject to Section 2.05(d).

####  

#### (v)                                 To the extent that theaggregate amount of the Loans accepted pursuant to an Asset Sale/Casualty EventOffer is less than the Excess Proceeds, the Borrower may use any remainingExcess Proceeds for general corporate purposes, subject to the terms of thisAgreement. If the aggregate principal amount of the Loans accepted in an AssetSale/Casualty Event Offer exceeds the amount of Excess Proceeds, the prepaymentshall be applied against such Loans on a prorata basis based onthe principal amount of the Loans tendered for acceptance. Upon completion ofany such Asset Sale/Casualty Event Offer, the amount of Excess Proceeds relatedto such Asset Sale/Casualty Event Offer shall be reset to zero (regardless ofwhether or not there are any remaining Excess Proceeds upon such completion).

####  

#### (vi)                              Pending the finalapplication of any Net Proceeds pursuant to this Section 2.05(c), theBorrower or the applicable Restricted Subsidiary may apply such NetProceeds temporarily to reduce Indebtedness outstanding under a revolving creditfacility or otherwise invest such Net Proceeds in any manner not prohibited bythis Agreement.

####  

#### (vii)                           Each prepayment of Loanspursuant to this Section 2.05(c) shall be applied in direct order ofmaturity to scheduled repayments of Loans required pursuant to Section 2.07.

####  

### (d)                                 Funding Losses, Etc. Allprepayments under this Section 2.05 shall be made together with, in thecase of any such prepayment of a Eurocurrency Rate Loan on a date prior to thelast day of an Interest Period therefor, any amounts owing in respect of suchEurocurrency Rate Loan pursuant to Section 3.05. Notwithstanding any ofthe other provisions of Section 2.05, so long as no Event of Default shallhave occurred and be continuing, if any prepayment of Eurocurrency Rate Loansis required to be made under this Section 2.05, prior to the last day ofthe Interest Period therefor, in lieu of making any payment pursuant to this Section 2.05in respect of any such Eurocurrency Rate Loan prior to the last day of theInterest Period therefor, the Borrower may, in its sole discretion, deposit theamount of any such prepayment otherwise required to be made thereunder into aCash Collateral Account until the last day of such Interest Period, at whichtime the Administrative Agent shall be authorized (without any further actionby or notice to or from the Borrower or any other Loan Party) to apply suchamount to the prepayment of such Loans in accordance with this Section 2.05.Upon the occurrence and during the continuance of any Event of Default, theAdministrative Agent

 

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### shall also be authorized (without any further action by or notice to orfrom the Borrower or any other Loan Party) to apply such amount to theprepayment of the outstanding Loans in accordance with the relevant provisionsof this Section 2.05.

###  

SECTION 2.06. Termination ofCommitments. The Commitment of each Lender shall be automatically andpermanently reduced to $0 upon the making of such Lender’s Loans pursuant to Section 2.01.

 

SECTION 2.07. Amortization of Loans.The Borrower shall repay to the Administrative Agent for the ratable account ofthe Lenders (i) on the last Business Day of each April, July, October andJanuary, commencing with the last Business Day of January, 2007, an aggregateprincipal amount equal to 0.25% of the aggregate principal amount of all Loansoutstanding on the Closing Date (which payments shall be reduced as a result ofthe application of prepayments in accordance with the order of priority set forthin Section 2.05) and (ii) on the Maturity Date, the aggregateprincipal amount of all Loans outstanding on such date.

 

SECTION 2.08. Interest. (a)  Subject tothe provisions of Section 2.08(b), (i) each Eurocurrency Rate Loanshall bear interest on the outstanding principal amount thereof for eachInterest Period at a rate per annum equal to the Eurocurrency Rate for suchInterest Period *plus* the Applicable Rate; and (ii) eachBase Rate Loan shall bear interest on the outstanding principal amount thereoffrom the applicable Borrowing date at a rate per annum equal to the Base Rate *plus* the Applicable Rate.

 

### (b)                                 The Borrower shall payinterest on past due amounts hereunder at a fluctuating interest rate per annumat all times equal to the Default Rate to the fullest extent permitted byapplicable Laws. Accrued and unpaid interest on past due amounts (includinginterest on past due interest) shall be due and payable upon demand.

###  

### (c)                                  Interest on each Loanshall be due and payable in arrears on each Interest Payment Date applicablethereto and at such other times as may be specified herein. Interesthereunder shall be due and payable in accordance with the terms hereof beforeand after judgment, and before and after the commencement of any proceedingunder any Debtor Relief Law.

###  

### (d)                                 All computations ofinterest hereunder shall be made in accordance with Section 2.10.

###  

SECTION 2.09. Fees. The Borrowershall pay to the Agents such fees as shall have been separately agreed upon inwriting in the amounts and at the times so specified. Such fees shall be fullyearned when paid and shall not be refundable for any reason whatsoever (exceptas expressly agreed between the Borrower and the applicable Agent).

 

SECTION 2.10. Computation of Interestand Fees. All computations of interest for Base Rate Loans when the BaseRate is determined by DBNY’s “prime rate” shall be made on the basis of a yearof three hundred and sixty-five (365) days or three hundred and sixty-six (366)days, as applicable, and actual days elapsed. All other computations of feesand interest shall be made on the basis of a three hundred and sixty (360) dayyear and actual days elapsed. Interest shall accrue on each Loan for the day onwhich the Loan is made, and shall not accrue on

 

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a Loan, or any portion thereof, for the day on which the Loan or suchportion is paid; *provided* that any Loan that isrepaid on the same day on which it is made shall, subject to Section 2.12(a),bear interest for one (1) day. Each determination by the AdministrativeAgent of an interest rate or fee hereunder shall be conclusive and binding forall purposes, absent manifest error.

 

SECTION 2.11. Evidence ofIndebtedness. (a) The Loans made by each Lender shall be evidenced by one or more accounts orrecords maintained by such Lender and evidenced by one or more entries in theRegister maintained by the Administrative Agent, acting solely for purposes ofTreasury Regulation Section 5f.103-1(c), as agent for the Borrower, ineach case in the ordinary course of business. The accounts or recordsmaintained by the Administrative Agent and each Lender shall be *prima facie* evidence absent manifest error of the amount ofthe Loans made by the Lenders to the Borrower and the interest and paymentsthereon. Any failure to so record or any error in doing so shall not, however,limit or otherwise affect the obligation of the Borrower hereunder to pay anyamount owing with respect to the Obligations. In the event of any conflictbetween the accounts and records maintained by any Lender and the accounts andrecords of the Administrative Agent in respect of such matters, the accountsand records of the Administrative Agent shall control in the absence ofmanifest error. Upon the request of any Lender made through the AdministrativeAgent, the Borrower shall execute and deliver to such Lender (through theAdministrative Agent) a Note payable to such Lender, which shall evidence suchLender’s Loans in addition to such accounts or records. Each Lender may attachschedules to its Note and endorse thereon the date, Type (if applicable),amount and maturity of its Loans and payments with respect thereto.

 

### (b)                                 Entries made in goodfaith by the Administrative Agent in the Register pursuant to Section 2.11(a),and by each Lender in its account or accounts pursuant to Sections 2.11(a),shall be *prima facie* evidence of the amount ofprincipal and interest due and payable or to become due and payable from theBorrower to, in the case of the Register, each Lender and, in the case of suchaccount or accounts, such Lender, under this Agreement and the other LoanDocuments, absent manifest error; *provided* thatthe failure of the Administrative Agent or such Lender to make an entry, or anyfinding that an entry is incorrect, in the Register or such account or accountsshall not limit or otherwise affect the obligations of the Borrower under thisAgreement and the other Loan Documents.

###  

SECTION 2.12. Payments Generally. (a)  All paymentsto be made by the Borrower shall be made without condition or deduction for anycounterclaim, defense, recoupment or setoff. Except as otherwise expresslyprovided herein, all payments by the Borrower hereunder shall be made to theAdministrative Agent, for the account of the respective Lenders to which suchpayment is owed, at the applicable Administrative Agent’s Office in Dollars andin Same Day Funds not later than 2:00 p.m. on the date specified herein. TheAdministrative Agent will promptly distribute to each Lender its Pro Rata Share(or other applicable share as provided herein) of such payment in like funds asreceived by wire transfer to such Lender’s Lending Office. All paymentsreceived by the Administrative Agent after 2:00 p.m. on the relevant dateshall be deemed received on the next succeeding Business Day and any applicableinterest or fee shall continue to accrue.

 

### (b)                                 If any payment to bemade by the Borrower shall come due on a day other than a Business Day, paymentshall be made on the next following Business Day, and such

 

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### extension of time shall be reflected in computing interest or fees, asthe case may be; *provided* that,if such extension would cause payment of interest on or principal ofEurocurrency Rate Loans to be made in the next succeeding calendar month, suchpayment shall be made on the immediately preceding Business Day.

###  

### (c)                                  Unless the Borroweror any Lender has notified the Administrative Agent, prior to the date anypayment is required to be made by it to the Administrative Agent hereunder,that the Borrower or such Lender, as the case may be, will not make suchpayment, the Administrative Agent may assume that the Borrower or suchLender, as the case may be, has timely made such payment and may (butshall not be so required to), in reliance thereon, make available acorresponding amount to the Person entitled thereto. If and to the extent thatsuch payment was not in fact made to the Administrative Agent in Same DayFunds, then:

###  

#### (i)                                     ifthe Borrower failed to make such payment, each Lender shall forthwith on demandrepay to the Administrative Agent the portion of such assumed payment that wasmade available to such Lender in Same Day Funds, together with interest thereonin respect of each day from and including the date such amount was madeavailable by the Administrative Agent to such Lender to the date such amount isrepaid to the Administrative Agent in Same Day Funds at the Federal Funds Ratefrom time to time in effect; and

####  

#### (ii)                                  ifany Lender failed to make such payment, such Lender shall forthwith on demandpay to the Administrative Agent the amount thereof in Same Day Funds, togetherwith interest thereon for the period from the date such amount was madeavailable by the Administrative Agent to the Borrower to the date such amountis recovered by the Administrative Agent (the “**Compensation Period**”) at a rate per annum equal to the FederalFunds Rate from time to time in effect. When such Lender makes payment to theAdministrative Agent (together with all accrued interest thereon), then suchpayment amount (excluding the amount of any interest which may haveaccrued and been paid in respect of such late payment) shall constitute suchLender’s Loan included in the applicable Borrowing. If such Lender does not paysuch amount forthwith upon the Administrative Agent’s demand therefor, theAdministrative Agent may make a demand therefor upon the Borrower, and theBorrower shall pay such amount to the Administrative Agent, together withinterest thereon for the Compensation Period at a rate per annum equal to therate of interest applicable to the applicable Borrowing. Nothing herein shallbe deemed to relieve any Lender from its obligation to fulfill its Commitmentor to prejudice any rights which the Administrative Agent or the Borrower may haveagainst any Lender as a result of any default by such Lender hereunder.

####  

A notice of the Administrative Agent to any Lender orthe Borrower with respect to any amount owing under this Section 2.12(c) shallbe conclusive, absent manifest error.

 

### (d)                                 If any Lender makesavailable to the Administrative Agent funds for any Loan to be made by suchLender as provided in the foregoing provisions of this Article 2, and suchfunds are not made available to the Borrower by the Administrative Agentbecause the conditions to the applicable Borrowing set forth in Article 4are not satisfied or waived in

 

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### accordance with the terms hereof, the Administrative Agent shall returnsuch funds (in like funds as received from such Lender) to such Lender, withoutinterest.

###  

### (e)                                  The obligations ofthe Lenders hereunder to make Loans are several and not joint. The failure ofany Lender to make any Loan on any date required hereunder shall not relieveany other Lender of its corresponding obligation to do so on such date, and noLender shall be responsible for the failure of any other Lender to so make itsLoan.

###  

### (f)                                    Nothing hereinshall be deemed to obligate any Lender to obtain the funds for any Loan in anyparticular place or manner or to constitute a representation by any Lender thatit has obtained or will obtain the funds for any Loan in any particular placeor manner.

###  

### (g)                                 Whenever any paymentreceived by the Administrative Agent under this Agreement or any of the otherLoan Documents is insufficient to pay in full all amounts due and payable tothe Administrative Agent and the Lenders under or in respect of this Agreementand the other Loan Documents on any date, such payment shall be distributed bythe Administrative Agent and applied by the Administrative Agent and theLenders in the order of priority set forth in Section 8.04. If theAdministrative Agent receives funds for application to the Obligations of theLoan Parties under or in respect of the Loan Documents under circumstances forwhich the Loan Documents do not specify the manner in which such funds are tobe applied, the Administrative Agent may, but shall not be obligated to, electto distribute such funds to each of the Lenders in accordance with such Lender’sProRata Share of the Outstanding Amount of all Loans outstandingat such time, in repayment or prepayment of such of the outstanding Loans orother Obligations then owing to such Lender.

###  

SECTION 2.13. Sharing of Payments.If, other than as expressly provided elsewhere herein, any Lender shall obtainon account of the Loans made by it, any payment (whether voluntary,involuntary, through the exercise of any right of setoff, or otherwise) inexcess of its ratable share (or other share contemplated hereunder) thereof,such Lender shall immediately (a) notify the Administrative Agent of suchfact, and (b) purchase from the other Lenders such participations in theLoans made by them as shall be necessary to cause such purchasing Lender toshare the excess payment in respect of such Loans prorata witheach of them; *provided* that if all or anyportion of such excess payment is thereafter recovered from the purchasingLender under any of the circumstances described in Section 10.06(including pursuant to any settlement entered into by the purchasing Lender inits discretion), such purchase shall to that extent be rescinded and each otherLender shall repay to the purchasing Lender the purchase price paid therefor,together with an amount equal to such paying Lender’s ratable share (accordingto the proportion of (i) the amount of such paying Lender’s requiredrepayment to (ii) the total amount so recovered from the purchasingLender) of any interest or other amount paid or payable by the purchasingLender in respect of the total amount so recovered, without further interestthereon. The Borrower agrees that any Lender so purchasing a participation fromanother Lender may, to the fullest extent permitted by applicable Law, exerciseall its rights of payment (including the right of setoff, but subject to Section 10.09)with respect to such participation as fully as if such Lender were the directcreditor of the Borrower in the amount of such participation. TheAdministrative Agent will keep records (which shall be conclusive and bindingin the absence of manifest error) of participations purchased under this Section 2.13and will in each case notify the Lenders following any such purchases orrepayments. Each Lender

 

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that purchases a participation pursuant to this Section 2.13 shallfrom and after such purchase have the right to give all notices, requests,demands, directions and other communications under this Agreement with respectto the portion of the Obligations purchased to the same extent as though thepurchasing Lender were the original owner of the Obligations purchased.

 

SECTION 2.14. Provisions Applicableto Canadian Loan Parties. (a) For the purposes of the Interest Act (Canada), to the extentapplicable, whenever any interest payable by a Canadian Subsidiary Guarantor iscalculated on the basis of a period of time other than a year of 365 or 366days, as applicable, the annual rate of interest to which each rate of interestutilized pursuant to such calculation is equivalent is such rate so utilizedmultiplied by the actual number of days in the calendar year in which the sameis to be ascertained and divided by the number of days in such calculation.

 

### (b)                                 Notwithstanding anyprovision herein to the contrary, in no event will the aggregate “interest” (asdefined in section 347 of the Criminal Code (Canada)) payable by aCanadian Loan Party under any Loan Document exceed the maximum effective annualrate of interest on the “credit advanced” (as defined in that section 347)permitted under that section and, if any payment, collection or demandpursuant to such Loan Document in respect of “interest” (as defined in that section 347)is determined to be contrary to the provisions of such section 347, suchpayment, collection or demand will be deemed to have been made by mutualmistake of such Canadian Loan Party, the Administrative Agent and theapplicable Lender or Lenders and the amount of such payment or collection willbe refunded to such Canadian Loan Party only to the extent of the amount whichis greater than the maximum effective annual rate permitted by such laws. Forpurposes of determining compliance with such section 347, the effectiveannual rate of interest will be determined in accordance with generallyaccepted actuarial practices and principles over the term of this Agreementand, in the event of dispute, a certificate of a Fellow of the CanadianInstitute of Actuaries appointed by the Administrative Agent will be *prima facie* evidence for the purposes of such determination.

###  

### (c)                                  For the purposes ofthe Interest Act (Canada), to the extent applicable, the principle of deemedreinvestment of interest will not apply to any interest calculation under theLoan Documents, and the rates of interest stipulated in this Agreement areintended to be nominal rates and not effective rates or yields.

###  

# **ARTICLE III**

#  

# **Taxes, Increased Costs Protection and Illegality**

#  

SECTION 3.01. Taxes. (a)  Except asprovided in this Section 3.01, any and all payments by the Loan Parties toor for the account of any Agent or any Lender under any Loan Document shall bemade free and clear of and without deduction or withholding for any and allpresent or future taxes, duties, levies, imposts, deductions, assessments,fees, withholdings or similar charges, and all liabilities (including additionsto tax, penalties and interest) with respect thereto, excluding, in the case ofeach Agent and each Lender, taxes imposed on or measured by its net income or netprofits (including branch profits), and franchise (and similar) taxes imposedon it in lieu of net income taxes, by the jurisdiction (or any politicalsubdivision thereof) under the Laws of which such Agent or such Lender, as thecase may be, is organized or maintains a

 

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LendingOffice, and all liabilities (including additions to tax, penalties andinterest) with respect thereto (all such non-excluded taxes, duties, levies,imposts, deductions, assessments, fees, withholdings or similar charges, andliabilities with respect thereto being hereinafter referred to as “**Taxes**”). If any Loan Party shall be required by any Laws todeduct or withhold any Taxes or Other Taxes from or in respect of any sumpayable under any Loan Document to any Agent or any Lender, (i) the sumpayable shall be increased as necessary so that after making all requireddeductions and withholdings (including deductions and withholdings applicableto additional sums payable under this Section 3.01), each of such Agentand such Lender receives an amount equal to the sum it would have received hadno such deductions and withholdings been made, (ii) such Loan Party shallmake such deductions and withholdings, (iii) such Loan Party shall pay thefull amount deducted and withheld to the relevant taxation authority or otherauthority in accordance with applicable Laws, and (iv) within thirty (30)days after the date of such payment (or, if receipts or evidence are notavailable within thirty (30) days, as soon as reasonably possible thereafter),such Loan Party shall furnish to such Agent or Lender (as the case may be)the original or a certified copy of a receipt evidencing payment thereof to theextent such a receipt is issued therefor, or other written proof of paymentthereof that is reasonably satisfactory to the Administrative Agent. If anyLoan Party fails to pay any Taxes or Other Taxes when due to the appropriatetaxing authority or fails to remit to any Agent or any Lender the required receiptsor other required documentary evidence, such Loan Party shall indemnify suchAgent and such Lender for any incremental taxes, interest or penalties that may becomepayable by such Agent or such Lender arising out of such failure.

 

### (b)                                 In addition, each LoanParty agrees to pay any and all present or future stamp, court or documentarytaxes and any other excise, property, intangible or mortgage recording taxes orcharges or similar levies which arise from any payment made under any LoanDocument or from the execution, delivery, performance, enforcement orregistration of, or otherwise with respect to, any Loan Document other than,for the avoidance of doubt, any excluded taxes or other similar excludedamounts described in Section 3.01(a) above (hereinafter referred toas “**Other Taxes**”).

###  

### (c)                                  Each Loan Partyagrees to indemnify each Agent and each Lender for (i) the full amount ofTaxes and Other Taxes (including any Taxes or Other Taxes imposed or assertedby any jurisdiction on amounts payable under this Section 3.01) paid bysuch Agent and such Lender and (ii) any liability (including additions totax, penalties, interest and expenses) arising therefrom or with respectthereto, in each case whether or not such Taxes or Other Taxes were correctlyor legally imposed or asserted by the relevant Governmental Authority; providedsuch Agent or Lender, as the case may be, provides such Loan Party with awritten statement thereof setting forth in reasonable detail the basis andcalculation of such amounts. Payment under this Section 3.01(c) shallbe made within thirty (30) days after the date such Lender or such Agent makesa demand therefor. The obligations of the Loan Parties under this Section 3.01(c) shallbe joint and several. Notwithstanding anything to the contrary in thisAgreement, the obligations of the Loan Parties under this Section 3.01(c) shallsurvive the payment in full of principal, interest, fees and any other amountspayable hereunder and the termination of this Agreement.

###  

### (d)                                 No Loan Party shall berequired pursuant to this Section 3.01 to pay any additional amount to, orto indemnify, any Lender or Agent, as the case may be, to the extent that

 

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### such Lender or such Agent becomes subject to Taxes subsequent to theClosing Date (or, if later, the date such Lender or Agent becomes a party tothis Agreement) as a result of a change in the place of organization of suchLender or Agent or a change in the lending office of such Lender, except to theextent that any such change is requested or required in writing by the Borrower(and *provided* that nothing in this clause (d) shallbe construed as relieving the Borrower from any obligation to make suchpayments or indemnification in the event of a change in lending office or placeof organization that precedes a change in Law to the extent such Taxes resultfrom a change in Law).

###  

### (e)                                  If at the date of theAssignment and Assumption pursuant to which a Lender becomes a party to thisAgreement, the Lender assignor was entitled to payments under clause (a) ofthis Section 3.01 in respect of withholding tax with respect to interestpaid at such date, then, to such extent, the term Taxes shall include (inaddition to withholding taxes that may be imposed in the future or otheramounts otherwise includable in Taxes) withholding tax, if any, applicable withrespect to the Lender assignee on such date.

###  

### (f)                                    If any Lender orAgent determines, in its reasonable discretion, that it has received a refundin respect of any Taxes or Other Taxes as to which indemnification oradditional amounts have been paid to it by any Loan Party pursuant to this Section 3.01,it shall promptly remit such refund (but only to the extent of indemnitypayments made, or additional amounts paid, by such Loan Party under this Section 3.01with respect to the Taxes or Other Taxes giving rise to such refund *plus* any interest included in such refund by the relevanttaxing authority attributable thereto) to such Loan Party, net of allout-of-pocket expenses of the Lender or Agent, as the case may be andwithout interest (other than any interest paid by the relevant taxing authoritywith respect to such refund); *provided* thatsuch Loan Party, upon the request of the Lender or Agent, as the case may be,agrees promptly to return such refund to such party in the event such party isrequired to repay such refund to the relevant taxing authority. Such Lender orAgent, as the case may be, shall, at such Loan Party’s request, providesuch Loan Party with a copy of any notice of assessment or other evidence ofthe requirement to repay such refund received from the relevant taxingauthority (*provided* that such Lender or Agent may deleteany information therein that such Lender or Agent deems confidential). Nothingherein contained shall interfere with the right of a Lender or Agent to arrangeits tax affairs in whatever manner it thinks fit nor oblige any Lender or Agentto claim any tax refund or to make available its tax returns or disclose anyinformation relating to its tax affairs or any computations in respect thereofor require any Lender or Agent to do anything that would prejudice its abilityto benefit from any other refunds, credits, reliefs, remissions or repaymentsto which it may be entitled.

###  

### (g)                                 Each Lender agreesthat, upon the occurrence of any event giving rise to the operation of Section 3.01(a) or(c) with respect to such Lender it will, if requested by the Borrower, usecommercially reasonable efforts (subject to such Lender’s overall internalpolicies of general application and legal and regulatory restrictions) todesignate another Lending Office for any Loan affected by such event; *provided* that such efforts are made on terms that, in thesole judgment of such Lender, cause such Lender and its Lending Office(s) tosuffer no economic, legal or regulatory disadvantage, and *providedfurther*, that nothing in this Section 3.01(g) shall affector postpone any of the Obligations of any Loan Party or the rights of suchLender pursuant to Section 3.01(a) or (c).

 

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### (h)                                 In addition to theprovisions of Section 3.01(a), in respect of amounts paid or credited by aLoan Party that is resident in Canada for purposes of the ITA to or for thebenefit of a Lender or Agent that is an “authorized foreign bank” for purposesof the ITA, the obligations under Section 3.01 to pay an additional amountshall apply where the particular Lender or Agent is liable for Taxes under Part XIIIof the ITA in respect of such payment, even if such Loan Party is not requiredunder the ITA to deduct or withhold an amount in respect of Indemnified Taxeson such payment and Section 3.01 shall apply, mutatis mutandis, as if suchLoan Party was required to deduct or withhold an amount in respect of suchTaxes.

###  

SECTION 3.02. Illegality. If anyLender determines that any Law has made it unlawful, or that any GovernmentalAuthority has asserted that it is unlawful, for any Lender or its applicableLending Office to make, maintain or fund Eurocurrency Rate Loans, or todetermine or charge interest rates based upon the Eurocurrency Rate, then, onnotice thereof by such Lender to the Borrower through the Administrative Agent,any obligation of such Lender to make or continue Eurocurrency Rate Loans or toconvert Base Rate Loans to Eurocurrency Rate Loans shall be suspended untilsuch Lender notifies the Administrative Agent and the Borrower that thecircumstances giving rise to such determination no longer exist. Upon receiptof such notice, the Borrower shall upon demand from such Lender (with a copy tothe Administrative Agent), prepay or, if applicable, convert all EurocurrencyRate Loans of such Lender to Base Rate Loans, either on the last day of theInterest Period therefor, if such Lender may lawfully continue to maintainsuch Eurocurrency Rate Loans to such day, or promptly, if such Lender may notlawfully continue to maintain such Eurocurrency Rate Loans. Upon any suchprepayment or conversion, the Borrower shall also pay accrued interest on theamount so prepaid or converted and all amounts due, if any, in connection withsuch prepayment or conversion under Section 3.05. Each Lender agrees todesignate a different Lending Office if such designation will avoid the needfor such notice and will not, in the good faith judgment of such Lender,otherwise be materially disadvantageous to such Lender.

 

SECTION 3.03. Inability to DetermineRates. If the Required Lenders determine that for any reason adequate andreasonable means do not exist for determining the Eurocurrency Rate for anyrequested Interest Period with respect to a proposed Eurocurrency Rate Loan, orthat the Eurocurrency Rate for any requested Interest Period with respect to aproposed Eurocurrency Rate Loan does not adequately and fairly reflect the costto such Lenders of funding such Loan, or that Dollar deposits are not beingoffered to banks in the London interbank eurodollar market for the applicableamount and the Interest Period of such Eurocurrency Rate Loan, the AdministrativeAgent will promptly so notify the Borrower and each Lender. Thereafter, theobligation of the Lenders to make or maintain Eurocurrency Rate Loans shall besuspended until the Administrative Agent (upon the instruction of the RequiredLenders) revokes such notice. Upon receipt of such notice, the Borrower may revokeany pending request for a Borrowing of, conversion to or continuation ofEurocurrency Rate Loans or, failing that, will be deemed to have converted suchrequest into a request for a Borrowing of Base Rate Loans in the amountspecified therein.

 

SECTION 3.04. Increased Cost andReduced Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans. (a)  If any Lenderdetermines that as a result of the introduction of or any change in or in theinterpretation of any Law, in each case after the date hereof, or such Lender’scompliance therewith, there shall be any increase in the cost to such

 

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Lender ofagreeing to make or making, funding or maintaining Eurocurrency Rate Loans, ora reduction in the amount received or receivable by such Lender in connectionwith any of the foregoing (excluding for purposes of this Section 3.04(a) anysuch increased costs or reduction in amount resulting from (i) Taxes orOther Taxes (as to which Section 3.01 shall govern), (ii) changes intaxation of overall net income or overall gross income (including branchprofits), and franchise (and similar) taxes imposed in lieu of net incometaxes, by the United States or any foreign jurisdiction or any politicalsubdivision of either thereof under the Laws of which such Lender is organizedor maintains a Lending Office and (iii) reserve requirements contemplatedby Section 3.04(c)), then from time to time within fifteen (15) days afterdemand by such Lender setting forth in reasonable detail such increased costs(with a copy of such demand to the Administrative Agent given in accordancewith Section 3.06), the Borrower shall pay to such Lender such additionalamounts as will compensate such Lender for such increased cost or reduction. 

 

### (b)                                 If any Lenderdetermines that the introduction of any Law regarding capital adequacy or anychange therein or in the interpretation thereof, in each case after the datehereof, or compliance by such Lender (or its Lending Office) therewith, has theeffect of reducing the rate of return on the capital of such Lender or anycorporation controlling such Lender as a consequence of such Lender’sobligations hereunder (taking into consideration its policies with respect tocapital adequacy and such Lender’s desired return on capital), then from timeto time upon demand of such Lender setting forth in reasonable detail thecharge and the calculation of such reduced rate of return (with a copy of suchdemand to the Administrative Agent given in accordance with Section 3.06),the Borrower shall pay to such Lender such additional amounts as willcompensate such Lender for such reduction within fifteen (15) days afterreceipt of such demand.

###  

### (c)                                  The Borrower shallpay to each Lender, (i) as long as such Lender shall be required tomaintain reserves with respect to liabilities or assets consisting of orincluding Eurocurrency funds or deposits, additional interest on the unpaidprincipal amount of each Eurocurrency Rate Loan equal to the actual costs ofsuch reserves allocated to such Loan by such Lender (as determined by suchLender in good faith, which determination shall be conclusive in the absence ofmanifest error), and (ii) as long as such Lender shall be required tocomply with any reserve ratio requirement or analogous requirement of any othercentral banking or financial regulatory authority imposed in respect of themaintenance of the Commitments or the funding of the Eurocurrency Rate Loans,such additional costs (expressed as a percentage per annum and rounded upwards,if necessary, to the nearest five decimal places) equal to the actual costsallocated to such Commitment or Loan by such Lender (as determined by suchLender in good faith, which determination shall be conclusive absent manifesterror) which in each case shall be due and payable on each date on whichinterest is payable on such Loan, provided the Borrower shall have received atleast fifteen (15) days’ prior notice (with a copy to the Administrative Agent)of such additional interest or cost from such Lender. If a Lender fails to givenotice fifteen (15) days prior to the relevant Interest Payment Date, suchadditional interest or cost shall be due and payable fifteen (15) days fromreceipt of such notice. Notwithstanding anything to the contrary containedabove in this clause (c), the Borrower shall not be obligated to pay anyadditional amounts pursuant to this clause (c) to the extent such amountsare already included in the calculation of the Eurocurrency Rate pursuant toclause (b) of the definition thereof.

 

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### (d)                                 Failure or delay onthe part of any Lender to demand compensation pursuant to this Section 3.04shall not constitute a waiver of such Lender’s right to demand suchcompensation, *provided* that the Borrower shallnot be required to compensate a Lender pursuant to Section 3.04(a), (b) or(c) for any such increased cost or reduction incurred more than onehundred and eighty (180) days prior to the date that such Lender demands, ornotifies the Borrower of its intention to demand, compensation therefor, *provided further*, that, if the circumstance giving rise tosuch increased cost or reduction is retroactive, then such 180-day periodreferred to above shall be extended to include the period of retroactive effectthereof.

###  

### (e)                                  If any Lenderrequests compensation under this Section 3.04, then such Lender will, ifrequested by the Borrower, use commercially reasonable efforts to designateanother Lending Office for any Loan affected by such event; *provided* that such efforts are made on terms that, in thereasonable judgment of such Lender, cause such Lender and its Lending Office(s)to suffer no material economic, legal or regulatory disadvantage, and *provided further*, that nothing in this Section 3.04(e) shallaffect or postpone any of the Obligations of the Borrower or the rights of suchLender pursuant to Section 3.04(a), (b), (c) or (d).

###  

SECTION 3.05. Funding Losses. Upondemand of any Lender (with a copy to the Administrative Agent) from time totime, the Borrower shall promptly compensate such Lender for and hold suchLender harmless from any loss, cost or expense (but excluding any loss ofanticipated profit) incurred by it as a result of:

 

### (a)                                  anycontinuation, conversion, payment or prepayment of any Loan other than a BaseRate Loan prior to the last day of the Interest Period for such Loan; or

###  

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

###  

including any loss or expense arising from theliquidation or reemployment of funds obtained by it to maintain such Loan orfrom fees payable to terminate the deposits from which such funds wereobtained.

 

For purposes of calculating amounts payable by theBorrower to the Lenders under this Section 3.05, each Lender shall bedeemed to have funded each Eurocurrency Rate Loan made by it at theEurocurrency Rate for such Loan by a matching deposit or other borrowing in theLondon interbank eurodollar market for a comparable amount and for a comparableperiod, whether or not such Eurocurrency Rate Loan was in fact so funded.

 

SECTION 3.06. Matters Applicable toAll Requests for Compensation. (a)  Any Agent or any Lender claiming compensation under this Article 3shall deliver a certificate to the Borrower setting forth the additional amountor amounts to be paid to it hereunder which shall be conclusive in the absenceof manifest error. In determining such amount, such Agent or such Lender may useany reasonable averaging and attribution methods.

 

### (b)                                 With respect to anyLender’s claim for compensation under Section 3.01, 3.02, 3.03 or 3.04,the Borrower shall not be required to compensate such Lender for any amountincurred more than one hundred and eighty (180) days prior to the date thatsuch Lender notifies

 

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### the Borrower of the event that gives rise to such claim; *provided* that, if the circumstance giving rise to such claimis retroactive, then such 180-day period referred to above shall be extended toinclude the period of retroactive effect thereof. If any Lender requestscompensation by the Borrower under Section 3.04, the Borrower may, bynotice to such Lender (with a copy to the Administrative Agent), suspend theobligation of such Lender to make or continue from one Interest Period toanother Eurocurrency Rate Loans, or to convert Base Rate Loans intoEurocurrency Rate Loans, until the event or condition giving rise to suchrequest ceases to be in effect (in which case the provisions of Section 3.06(c) shallbe applicable); *provided* that such suspensionshall not affect the right of such Lender to receive the compensation sorequested.

###  

### (c)                                  If the obligation ofany Lender to make or continue from one Interest Period to another anyEurocurrency Rate Loan, or to convert Base Rate Loans into Eurocurrency RateLoans shall be suspended pursuant to Section 3.06(c) hereof, suchLender’s Eurocurrency Rate Loans shall be automatically converted into BaseRate Loans on the last day(s) of the then current Interest Period(s) for suchEurocurrency Rate Loans (or, in the case of an immediate conversion required bySection 3.02, on such earlier date as required by Law) and, unless anduntil such Lender gives notice as provided below that the circumstancesspecified in Section 3.01, 3.02, 3.03 or 3.04 hereof that gave rise tosuch conversion no longer exist:

###  

#### (i)                                     tothe extent that such Lender’s Eurocurrency Rate Loans have been so converted,all payments and prepayments of principal that would otherwise be applied tosuch Lender’s Eurocurrency Rate Loans shall be applied instead to its Base RateLoans; and

####  

#### (ii)                                  allLoans that would otherwise be made or continued from one Interest Period toanother by such Lender as Eurocurrency Rate Loans shall be made or continuedinstead as Base Rate Loans, and all Base Rate Loans of such Lender that wouldotherwise be converted into Eurocurrency Rate Loans shall remain as Base RateLoans.

####  

### (d)                                 If any Lender givesnotice to the Borrower (with a copy to the Administrative Agent) that thecircumstances specified in Section 3.01, 3.02, 3.03 or 3.04 hereof thatgave rise to the conversion of such Lender’s Eurocurrency Rate Loans pursuantto this Section 3.06 no longer exist (which such Lender agrees to dopromptly upon such circumstances ceasing to exist) at a time when EurocurrencyRate Loans made by other Lenders are outstanding, such Lender’s Base Rate Loansshall be automatically converted, on the first day(s) of the next succeedingInterest Period(s) for such outstanding Eurocurrency Rate Loans, to the extentnecessary so that, after giving effect thereto, all Loans held by the Lendersholding Eurocurrency Rate Loans and by such Lender are held pro rata (as toprincipal amounts, interest rate basis, and Interest Periods) in accordancewith their respective Commitments.

###  

SECTION 3.07. Replacement ofLenders under Certain Circumstances. (a)  If at any time (i) theBorrower becomes obligated to pay additional amounts or indemnity paymentsdescribed in Section 3.01 or 3.04 as a result of any condition describedin such Sections or any Lender ceases to make Eurocurrency Rate Loans as aresult of any condition described in Section 3.02 or Section 3.04, (ii) anyLender becomes a Defaulting Lender or (iii) any Lender becomes aNon-Consenting Lender, then the Borrower may, on ten (10) Business Days’ priorwritten notice to the Administrative Agent and such Lender, replace such Lenderby causing such Lender to

 

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(and suchLender shall be obligated to) assign pursuant to Section 10.07(b) (withthe assignment fee to be paid by the Borrower in such instance) all of itsrights and obligations under this Agreement to one or more Eligible Assignees; *provided* that neither the Administrative Agent nor anyLender shall have any obligation to the Borrower to find a replacement Lenderor other such Person; *provided further*,that (A) in the case of any such assignment resulting from a claim forcompensation under Section 3.04 or payments required to be made pursuantto Section 3.01, such assignment will result in a reduction in suchcompensation or payments and (B) in the case of any such assignmentresulting from a Lender becoming a Non-Consenting Lender, the applicableEligible Assignees shall have agreed to the applicable departure, waiver oramendment of the Loan Documents; and *provided further*,that a Non-Consenting Lender may not be replaced unless all Non-ConsentingLenders in respect of the applicable departure, waiver or amendment arereplaced in accordance with the provisions of this Section at the sametime.

 

### (b)                                 Any Lender beingreplaced pursuant to Section 3.07(a) above shall (i) execute anddeliver an Assignment and Assumption with respect to such Lender’s Commitmentand outstanding Loans, and (ii) deliver any Notes evidencing such Loans tothe Borrower or Administrative Agent. Pursuant to such Assignment andAssumption, (A) the assignee Lender shall acquire all or a portion, as thecase may be, of the assigning Lender’s Commitment and outstanding Loans, (B) allobligations of the Borrower owing to the assigning Lender relating to the Loansso assigned shall be paid in full by the assignee Lender to such assigningLender concurrently with such assignment and assumption and (C) upon suchpayment and, if so requested by the assignee Lender, delivery to the assigneeLender of the appropriate Note or Notes executed by the Borrower, the assigneeLender shall become a Lender hereunder and the assigning Lender shall cease toconstitute a Lender hereunder with respect to such assigned Loans andCommitments, except with respect to indemnification provisions under thisAgreement, which shall survive as to such assigning Lender.

###  

### (c)                                  In the event that (i) theBorrower or the Administrative Agent has requested that the Lenders consent toa departure or waiver of any provisions of the Loan Documents or agree to anyamendment thereto, (ii) the consent, waiver or amendment in questionrequires the agreement of all affected Lenders or all Lenders in accordancewith the terms of Section 10.01 and (iii) the Required Lenders haveagreed to such consent, waiver or amendment, then any Lender who does not agreeto such consent, waiver or amendment shall be deemed a “**Non-Consenting Lender**”.

###  

SECTION 3.08. Survival. All ofthe Borrower’s obligations under this Article 3 shall survive terminationof the Aggregate Commitments and repayment of all other Obligations hereunder.

 

# **ARTICLE IV**

#  

# **Conditions Precedent to Credit Extensions**

#  

SECTION 4.01. Conditions of Making ofLoans. The obligation of each Lender to make its Loans hereunder is subjectto satisfaction of the following conditions precedent:

 

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### (a)                                  The AdministrativeAgent’s receipt of the following, each of which shall be originals orfacsimiles (followed promptly by originals) unless otherwise specified, eachproperly executed by a Responsible Officer of the signing Loan Party, each in form andsubstance reasonably satisfactory to the Administrative Agent and its legalcounsel:

###  

#### (i)                                     executedcounterparts of this Agreement, each Guaranty and the Intercreditor Agreement;

####  

#### (ii)                                  aNote executed by the Borrower in favor of each Lender that has requested a Noteat least two Business Days in advance of the Closing Date;

####  

#### (iii)                               eachCollateral Document set forth on Schedule 1.01B, duly executed by eachLoan Party thereto, together with:

####  

(A)                              certificates, if any, representing thePledged Equity referred to therein accompanied by undated stock powers executedin blank and instruments evidencing the Pledged Debt indorsed in blank, and

 

(B)                                evidence that all other actions,recordings and filings that the Administrative Agent may deem reasonablynecessary to satisfy the Collateral and Guarantee Requirement shall have beentaken, completed or otherwise provided for in a manner reasonably satisfactoryto the Administrative Agent;

 

#### (iv)                              suchcertificates of resolutions or other action, incumbency certificates and/orother certificates of Responsible Officers of each Loan Party as theAdministrative Agent may reasonably require evidencing the identity, authorityand capacity of each Responsible Officer thereof authorized to act as aResponsible Officer in connection with this Agreement and the other LoanDocuments to which such Loan Party is a party or is to be a party on theClosing Date;

####  

#### (v)                                 opinionfrom Ropes & Gray LLP, counsel to the Loan Parties substantially inthe form of Exhibit I;

####  

#### (vi)                              acertificate signed by a Responsible Officer of the Borrower certifying thatthere has been no change, effect, event or occurrence since January 28,2006, that has had or could reasonably be expected to result in a MaterialAdverse Change;

####  

#### (vii)                           acertificate attesting to the Solvency of the Loan Parties (taken as a whole)after giving effect to the Transaction, from the Chief Financial Officer of theBorrower;

####  

#### (viii)                        evidencethat all insurance (including title insurance) required to be maintainedpursuant to the Loan Documents has been obtained and is in effect and that theAdministrative Agent has been named as loss payee under each insurance policywith respect to such insurance as to which the Administrative Agent shall havereasonably requested to be so named; and

 

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#### (ix)                                certifiedcopies of the Recapitalization Agreement and the ABL Credit Agreement, in eachcase duly executed by the parties thereto, together with all materialagreements, instruments and other documents delivered in connection therewithas the Administrative Agent shall reasonably request, each includingcertification by a Responsible Officer of the Borrower that such documents arein full force and effect as of the Closing Date.

####  

### (b)                                 All fees and expensesrequired to be paid hereunder and invoiced before the Closing Date shall havebeen paid in full in cash.

###  

### (c)                                  Prior to orsimultaneously with the initial Borrowing, (i) the Equity Contributionsshall have been funded in full in cash; and (ii) the Recapitalizationshall be consummated in accordance with the terms of the RecapitalizationAgreement (which shall not have been amended, modified or waived prior to theClosing Date in a manner material and adverse to the interests of the Lenderswithout the prior written consent of the Arrangers).

###  

### (d)                                 Prior to orsimultaneously with the initial Borrowing of Loans, the Borrower shall havereceived (i) at least $1,400,000,000 in gross cash proceeds from theissuance of the New Notes and (ii) at least $400,000,000 in gross cashproceeds from the ABL Loans made pursuant to the ABL Credit Agreement.

###  

### (e)                                  Prior to orsimultaneously with the initial Borrowing of Loans, the Borrower shall haveterminated the Existing Credit Agreement and taken all other necessary actionssuch that, after giving effect to the Transaction, (i) the Borrower andits Subsidiaries shall have outstanding no Indebtedness or preferred EquityInterests other than (A) the Loans, (B) the New Notes, (C) ABLLoans outstanding under the ABL Credit Agreement, (D) Indebtedness listedon Schedule 7.03, and (E) Indebtedness between Loan Parties and (ii) theBorrower shall have outstanding no Equity Interests (or securities convertibleinto or exchangeable for Equity Interests or rights or options to acquireEquity Interests) other than common stock owned by the Investors or members ofmanagement of the Borrower and other co-investors reasonably acceptable to theArrangers.

###  

### (f)                                    The Arrangers andthe Lenders shall have received (i) the Audited Financial Statements andthe audit report for such financial statements (which shall not be subject toany qualification) and (ii) unaudited consolidated balance sheets andrelated statements of income, stockholders’ equity and cash flows of theBorrower and its Subsidiaries for (A) each subsequent fiscal quarter endedat least forty-five (45) days before the Closing Date and (B) to theextent reasonably available and, in any event, excluding footnotes, each fiscalmonth after the most recent fiscal period for which financial statements werereceived by the Arrangers and the Lenders as described above and ended at leastthirty (30) days before the Closing Date (collectively, the “**Unaudited Financial Statements**”), whichfinancial statements described in clauses (i) and (ii)(A) shall beprepared in accordance with GAAP.

###  

### (g)                                 On or prior to thedate of the Borrowing of Loans, each Loan Party and each other Subsidiary ofthe Borrower which is an obligee or obligor with respect to any intercompanyIndebtedness shall have duly authorized, executed and delivered theIntercompany Note, and the Intercompany Note shall be in full force and effect.

 

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### (h)                                 The Arrangers and theLenders shall have received the Pro Forma Financial Statements.

###  

### (i)                                     The Arrangers andthe Lenders shall have received a certificate from a Responsible Officer of theBorrower to the effect that those representations and warranties of theBorrower and each other Loan Party contained in Article V (exceptrepresentations contained in Sections 5.01(d) and (e), 5.02(b) and(c), 5.03, 5.05, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.14, 5.15, 5.16 and5.18) are true and correct in all material respects on and as of the date ofthe initial Borrowing of the Loans; *provided* that,to the extent that such representations and warranties described in this clause(i) specifically refer to an earlier date, they shall be true and correctin all material respects as of such earlier date; *providedfurther*, that, any representation and warranty described in thisclause (i) that is qualified as to “materiality,” “Material Adverse Effect”,or similar language shall be true and correct in all respects on suchrespective dates.

###  

### (j)                                     No Default shallexist, or would result from the proposed initial Borrowing of Loans or from theapplication of the proceeds therefrom.

###  

### (k)                                  The AdministrativeAgent shall have received a Committed Loan Notice in accordance with therequirements hereof.

###  

The Committed Loan Notice delivered on the ClosingDate by the Borrower shall be deemed to be a representation and warranty thatthe conditions specified in Sections 4.01(i) and (j) have been satisfiedon and as of the date of the initial Borrowing of Loans.

 

# **ARTICLE V**

#  

# **Representations and Warranties**

#  

The Borrower represents and warrants to the Agents andthe Lenders that:

 

SECTION 5.01. Existence,Qualification and Power; Compliance with Laws. Each Loan Party and each ofits Subsidiaries (a) is a Person duly organized or formed, validlyexisting and in good standing under the Laws of the jurisdiction of itsincorporation or organization, (b) has all requisite power and authorityto (i) own or lease its assets and carry on its business and (ii) execute,deliver and perform its obligations under the Loan Documents to which itis a party, (c) is duly qualified and in good standing under the Laws ofeach jurisdiction where its ownership, lease or operation of properties or theconduct of its business requires such qualification, (d) is in compliancewith all Laws, orders, writs, injunctions and orders and (e) has allrequisite governmental licenses, authorizations, consents and approvals tooperate its business as currently conducted; except in each case referred to inclause (c), (d) or (e), to the extent that failure to do so could notreasonably be expected to have a Material Adverse Effect.

 

SECTION 5.02. Authorization; NoContravention. The execution, delivery and performance by each Loan Partyof each Loan Document to which such Person is a party, and the consummation ofthe Transaction, are within such Loan Party’s corporate or other powers, havebeen duly authorized by all necessary corporate or other organizational action,and do not and will not (a) contravene the terms of any of such Person’sOrganization Documents; (b) conflict with or result in any breach orcontravention of, or the creation of any Lien under (other

 

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than as permitted by Section 7.01), or require any payment to bemade under (i) (x) any New Notes Documentation and any other indenture, mortgage,deed of trust or loan agreement evidencing Indebtedness in an aggregateprincipal amount in excess of the Threshold Amount or (y) any other ContractualObligation to which such Person is a party or affecting such Person or theproperties of such Person or any of its Subsidiaries or (ii) any materialorder, injunction, writ or decree of any Governmental Authority or any arbitralaward to which such Person or its property is subject; or (c) violate anymaterial Law; except with respect to any conflict, breach or contravention orpayment (but not creation of Liens) referred to in clause (b)(i), to the extentthat such conflict, breach, contravention or payment could not reasonably beexpected to have a Material Adverse Effect.

 

SECTION 5.03. GovernmentalAuthorization; Other Consents. No material approval, consent, exemption,authorization, or other action by, or notice to, or filing with, anyGovernmental Authority or any other Person is necessary or required inconnection with (a) the execution, delivery or performance by, orenforcement against, any Loan Party of this Agreement or any other LoanDocument, or for the consummation of the Transaction, (b) the grant by anyLoan Party of the Liens granted by it pursuant to the Collateral Documents, (c) theperfection or maintenance of the Liens created under the Collateral Documents(including the priority thereof) or (d) the exercise by the AdministrativeAgent or any Lender of its rights under the Loan Documents or the remedies inrespect of the Collateral pursuant to the Collateral Documents, except for (i) filingsnecessary to perfect the Liens on the Collateral granted by the Loan Parties infavor of the Secured Parties, (ii) the approvals, consents, exemptions,authorizations, actions, notices and filings which have been duly obtained,taken, given or made and are in full force and effect and (iii) thoseapprovals, consents, exemptions, authorizations or other actions, notices orfilings, the failure of which to obtain or make could not reasonably be expectedto have a Material Adverse Effect.

 

SECTION 5.04. Binding Effect. ThisAgreement and each other Loan Document has been duly executed and delivered byeach Loan Party that is party thereto. This Agreement and each other LoanDocument constitutes, a legal, valid and binding obligation of such Loan Party,enforceable against each Loan Party that is party thereto in accordance withits terms, except as such enforceability may be limited by Debtor ReliefLaws and by general principles of equity.

 

SECTION 5.05. Financial Statements;No Material Adverse Effect.  (a)  (i) The Audited Financial Statements and theUnaudited Financial Statements fairly present in all material respects thefinancial position of the Borrower and its Subsidiaries as of the dates thereofand their results of operations for the period covered thereby in accordancewith GAAP consistently applied throughout the periods covered thereby, exceptas otherwise expressly noted therein or in Schedule 5.05 hereto. Duringthe period from January 28, 2006 to and including the Closing Date, therehas been (i) no sale, transfer or other disposition by the Borrower or anyof its Subsidiaries of any material part of the business or property ofthe Borrower or any of its Subsidiaries, taken as a whole and (ii) nopurchase or other acquisition by the Borrower or any of its Subsidiaries of anybusiness or property (including any Equity Interests of any other Person)material in relation to the consolidated financial condition of the Borrowerand its Subsidiaries, in each case, which is not reflected in the foregoingfinancial statements or in the notes thereto or has not otherwise beendisclosed in writing to the Lenders prior to the Closing Date.

 

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#### (ii)                                  The unaudited proforma condensed consolidated balance sheet of the Borrower and its Subsidiariesas at July 29, 2006 (including the notes thereto) (the “ProFormaBalance Sheet”) and the unaudited proforma condensedconsolidated statements of operations (the “**ProForma Statements of Operations**”) of theBorrower and its Subsidiaries for the most recent fiscal year, the six monthsended July 29, 2006 and the 12-month period ending on July 29, 2006(together with the ProForma Balance Sheet, the “**ProForma Financial Statements**”),copies of which have heretofore been furnished to the Administrative Agent,have been prepared giving effect (as if such events had occurred on July 29,2006with respect to the ProForma Balance Sheet or on January 30,2005 with respect to the ProForma Statements of Operations) tothe Transaction. The ProForma Financial Statements have beenprepared in good faith, based on assumptions believed by the Borrower to bereasonable as of the date of delivery thereof, and present fairly in allmaterial respects the proforma financial position of theBorrower and its Subsidiaries as at July 29, 2006 and their proformaresults of operations for the periods covered thereby, assuming that the eventsspecified in the preceding sentence had actually occurred on July 29, 2006with respect to the ProForma Balance Sheet or on January 30,2005 with respect to the ProForma Statements of Operations.

####  

#### (iii)                               Since the Closing Date,there has been no event or circumstance, either individually or in theaggregate, that has had or could reasonably be expected to have a MaterialAdverse Effect.

####  

#### (iv)                              The forecasts ofconsolidated balance sheets, income statements and cash flow statements of theBorrower and its Subsidiaries for each fiscal year ending after the ClosingDate until the seventh anniversary of the Closing Date, copies of which havebeen furnished to the Administrative Agent prior to the Closing Date in a form reasonablysatisfactory to it, have been prepared in good faith on the basis of the assumptionsstated therein, which assumptions were believed to be reasonable at the time ofpreparation of such forecasts, it being understood that actual results may varyfrom such forecasts and that such variations may be material.

####  

#### (v)                                 As of the Closing Date,neither the Borrower nor any Subsidiary has any Indebtedness or otherobligations or liabilities, direct or contingent (other than (i) suchliabilities as are set forth in the financial statements described in clause (a) ofthis Section 5.05, (ii) obligations arising under this Agreement, theABL Loan Documents and the New Notes Documentation and (iii) liabilitiesincurred in the ordinary course of business) that, either individually or inthe aggregate, have had or could reasonably be expected to have a MaterialAdverse Effect.

####  

SECTION 5.06. Litigation. Thereare no actions, suits, proceedings, claims or disputes pending or, to theknowledge of the Borrower, threatened in writing, at law, in equity, inarbitration or before any Governmental Authority, by or against the Borrower orany of its Subsidiaries or against any of their properties or revenues thateither individually or in the aggregate, could reasonably be expected to have aMaterial Adverse Effect.

 

SECTION 5.07. No Default. Neitherthe Borrower nor any Subsidiary is in default under or with respect to, or aparty to, any Contractual Obligation that could, either individually or in theaggregate, reasonably be expected to have a Material Adverse Effect.

 

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SECTION 5.08. Ownership of Property;Liens. Each Loan Party and each of its Subsidiaries has good record andmarketable title in fee simple to, or valid leasehold interests in, oreasements or other limited property interests in, all real property necessaryin the ordinary conduct of its business, free and clear of all Liens except (i) forminor defects in title that do not materially interfere with its ability toconduct its business or to utilize such assets for their intended purposes, (ii) forLiens permitted by Section 7.01 and (iii) where the failure to havesuch title could not reasonably be expected to have, individually or in theaggregate, a Material Adverse Effect.

 

SECTION 5.09. EnvironmentalCompliance.  (a) There are no claims, actions, suits, or proceedings alleging potentialliability or responsibility for violation of, or otherwise relating to, anyEnvironmental Law that could, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect.

 

### (b)                                 Except as could notreasonably be expected to have, individually or in the aggregate, a MaterialAdverse Effect, (i) none of the properties currently or formerly owned,leased or operated by any Loan Party or any of its Subsidiaries is listed orproposed for listing on the NPL or on the CERCLIS or any analogous foreign,state, provincial or local list or is adjacent to any such property; (ii) tothe knowledge of the Loan Parties or any of their Restricted Subsidiaries, thereare no and never have been any underground or aboveground storage tanks or anysurface impoundments, septic tanks, pits, sumps or lagoons in which HazardousMaterials are being or have been treated, stored or disposed of on any propertycurrently owned, leased or operated by any Loan Party or any of itsSubsidiaries or, to its knowledge, on any property formerly owned or operatedby any Loan Party or any of its Subsidiaries; (iii) to the knowledge ofthe Loan Parties or any of their Restricted Subsidiaries, there is no asbestosor asbestos-containing material on any property currently owned or operated byany Loan Party or any of its Subsidiaries; and (iv) Hazardous Materialshave not been released, discharged or disposed of by any Person on any propertycurrently or formerly owned, leased or operated by any Loan Party or any of itsSubsidiaries and Hazardous Materials have not otherwise been released,discharged or disposed of by any of the Loan Parties and their Subsidiaries atany other location.

###  

### (c)                                  The properties owned,leased or operated by the Borrower and the Subsidiaries do not contain anyHazardous Materials in amounts or concentrations which (i) constitute, orconstituted a violation of, (ii) require remedial action under, or (iii) couldgive rise to liability under, Environmental Laws, which violations, remedialactions and liabilities, individually or in the aggregate, could reasonably beexpected to result in a Material Adverse Effect.

###  

### (d)                                 Neither the Borrowernor any of its Subsidiaries is undertaking, and has not completed, eitherindividually or together with other potentially responsible parties, anyinvestigation or assessment or remedial or response action relating to anyactual or threatened release, discharge or disposal of Hazardous Materials atany site, location or operation, either voluntarily or pursuant to the order ofany Governmental Authority or the requirements of any Environmental Law exceptfor such investigation or assessment or remedial or response action that,individually or in the aggregate, could not reasonably be expected to result ina Material Adverse Effect.

 

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### (e)                                  All HazardousMaterials generated, used, treated, handled or stored at, or transported to orfrom, any property currently or formerly owned or operated by any Loan Party orany of its Subsidiaries have been disposed of in a manner not reasonablyexpected to result, individually or in the aggregate, in a Material AdverseEffect.

###  

### (f)                                    Except as would notreasonably be expected to result, individually or in the aggregate, in aMaterial Adverse Effect, none of the Loan Parties and their Subsidiaries hascontractually assumed any liability or obligation under or relating to anyEnvironmental Law.

###  

SECTION 5.10. Taxes. Except asset forth in Schedule 5.10, the Borrower and its Subsidiaries have filedall Federal, state, provincial and other material tax returns and reportsrequired to be filed, and have paid all material Federal, state, provincial andother taxes, assessments, fees and other governmental charges levied or imposedupon them or their properties, income or assets otherwise due and payable,except those (a) which are not overdue by more than thirty (30) days or (b) whichare being contested in good faith by appropriate actions diligently conductedand for which adequate reserves have been provided in accordance with GAAP.

 

SECTION 5.11. ERISA Compliance.  (a)    Exceptas could not, either individually or in the aggregate, reasonably be expectedto result in a Material Adverse Effect, each Plan is in compliance with theapplicable provisions of ERISA, the Code, the PBA and other Federal, state orprovincial Laws.

 

### (b)                                 No ERISA Event hasoccurred during the five year period prior to the date on which thisrepresentation is made or deemed made with respect to any Pension Plan; (ii) noPension Plan has an “accumulated funding deficiency” (as defined in Section 412of the Code), whether or not waived; (iii) neither any Loan Party nor anyERISA Affiliate has incurred, or reasonably expects to incur, any liabilityunder Title IV of ERISA with respect to any Pension Plan (other than premiumsdue and not delinquent under Section 4007 of ERISA); (iv) neither anyLoan Party nor any ERISA Affiliate has incurred, or reasonably expects toincur, any liability (and no event has occurred which, with the giving ofnotice under Section 4219 of ERISA, would result in such liability) underSections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neitherany Loan Party nor any ERISA Affiliate has engaged in a transaction that couldbe subject to Sections 4069 or 4212(c) of ERISA, except, with respect toeach of the foregoing clauses of this Section 5.11(b), as could notreasonably be expected, individually or in the aggregate, to result in a MaterialAdverse Effect.

###  

### (c)                                  Each CanadianSubsidiary is in compliance with the requirements of the PBA and other federal,provincial or state laws with respect to each Pension Plan, except where thefailure to so comply would not reasonably be expected to have a MaterialAdverse Effect. No fact or situation that may reasonably be expected toresult in a Material Adverse Effect exists in connection with any Pension Plan.No Canadian Subsidiary has any material withdrawal liability in connection witha Pension Plan. No Pension Event has occurred which could reasonably beexpected to result in a Material Adverse Effect. No lien has arisen, choate orinchoate, in respect of a Canadian Subsidiary or its property in connectionwith any Pension Plan (save for contribution amounts not yet due).

 

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SECTION 5.12. Subsidiaries; EquityInterests. As of the Closing Date, no Loan Party has any Subsidiaries otherthan those specifically disclosed in Schedule 5.12, and all of theoutstanding Equity Interests in their respective Subsidiaries have been validlyissued, are fully paid and nonassessable and all Equity Interests owned by aLoan Party are owned free and clear of all Liens except (i) those createdunder the Collateral Documents and (ii) any nonconsensual Lien that ispermitted under Section 7.04. As of the Closing Date, Schedule 5.12 (a) setsforth the name and jurisdiction of each Subsidiary, (b) sets forth theownership interest of the Borrower and any other Subsidiary in each Subsidiary,including the percentage of such ownership and (c) identifies eachSubsidiary the Equity Interests of which are required to be pledged on theClosing Date pursuant to the Collateral and Guarantee Requirement.

 

SECTION 5.13. Margin Regulations;Investment Company Act.   (i)    The Borrower isnot engaged nor will it engage, principally or as one of its importantactivities, in the business of purchasing or carrying margin stock (within themeaning of Regulation U issued by the FRB), or extending credit for the purposeof purchasing or carrying margin stock, and no proceeds of any Borrowings willbe used for the purpose of purchasing or carrying margin stock (other thanpursuant to, or in connection with, the Recapitalization) or any other purposethat violates Regulation U. The value of the margin stock (within the meaningof Regulation U) owned by the Borrower and its Subsidiaries at any time theextensions of credit hereunder constitute “purpose” credit (within the meaningof Regulation U) does not exceed 25% of the value of the assets of the Borrowerand its Subsidiaries taken as a whole.

 

(ii)                                  None of the Borrower, any PersonControlling the Borrower, or any Subsidiary is or is required to be registeredas an “investment company” under the Investment Company Act of 1940.

 

SECTION 5.14. Disclosure. Noreport, financial statement, certificate or other written information furnishedby or on behalf of any Loan Party to any Agent or any Lender in connection withthe transactions contemplated hereby and the negotiation of this Agreement ordelivered hereunder or any other Loan Document (as modified or supplemented byother information so furnished) when taken as a whole contains any materialmisstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they weremade, not materially misleading; *provided* that,with respect to projected financial information and pro forma financialinformation, the Borrower represents only that such information was prepared ingood faith based upon assumptions believed by the Borrower to be reasonable atthe time of preparation; it being understood that such projections may varyfrom actual results and that such variances may be material.

 

SECTION 5.15. Intellectual Property;Licenses, Etc. Each of the Loan Parties and their Subsidiaries own, licenseor possess the right to use, all of the trademarks, service marks, trade names,domain names, copyrights, patents, patent rights, licenses, technology,software, know-how database rights, rights of privacy and publicity and otherintellectual property rights (collectively, “IP Rights”) that arereasonably necessary for the operation of their respective businesses ascurrently conducted, and, without conflict with the rights of any Person,except to the extent such failure to own, license or possess or such conflicts,either individually or in the aggregate, could not reasonably be expected tohave a Material Adverse Effect. The operation of the businesses of any LoanParty or Subsidiary as currently conducted does not

 

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infringe upon, misuse, misappropriate or violate any rights held by anyPerson except for such infringements, misuses, misappropriations or violations,individually or in the aggregate, which could not reasonably be expected tohave a Material Adverse Effect. No claim or litigation regarding any IP Rights,is pending or, to the knowledge of the Borrower, threatened against any LoanParty or Subsidiary, which, either individually or in the aggregate, couldreasonably be expected to have a Material Adverse Effect.

 

SECTION 5.16. Solvency.  Onthe Closing Date after giving effect to the Transaction, the Loan Parties, on aconsolidated basis, are Solvent.

 

SECTION 5.17. Subordination of JuniorFinancing. The Obligations are “Senior Debt”, “Senior Indebtedness”, “GuarantorSenior Debt” or “Senior Secured Financing” (or any comparable term) under, andas defined in, each of the Senior Subordinated Notes Indenture and the SubordinatedDiscount Notes Indenture and under any other Junior Financing Documentation. TheObligations are “Designated Senior Indebtedness” under and as defined in eachof the Senior Subordinated Notes Indenture and the Subordinated Discount NotesIndenture.

 

SECTION 5.18. Labor Matters. Exceptas, in the aggregate, could not reasonably be expected to have a MaterialAdverse Effect:  (a) there are nostrikes or other labor disputes against any of the Borrower or its Subsidiariespending or, to the knowledge of the Borrower, threatened; (b) hours workedby and payment made to employees of each of the Borrower or its Subsidiarieshave not been in violation of the Fair Labor Standards Act or any otherapplicable Laws dealing with such matters; and (c) all payments due fromany of the Borrower or its Subsidiaries on account of employee health andwelfare insurance have been paid or accrued as a liability on the books of therelevant party.

 

# **ARTICLE VI**

#  

# **Affirmative Covenants**

#  

So long as any Lender shall have any Commitmenthereunder, any Loan or other Obligation hereunder which is accrued and payableshall remain unpaid or unsatisfied (other than contingent indemnity obligationswith respect to then unasserted claims), the Borrower shall, and shall (exceptin the case of the covenants set forth in Sections 6.01, 6.02 and 6.03) causeeach Restricted Subsidiary (and, in the case of Sections 6.04 and 6.08 only,each Unrestricted Subsidiary) to:

 

SECTION 6.01. Financial Statements.Deliver to the Administrative Agent for prompt further distribution to eachLender:

 

### (a)                                  assoon as available, but in any event within ninety (90) days after the end ofeach fiscal year of the Borrower beginning with the 2007 fiscal year, aconsolidated balance sheet of the Borrower and its Subsidiaries as at the endof such fiscal year, and the related consolidated statements of income oroperations, stockholders’ equity and cash flows for such fiscal year, settingforth in each case in comparative form the figures for the previous fiscalyear, all in reasonable detail and prepared in accordance with

 

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### GAAP, auditedand accompanied by a report and opinion of Ernst & Young, LLP or anyother independent registered public accounting firm of nationally recognizedstanding, which report and opinion shall be prepared in accordance withgenerally accepted auditing standards and shall not be subject to any “goingconcern” or like qualification or exception or any qualification or exceptionas to the scope of such audit;

###  

### (b)                                 assoon as available, but in any event within forty-five (45) days after the endof each of the first three (3) fiscal quarters of each fiscal year of theBorrower, a consolidated balance sheet of the Borrower and its Subsidiaries asat the end of such fiscal quarter, and the related (i) consolidatedstatements of income or operations for such fiscal quarter and for the portionof the fiscal year then ended and (ii) consolidated statements of cashflows for the portion of the fiscal year then ended, setting forth in each casein comparative form the figures for the corresponding fiscal quarter ofthe previous fiscal year and the corresponding portion of the previous fiscalyear, all in reasonable detail and certified by a Responsible Officer of theBorrower as fairly presenting in all material respects the financial position,results of operations, stockholders’ equity and cash flows of the Borrower andits Subsidiaries in accordance with GAAP, subject only to normal year-endadjustments and the absence of footnotes;

###  

### (c)                                  assoon as available, and in any event no later than ninety (90) days after theend of each fiscal year of the Borrower, a detailed consolidated budget for thefollowing fiscal year (including a projected consolidated balance sheet of theBorrower and its Subsidiaries as of the end of the following fiscal year, therelated consolidated statements of projected cash flow and projected income anda summary of the material underlying assumptions applicable thereto), and, assoon as available, significant revisions, if any, of such budget andprojections with respect to such fiscal year (collectively, the “**Projections**”), which Projections shall ineach case be accompanied by a certificate of a Responsible Officer stating thatsuch Projections are based on estimates, information and assumptions believedby the Borrower to be reasonable and that such Responsible Officer has noreason to believe that such Projections are incorrect or misleading in anymaterial respect; and

###  

### (d)                                 simultaneouslywith the delivery of each set of consolidated financial statements referred toin Sections 6.01(a) and 6.01(b) above, the related consolidatingfinancial statements reflecting the adjustments necessary to eliminate theaccounts of Unrestricted Subsidiaries (if any) from such consolidated financialstatements.

###  

Notwithstanding the foregoing, the obligations inparagraphs (a) and (b) of this Section 6.01 may besatisfied with respect to financial information of the Borrower and theRestricted Subsidiaries by furnishing (A) the applicable financialstatements of any direct or indirect parent of the Borrower or (B) theBorrower’s (or any direct or indirect parent thereof) Form 10-K or 10-Q,as applicable, filed with the SEC; *provided* thatwith respect to each of clauses (A) and (B), (i) to the extent suchinformation relates to a direct or indirect parent of the Borrower, suchinformation is accompanied by consolidating information that explains inreasonable detail the differences between the information relating to suchparent of the Borrower, on the one hand, and the information relating to theBorrower and the Restricted Subsidiaries on a stand-alone basis, on the otherhand and (ii) to the extent such information is in lieu of informationrequired

 

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to be provided under Section 6.01(a), suchmaterials are accompanied by a report and opinion of Ernst & Young,LLP or any other independent registered public accounting firm of nationallyrecognized standing, which report and opinion shall be prepared in accordancewith generally accepted auditing standards and shall not be subject to any “goingconcern” or like qualification or exception or any qualification or exceptionas to the scope of such audit.

 

SECTION 6.02. Certificates; OtherInformation. Deliver to the Administrative Agent for prompt furtherdistribution to each Lender:

 

### (a)                                  nolater than five (5) days after the delivery of the financial statementsreferred to in Section 6.01(a), a certificate of its independentregistered public accounting firm certifying such financial statements andstating that in making the examination necessary therefor no knowledge wasobtained of any Event of Default under Section 7.05 or, if any such Eventof Default shall exist, stating the nature and status of such event (whichcertificate may be limited to the extent required by accounting rules orguidelines);

###  

### (b)                                 nolater than five (5) days after the delivery of the financial statementsreferred to in Section 6.01(a) and (b), a duly completed ComplianceCertificate signed by a Responsible Officer of the Borrower, and if suchCompliance Certificate demonstrates an Event of Default of any covenant under Section 7.05,any of the Investors may deliver, together with such ComplianceCertificate, notice of their intent to cure (a “**Notice of Intent to Cure**”) such Event of Default pursuant to Section 8.05;*provided* that the delivery of a Noticeof Intent to Cure shall in no way affect or alter the occurrence, existence orcontinuation of any such Event of Default or the rights, benefits powers andremedies of the Administrative Agent and the Lenders under any Loan Document;

###  

### (c)                                  promptlyafter the same are publicly available, copies of all annual, regular, periodicand special reports and registration statements which the Borrower files withthe SEC or with any Governmental Authority that may be substitutedtherefor (other than amendments to any registration statement (to the extentsuch registration statement, in the form it became effective, isdelivered), exhibits to any registration statement and, if applicable, anyregistration statement on Form S-8) and in any case not otherwise requiredto be delivered to the Administrative Agent pursuant hereto;

###  

### (d)                                 promptlyafter the furnishing thereof, copies of any material requests or materialnotices received by any Loan Party (other than in the ordinary course ofbusiness) or material statements or material reports furnished to any holder ofdebt securities of any Loan Party or of any of its Restricted Subsidiariespursuant to the terms of any New Notes Documentation or any other Indebtednessin a principal amount greater than the Threshold Amount (but excluding materialstatements or material reports relating to the “borrowing base” or thedetermination thereof (including appraisals and collateral audits) furnished toany ABL Lender) and not otherwise required to be furnished to the Lenderspursuant to any other clause of this Section 6.02;

###  

### (e)                                  togetherwith the delivery of each Compliance Certificate pursuant to Section 6.02(b),(i) a report setting forth the information required by Section 3.03(c) of

 

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### the SecurityAgreement or confirming that there has been no change in such information sincethe Closing Date or the date of the last such report, (ii) a descriptionof each event, condition or circumstance during the last fiscal quarter coveredby such Compliance Certificate requiring a mandatory prepayment or offer topurchase under Section 2.05(b) or (c) and (iii) a list ofeach Subsidiary that identifies each Subsidiary as a Restricted Subsidiary oran Unrestricted Subsidiary as of the date of delivery of such ComplianceCertificate;

###  

### (f)                                    promptly,a copy of any final “management letter” received from the Borrower’sindependent public accountants to the extent such independent publicaccountants have consented to the delivery of such management letter to theAdministrative Agent upon the request of the Borrower;

###  

### (g)                                 promptlyfollowing the Administrative Agent’s request therefor, all documentation andother information that the Administrative Agent reasonably requests on itsbehalf or on behalf of any Lender in order to comply with its ongoingobligations under applicable “know your customer” and anti-money laundering rules andregulations, including the Act;

###  

### (h)                                 (x)on the date of any incurrence of Indebtedness under a revolving credit facilityto finance an Acquisition, an Investment or any other Restricted Payment, acertificate from a Responsible Officer certifying as to the aggregate principalamount of such Indebtedness so incurred and the date of such incurrence and (y)on the date of any repayment of Indebtedness under a revolving credit facilitywith the net proceeds of a Material Disposition, a certificate from aResponsible Officer certifying as to the aggregate principal amount of suchIndebtedness so repaid and the date of such repayment; and

###  

### (i)                                     promptly,such additional information regarding the business, legal, financial orcorporate affairs of any Loan Party or any Subsidiary, or compliance with theterms of the Loan Documents, as the Administrative Agent or any Lender throughthe Administrative Agent may from time to time reasonably request.

###  

Documents required to be delivered pursuant to Section 6.01(a) or(b) or Section 6.02(d) (to the extent any such documents areincluded in materials otherwise filed with the SEC) may be deliveredelectronically and if so delivered, shall be deemed to have been delivered onthe date (i) on which the Borrower posts such documents, or provides alink thereto on the Borrower’s website on the Internet at the website addresslisted on Schedule 10.02; or (ii) on which such documents are postedon the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website,if any, to which each Lender and the Administrative Agent have access (whethera commercial, third-party website or whether sponsored by the AdministrativeAgent); *provided* that:  (i) upon written request by theAdministrative Agent, the Borrower shall deliver paper copies of such documentsto the Administrative Agent for further distribution to each Lender until awritten request to cease delivering paper copies is given by the AdministrativeAgent and (ii) the Borrower shall notify (which may be by facsimileor electronic mail) the Administrative Agent of the posting of any suchdocuments and provide to the Administrative Agent by electronic mail electronicversions (i.e., soft copies) of such documents.

 

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Notwithstanding anything contained herein, in everyinstance the Borrower shall be required to provide paper copies of theCompliance Certificates required by Section 6.02(b) to theAdministrative Agent. Each Lender shall be solely responsible for timelyaccessing posted documents or requesting delivery of paper copies of suchdocuments from the Administrative Agent and maintaining its copies of suchdocuments.

 

SECTION 6.03. Notices. (a) Promptlyafter obtaining knowledge thereof, notify the Administrative Agent of:

 

#### (i)                                     theoccurrence of any Default;

####  

#### (ii)                                  anyloss, damage, or destruction to the Collateral in the amount of $10,000,000 ormore, whether or not covered by insurance; and

####  

#### (iii)                               anymatter that has resulted or could reasonably be expected to result in aMaterial Adverse Effect, including arising out of or resulting from (A) breachor non-performance of, or any default or event of default under, a ContractualObligation of any Loan Party or any Subsidiary, (B) any dispute,litigation, investigation, proceeding or suspension between any Loan Party orany Subsidiary and any Governmental Authority, (C) the commencement of, orany material development in, any litigation or proceeding affecting any LoanParty or any Subsidiary, including pursuant to any applicable EnvironmentalLaws or in respect of IP Rights or the assertion or occurrence of any noncomplianceby any Loan Party or as any of its Subsidiaries with, or liability under, anyEnvironmental Law or Environmental Permit, or (D) the occurrence of anyERISA Event or any Pension Event;

####  

### (b)                                 Furnishcontemporaneously to the Administrative Agent, a copy of any notice sent to theadministrative agent or collateral agent under Sections 5.02(d), (g) and5.03 of the ABL Credit Agreement, if such notice is not required to bedelivered hereunder.

###  

Each notice pursuant to this Section shall beaccompanied by a written statement of a Responsible Officer of the Borrower (x)that such notice is being delivered pursuant to Section 6.03(a)(i), (ii) or(iii) or 6.03(b) (as applicable) and (y) setting forth details of theoccurrence referred to therein and stating what action the Borrower has takenand proposes to take with respect thereto.

 

SECTION 6.04. Payment of Obligations.Pay, discharge or otherwise satisfy as the same shall become due and payable,all its material obligations and liabilities in respect of material taxes,assessments and governmental charges or levies imposed upon it or upon itsincome or profits or in respect of its property; *provided*that neither the Borrower nor any of the Restricted Subsidiaries shall berequired to pay any such taxes, assessments, governmental charges or leviesthat are being contested in good faith and by proper actions if it hasmaintained adequate reserves with respect thereto in accordance with GAAP.

 

SECTION 6.05. Preservation ofExistence, Etc. (a) Preserve, renew and maintain in full force andeffect its legal existence under the Laws of the jurisdiction of itsorganization except in a transaction permitted by Section 7.01 or 7.06 and(b) take all reasonable action to maintain all rights, privileges(including its good standing), permits, licenses and franchises

 

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necessary or desirable in the normal conduct of its business, except (i) tothe extent that failure to do so could not reasonably be expected to have aMaterial Adverse Effect or (ii) pursuant to a transaction permitted by Section 7.01or 7.06.

 

SECTION 6.06. Maintenance ofProperties. Except if the failure to do so could not reasonably be expectedto have a Material Adverse Effect, (a) maintain, preserve and protect allof its material properties and equipment necessary in the operation of itsbusiness in good working order, repair and condition, ordinary wear and tearexcepted and casualty or condemnation excepted, and (b) make all necessaryrenewals, replacements, modifications, improvements, upgrades, extensions andadditions thereof or thereto in accordance with prudent industry practice.

 

SECTION 6.07. Maintenance ofInsurance. (a)  Maintain with financially sound and reputableinsurance companies, insurance with respect to its properties and businessagainst loss or damage of the kinds customarily insured against by Personsengaged in the same or similar business, of such types and in such amounts(after giving effect to any self-insurance reasonable and customary forsimilarly situated Persons engaged in the same or similar businesses as theBorrower and the Restricted Subsidiaries) as are customarily carried undersimilar circumstances by such other Persons. The Loan Parties shall furnish tothe Administrative Agent, upon written request, full information as to theinsurance carried.

 

### (b)                                 Fire and extendedcoverage policies maintained with respect to any Collateral shall be endorsedor otherwise amended to include (i) a non-contributing mortgage clause(regarding improvements to real property) and a lenders’ loss payable clause (regardingpersonal property), in form and substance reasonably satisfactory to theAdministrative Agent, which endorsements or amendments shall provide that theinsurer shall pay all proceeds otherwise payable to the Loan Parties under thepolicies directly to the Administrative Agent, (ii) a provision to theeffect that none of the Loan Parties, Secured Parties (in their capacity assuch), or any other Affiliate of a Loan Party shall be a co-insurer (theforegoing not being deemed to limit the amount of self-insured retention ordeductibles under such policies, which self-insured retention or deductiblesshall be consistent with business practices in effect on the Closing Date or asotherwise determined by the Responsible Officers of the Loan Parties actingreasonably in their business judgment), and (iii) such other provisions asthe Administrative Agent may reasonably require from time to time toprotect the interests of the Secured Parties. Commercial general liabilitypolicies shall be endorsed to name the Administrative Agent as an additionalinsured. Each endorsement to such casualty or liability policy referred to inthis Section 6.07(b) shall also provide that it shall not becanceled, modified in any manner that would cause this Section 6.07 to beviolated, or not renewed (i) by reason of nonpayment of premium exceptupon not less than ten (10) days’ prior written notice thereof by theinsurer to the Administrative Agent (giving the Administrative Agent the rightto cure defaults in the payment of premiums) or (ii) for any other reasonexcept upon not less than thirty (30) days’ prior written notice thereof by theinsurer to the Administrative Agent. The Borrower shall deliver to theAdministrative Agent, prior to the cancellation, modification or non-renewal ofany such policy of insurance, a copy of a renewal or replacement policy (orother evidence of renewal of a policy previously delivered to theAdministrative Agent, including an insurance binder) together with evidencesatisfactory to the Administrative Agent of payment of the premium therefor.

 

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### (c)                                  The Agentsacknowledge that the insurance policies described on Schedule 6.07 aresatisfactory to them as of the Closing Date and are in compliance with theprovisions of this Section 6.07.

###  

SECTION 6.08. Compliance with Laws.Comply in all material respects with the requirements of all Laws and allorders, writs, injunctions and decrees applicable to it or to its business orproperty, except if the failure to comply therewith could not reasonably beexpected to have a Material Adverse Effect.

 

SECTION 6.09. Books and Records.   Maintainproper books of record and account, in which entries that are full, true andcorrect in all material respects and permit financial statements to be preparedin conformity with GAAP consistently applied shall be made of all materialfinancial transactions and matters involving the assets and business of theBorrower or such Subsidiary, as the case may be.

 

SECTION 6.10. Inspection Rights.   Permitrepresentatives and independent contractors of the Administrative Agent andeach Lender to visit and inspect any of its properties, to examine itscorporate, financial and operating records, and make copies thereof orabstracts therefrom, and to discuss its affairs, finances and accounts with itsdirectors, officers, and (subject to customary access agreements) independentpublic accountants all at the reasonable expense of the Borrower and at suchreasonable times during normal business hours and as often as may bereasonably desired, upon reasonable advance notice to the Borrower; *provided* that, excluding any such visits and inspectionsduring the continuation of an Event of Default, only the Administrative Agenton behalf of the Lenders may exercise rights of the Administrative Agentand the Lenders under this Section 6.10 and the Administrative Agent shallnot exercise such rights more often than two (2) times during any calendaryear absent the existence of an Event of Default and only one (1) suchtime shall be at the Borrower’s expense; *provided further*,that when an Event of Default exists, the Administrative Agent or any Lender(or any of their respective representatives or independent contractors) may doany of the foregoing at the expense of the Borrower at any time during normalbusiness hours and upon reasonable advance notice. The Administrative Agent andthe Lenders shall give the Borrower the opportunity to participate in anydiscussions with the Borrower’s independent public accountants.

 

SECTION 6.11. Covenant to GuaranteeObligations and Give Security. At the Borrower’s expense, take all actionnecessary or reasonably requested by the Administrative Agent to ensure thatthe Collateral and Guarantee Requirement continues to be satisfied, including:

 

### (a)                                  (x) upon theformation or acquisition of any new direct or indirect Wholly Owned Subsidiarythat is a Domestic Subsidiary (in each case, other than an UnrestrictedSubsidiary or an Excluded Subsidiary) by any Loan Party or the designation ofany “Unrestricted Subsidiary” as a Restricted Subsidiary in accordance with thedefinition of “Unrestricted Subsidiary”, to the extent such Subsidiary is (orwill become) a Domestic Subsidiary and a Wholly-Owned Subsidiary (other than anExcluded Subsidiary) or (y) the formation of Holdco:

 

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#### (i)                                     inthe case of any such Restricted Subsidiary that is required (or has elected) tobecome a Subsidiary Guarantor under the Collateral and Guaranty Requirement,within thirty (30) days after such formation, acquisition or designation orsuch longer period as the Administrative Agent may agree in itsdiscretion:

####  

(A)  cause each such Restricted Subsidiary that is required (orhas elected) to become a Subsidiary Guarantor under the Collateral andGuarantee Requirement to furnish to the Administrative Agent a description ofthe real properties owned by such Restricted Subsidiary that have a Fair MarketValue in excess of $5,000,000 in detail reasonably satisfactory to theAdministrative Agent;

 

(B)  cause (x) each such Restricted Subsidiary that is required(or has elected) to become a Subsidiary Guarantor pursuant to the Collateraland Guarantee Requirement to duly execute and deliver to the AdministrativeAgent or the Collateral Agent (as appropriate) Guaranty Supplements, Mortgageswith respect to the owned real properties which are identified to theAdministrative Agent pursuant to Section 6.11(a)(i)(A), Security AgreementSupplements, a counterpart of the Intercompany Note, a counterpart ofthe Intercreditor Agreement and other guaranties, security agreements anddocuments (including, with respect to such Mortgages, the documents listed in Section 6.13(b)),as reasonably requested by and in form and substance reasonablysatisfactory to the Administrative Agent (consistent, where applicable, withthe Mortgages, Security Agreement, Canadian Security Agreement, relevantGuaranty and other security agreements in effect on the Closing Date), in eachcase granting Liens required by the Collateral and Guarantee Requirement and(y) each direct or indirect parent of each such Restricted Subsidiary that isrequired (or has elected) to be a Subsidiary Guarantor pursuant to theCollateral and Guarantee Requirement to duly execute and deliver to theAdministrative Agent such Security Agreement Supplements and other securityagreements as reasonably requested by and in form and substance reasonablysatisfactory to the Administrative Agent (consistent, where applicable, withthe Security Agreements and Canadian Security Agreement as in effect on theClosing Date), in each case granting Liens required by the Collateral andGuarantee Requirement;

 

(C)  (x) cause each such Restricted Subsidiary that is required(or has elected) to become a Subsidiary Guarantor pursuant to the Collateraland Guarantee Requirement to deliver any and all certificates representingEquity Interests (to the extent certificated) that are required to be pledgedpursuant to the Collateral and Guarantee Requirement, accompanied by undatedstock powers or other appropriate instruments of transfer executed in blank andinstruments evidencing the intercompany Indebtedness held by such RestrictedSubsidiary and required to be pledged pursuant to the Collateral Documents,indorsed in blank to the Collateral Agent and (y) cause each direct or indirectparent of such Restricted Subsidiary that is required (or has elected) to be aSubsidiary Guarantor pursuant to the Collateral and Guarantee Requirement todeliver any and all certificates representing the outstanding Equity Interests(to the extent certificated) of such

 

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RestrictedSubsidiary that are required to be pledged pursuant to the Collateral and GuaranteeRequirement, accompanied by undated stock powers or other appropriateinstruments of transfer executed in blank and instruments evidencing theintercompany Indebtedness issued by such Restricted Subsidiary and required tobe pledged in accordance with the Collateral Documents, indorsed in blank tothe Collateral Agent; and

 

(D)  take and cause such Restricted Subsidiary and each direct orindirect parent of such Restricted Subsidiary that is required (or has elected)to become a Subsidiary Guarantor pursuant to the Collateral and GuarantyRequirement to take whatever action (including the recording of Mortgages, thefiling of Uniform Commercial Code financing statements or PPSAregistration statements or recordations and delivery of stock and membershipinterest certificates) may be necessary in the reasonable opinion of theAdministrative Agent to vest in the Administrative Agent (or in anyrepresentative of the Administrative Agent designated by it) valid Liensrequired by the Collateral and Guarantee Requirement, enforceable against allthird parties in accordance with their terms, except as such enforceability may belimited by Debtor Relief Laws and by general principles of equity,

 

#### (ii)                                  inthe case of Holdco, within thirty (30) days after such formation, cause Holdcoto enter into the Holdco Guaranty and cause Holdco to take all such actionscontemplated by subclauses (A), (B), (C) and (D) of Section 6.11(a)(i) aboveas if Holdco were a “Restricted Subsidiary” and a “direct or indirect parent ofa Restricted Subsidiary”,

####  

#### (iii)                               withinthirty (30) days after the request therefor by the Administrative Agent,deliver to the Administrative Agent a signed copy of an opinion, addressed tothe Administrative Agent and the other Secured Parties, of counsel for the LoanParties reasonably acceptable to the Administrative Agent as to such mattersset forth in this Section 6.11(a) as the Administrative Agent may reasonablyrequest, and

####  

#### (iv)                              aspromptly as practicable after the request therefor by the Administrative Agent,deliver to the Administrative Agent any existing title reports, surveys orenvironmental assessment reports with respect to each parcel of real propertythat is owned by such Restricted Subsidiary and has a Fair Market Value inexcess of $5,000,000.

####  

### (b)                                 After the ClosingDate, concurrently with (x) the acquisition of any material personal propertyby any Loan Party or (y) the acquisition of any owned real property by any LoanParty with a Fair Market Value in excess of $5,000,000 if such personalproperty or owned real property shall not already be subject to a perfectedLien pursuant to the Collateral and Guarantee Requirement, the Borrower shallgive notice thereof to the Administrative Agent and promptly thereafter shallcause such assets to be subjected to a Lien to the extent required by theCollateral and Guarantee Requirement and will take, or cause the relevant LoanParty to take, such actions as shall be necessary or reasonably requested bythe Administrative Agent to grant

 

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### and perfect or record such Lien, including, as applicable, the actionsreferred to in Section 6.13(b) with respect to real property.

###  

### (c)                                  If, at any time andfrom time to time after the Closing Date, any Domestic Subsidiary ceases toconstitute an Immaterial Subsidiary in accordance with the definition of “ImmaterialSubsidiary”, then the Borrower shall cause such Subsidiary to become anadditional Loan Party and take all the actions contemplated by Section 6.11(a) asif such Subsidiary were a newly-formed Domestic Subsidiary of the Borrower.

###  

### (d)                                 If, at any time afterthe Closing Date, any Restricted Subsidiary becomes an obligee or obligor ofany intercompany Indebtedness, then the Borrower shall cause such RestrictedSubsidiary to authorize, execute and deliver a counterpart of theIntercompany Note.

###  

### (e)                                  (i) Usecommercially reasonable efforts to obtain a Collateral Access Agreement fromany Person from whom a Loan Party enters into a lease after the Closing Datefor a warehouse or distribution center prior to entering into such lease, tothe extent required by the ABL Collateral Agent pursuant to the terms of ABLCredit Agreement, and (ii) use commercially reasonable efforts to causeeach of its customs brokers to deliver an agreement (including, withoutlimitation, a Customs Broker Agreement) to the Collateral Agent covering suchmatters and in such form as the Collateral Agent may reasonablyrequire, to the extent required by the ABL Collateral Agent pursuant to theterms of the ABL Credit Agreement.

###  

SECTION 6.12. Compliance withEnvironmental Laws. Except, in each case, to the extent that the failure todo so could not reasonably be expected to have, individually or in theaggregate, a Material Adverse Effect, comply, and take all reasonable actionsto cause all lessees and other Persons operating or occupying its properties tocomply with all applicable Environmental Laws and Environmental Permits; obtainand renew all Environmental Permits necessary for its operations andproperties; and, in each case to the extent required by Environmental Laws,conduct any investigation, study, sampling and testing, and undertake anycleanup, removal, remedial or other action necessary to remove and clean up allHazardous Materials from any of its properties, in accordance with therequirements of all Environmental Laws.

 

SECTION 6.13. Further Assurances andPost-Closing Conditions. (a)  Promptly upon reasonable request by theAdministrative Agent (i) correct any material defect or error that may bediscovered in the execution, acknowledgment, filing or recordation of anyCollateral Document or other document or instrument relating to any Collateral,and (ii) do, execute, acknowledge, deliver, record, re-record, file,re-file, register and re-register any and all such further acts, deeds,certificates, assurances and other instruments as the Administrative Agent may reasonablyrequest from time to time in order to carry out more effectively the purposesof the Collateral Documents.

 

### (b)                     In the case of any real propertyreferred to in Section 6.11(a)(i)(A) or 6.11(b), provide theAdministrative Agent with Mortgages with respect to such owned real propertywithin thirty (30) days of the acquisition of such real property, in each casetogether with:

 

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#### (i)                                     evidencethat counterparts of the Mortgages have been duly executed, acknowledged anddelivered and are in form suitable for filing or recording in all filingor recording offices that the Administrative Agent may deem reasonablynecessary or desirable in order to create a valid and subsisting perfected Lienon the property and/or rights described therein in favor of the AdministrativeAgent or the Collateral Agent (as appropriate) for the benefit of the SecuredParties and that all filing and recording taxes and fees have been paid orotherwise provided for in a manner reasonably satisfactory to theAdministrative Agent;

####  

#### (ii)                                  fullypaid American Land Title Association Lender’s Extended Coverage title insurancepolicies or the equivalent or other form available in each applicablejurisdiction (the “**Mortgage Policies**”)in form and substance, with endorsements and in amount, reasonablyacceptable to the Administrative Agent (not to exceed the value of the realproperties covered thereby), issued, coinsured and reinsured by title insurersreasonably acceptable to the Administrative Agent, insuring the Mortgages to bevalid subsisting Liens on the property described therein, free and clear of alldefects and encumbrances, subject to Liens permitted by Section 7.04, andproviding for such other affirmative insurance (including endorsements forfuture advances under the Loan Documents) and such coinsurance and directaccess reinsurance as the Administrative Agent may reasonably request;

####  

#### (iii)                               opinionsof local counsel for the Loan Parties in states in which such real propertiesare located, with respect to the enforceability and perfection of the Mortgagesand any related fixture filings in form and substance reasonablysatisfactory to the Administrative Agent;

####  

#### (iv)                              tothe extent required by applicable law, flood certificates covering eachMortgaged Property in form and substance reasonably acceptable to theCollateral Agent, certified to the Collateral Agent in its capacity as such andcertifying whether or not each such Mortgaged Property is located in a floodhazard zone by reference to the applicable FEMA map; and

####  

#### (v)                                 suchother evidence that all other actions that the Administrative Agent may reasonablydeem necessary or desirable in order to create valid and subsisting Liens onthe property described in the Mortgages have been taken.

####  

SECTION 6.14. Corporate Separateness.  (a)    Satisfy, and cause each of itsRestricted Subsidiaries and Unrestricted Subsidiaries to satisfy, customarycorporate and other formalities, including, as applicable, the holding ofregular Board of Directors’ meetings or action by directors without a meetingand the maintenance of corporate offices and records.

 

### (b)                                 Ensure that (i) nobank account of any Unrestricted Subsidiary shall be commingled with any bankaccount of the Borrower or any of the Borrower’s Restricted Subsidiaries, and (ii) anyfinancial statements distributed to any creditors of any UnrestrictedSubsidiary shall clearly establish or indicate the corporate separateness ofsuch Unrestricted Subsidiary from the Borrower and the Borrower’s RestrictedSubsidiaries.

 

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SECTION 6.15. Pension Plans. EachLoan Party shall cause each of its Pension Plans to be duly qualified andadministered in all respects in compliance with, as applicable, the PBA and allLaws (including regulations, orders and directives), and the terms of thePension Plans and any agreements relating thereto, except for suchnon-compliance as would not reasonably be expected to have a Material AdverseEffect. Each Loan Party and each of its Subsidiaries shall ensure that it,except where failure to do so would not reasonably be expected to have aMaterial Adverse Effect (a) has no Unfunded Pension Liability in respectof any Pension Plan, including any Pension Plan to be established andadministered by it or them; and (b) does not engage in a prohibitedtransaction or violation of the fiduciary responsibility rules withrespect to any Pension Plan that could reasonably be expected to result inliability.

 

# **ARTICLE VII**

#  

# **Negative Covenants**

#  

So long as any Lender shall have any Commitmenthereunder, any Loan or other Obligation hereunder which is accrued and payableshall remain unpaid or unsatisfied (other than contingent indemnity obligationswith respect to then unasserted claims):

 

SECTION 7.01. Asset Sales. TheBorrower shall not, and shall not permit any of its Restricted Subsidiaries toconsummate an Asset Sale, unless:

 

### (a)                                  theBorrower or such Restricted Subsidiary, as the case may be, receivesconsideration at the time of such Asset Sale at least equal to the Fair MarketValue of the assets sold or otherwise disposed of; and

###  

### (b)                                 exceptin the case of a Permitted Asset Swap, at least 75% of the considerationtherefor received by the Borrower or such Restricted Subsidiary, as the case may be,is in the form of Cash Equivalents; *provided* thatthe amount of (i) any liabilities (as shown on the Borrower’s or suchRestricted Subsidiary’s most recent balance sheet or in the footnotes thereto)of the Borrower or such Restricted Subsidiary, other than liabilities that areby their terms subordinated to the Obligations, that are assumed by the transfereeof any such assets and for which the Borrower and all of its RestrictedSubsidiaries have been validly released by all creditors in writing, (ii) anysecurities received by the Borrower or such Restricted Subsidiary from suchtransferee that are converted by the Borrower or such Restricted Subsidiaryinto Cash Equivalents (to the extent of the Cash Equivalents received) within180 days following the closing of such Asset Sale, and (iii) anyDesignated Non-cash Consideration received by the Borrower or such RestrictedSubsidiary in such Asset Sale having an aggregate Fair Market Value, takentogether with all other Designated Non-cash Consideration received pursuant tothis clause (iii) that is at that time outstanding, not to exceed 7.5% ofTotal Assets at the time of the receipt of such Designated Non-cashConsideration, with the Fair Market Value of each item of Designated Non-cashConsideration being measured at the time received and without giving effect tosubsequent changes in value, shall be deemed to be Cash Equivalents forpurposes of this provision and for no other purpose; and

 

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### (c)                                  anamount equal to 100% of the Net Proceeds of such Asset Sale are applied inaccordance with the requirements of (and to the extent required by) Section 2.05(c).

###  

SECTION 7.02. Limitation onRestricted Payments. (a)  The Borrower shall not, nor shall permit any of itsRestricted Subsidiaries to, directly or indirectly, (w) declare or pay anydividend or make any payment having the effect thereof or any distribution onaccount of the Borrower’s, or any Restricted Subsidiary’s, Equity Interests,including any dividend or distribution payable in connection with any merger orconsolidation other than (A) dividends or distributions by the Borrowerpayable solely in Equity Interests (other than Disqualified Stock) of theBorrower or (B) dividends or distributions by a Restricted Subsidiary solong as, in the case of any dividend or distribution payable on or in respectof any class or series of securities issued by a RestrictedSubsidiary other than a Wholly-Owned Subsidiary, the Borrower or a RestrictedSubsidiary receives at least its pro rata share of such dividend ordistribution in accordance with its Equity Interests in such class or series ofsecurities, (x) purchase, redeem, defease or otherwise acquire or retire forvalue any Equity Interests of the Borrower or any direct or indirect parent ofthe Borrower, including in connection with any merger, amalgamation orconsolidation, (y) make any principal payment on, or redeem, repurchase,defease or otherwise acquire or retire for value, in each case prior to anyscheduled repayment, sinking fund payment or maturity, any SubordinatedIndebtedness, other than:  (A) Indebtednesspermitted under Section 7.03(b)(vii) or (viii), except to the extentprohibited by the subordination provisions contained in any Intercompany Noteor (B) the purchase, repurchase or other acquisition of SubordinatedIndebtedness purchased in anticipation of satisfying a sinking fund obligation,principal installment or final maturity, in each case due within one year ofthe date of purchase, repurchase or acquisition, or (z) make any RestrictedInvestment (all such payments and other actions set forth in clauses (w)through (z) above being collectively referred to as “**RestrictedPayments**”), unless at the time of such Restricted Payment:

 

#### (i)                                     noDefault shall have occurred and be continuing or would occur as a consequencethereof;

####  

#### (ii)                                  immediatelyafter giving effect to such transaction on a pro forma basis, (x) the Borrowercould satisfy the Fixed Charge Coverage Ratio Incurrence Test and (y) theBorrower is in ProForma Compliance with Section 7.05; and

####  

#### (iii)                               suchRestricted Payment, together with the aggregate amount of all other RestrictedPayments made by the Borrower and its Restricted Subsidiaries after the ClosingDate (including Restricted Payments permitted by Sections 7.02(b)(i),7.02(b)(vi)(C), (ix) and (xiv), but excluding all other RestrictedPayments permitted by Section 7.02(b)), is less than the sum of (withoutduplication):

####  

(A)                              if, immediately after giving effect tosuch Restricted Payment and any related financing transaction on a proformabasis, the Consolidated Total Leverage Ratio is less than 6.00 to 1.00, theCumulative Retained Excess Cash Flow Amount at such time; *plus*

 

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(B)                                100% of the aggregate net cash proceedsand the Fair Market Value, as determined in good faith by the Borrower, ofmarketable securities or other property received by the Borrower sinceimmediately after the Closing Date (other than net cash proceeds to the extentsuch net cash proceeds have been used to incur Indebtedness, Disqualified Stockor Preferred Stock pursuant to Section 7.03(b)(xii)(A)) from the issue orsale of:

 

(I)  (1) Equity Interests ofthe Borrower, including Treasury Capital Stock, but excluding cash proceeds andthe Fair Market Value of marketable securities or other property received fromthe sale of:

 

(x)                                   Equity Interests to members ofmanagement, directors or consultants of the Borrower, any direct or indirectparent company of the Borrower and the Borrower’s Subsidiaries after theClosing Date to the extent such amounts have been applied to RestrictedPayments made in accordance with Section 7.02(b)(iv); and

 

(y)                                 Designated Preferred Stock; and

 

(2)                                  to the extent such net cash proceeds areactually contributed to the Borrower, Equity Interests of the Borrower’s director indirect parent companies (excluding contributions of the proceeds from thesale of Designated Preferred Stock of such companies or contributions to theextent such amounts have been applied to Restricted Payments made in accordancewith Section 7.02(b)(iv)); or

 

(II)                                debt securities of the Borrower that havebeen converted into or exchanged for Equity Interests of the Borrower;

 

*provided,however*, thatthis clause (B) shall not include the proceeds from (V) a Permitted CureIssuance, (W) Refunding Capital Stock (as defined below), (X) Equity Interestsor convertible debt securities of the Borrower sold to a Restricted Subsidiary,(Y) Disqualified Stock or debt securities that have been converted intoDisqualified Stock or (Z) Excluded Contributions; *plus*

 

(C)                                100% of the aggregate amount of cash andthe Fair Market Value of marketable securities or other property contributed tothe capital of the Borrower following the Closing Date (other than (x) cashcontributed to the Borrower pursuant to a Permitted Cure Issuance, (y) by aRestricted Subsidiary and (z) from any Excluded Contributions); *plus*

 

(D)                               100% of the aggregate amount received incash and the Fair Market Value of marketable securities or other propertyreceived by means of:

 

(I)                                    the sale or other disposition (other thanto the Borrower or a Restricted Subsidiary) of Restricted Investments made bythe Borrower or its Restricted Subsidiaries and repurchases and redemptions ofsuch

 

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RestrictedInvestments from the Borrower or its Restricted Subsidiaries and repayments ofloans or advances, and releases of guarantees, which constitute RestrictedInvestments by the Borrower or its Restricted Subsidiaries, in each case afterthe Closing Date; or

 

(II)                                the sale (other than to the Borrower or aRestricted Subsidiary) of the stock of an Unrestricted Subsidiary or adistribution from an Unrestricted Subsidiary (other than in each case to theextent the Investment in such Unrestricted Subsidiary was made by the Borroweror a Restricted Subsidiary pursuant to Section 7.02(b)(vii) or to theextent such Investment constituted a Permitted Investment) or a dividend froman Unrestricted Subsidiary after the Closing Date; *plus*

 

(E)                                 in the case of the redesignation of anUnrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamationor consolidation of an Unrestricted Subsidiary into the Borrower or aRestricted Subsidiary or the transfer of all or substantially all of the assetsof an Unrestricted Subsidiary to the Borrower or a Restricted Subsidiary afterthe Closing Date, the Fair Market Value of the Investment in such UnrestrictedSubsidiary (or the assets transferred), or if such Fair Market Value may exceed$125,000,000, as determined in writing by an Independent Financial Advisor, atthe time of the redesignation of such Unrestricted Subsidiary as a RestrictedSubsidiary or at the time of such merger, amalgamation, consolidation ortransfer of assets to the extent the Investment in such Unrestricted Subsidiarywas made by the Borrower or a Restricted Subsidiary pursuant to Section 7.02(b)(vii) orto the extent such Investment constituted a Permitted Investment.

 

### (b)                                 The provisions of Section 7.02(a) willnot prohibit:

###  

#### (i)                                     thepayment of any dividend within 60 days after the date of declaration thereof,if at the date of declaration such payment would have complied with theprovisions of this Agreement;

####  

#### (ii)                                  (A) theredemption, repurchase, retirement or other acquisition of any Equity Interests(“**Treasury Capital Stock**”) of theBorrower or any Equity Interests of any direct or indirect parent company ofthe Borrower or any Subordinated Indebtedness of the Borrower or a RestrictedSubsidiary, in exchange for, or out of the proceeds of, the substantiallyconcurrent sale or issuance (other than to a Restricted Subsidiary) of, EquityInterests of the Borrower or any direct or indirect parent company of theBorrower to the extent contributed to the Borrower (in each case, other thanany Disqualified Stock) (“**Refunding CapitalStock**”), (B) the declaration and payment of dividends onTreasury Capital Stock out of the proceeds of the substantially concurrent saleor issuance (other than to a Subsidiary of the Borrower or to an employee stockownership plan or any trust established by the Borrower or any of itsSubsidiaries) of Refunding Capital Stock, and (C) if immediately prior tothe retirement of Treasury Capital Stock, the declaration and payment ofdividends thereon was

 

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#### permittedunder sub-clause (vi) of this Section 7.02(b), the declaration andpayment of dividends on the Refunding Capital Stock (other than RefundingCapital Stock the proceeds of which were used to redeem, repurchase, retire orotherwise acquire any Equity Interests of any direct or indirect parent companyof the Borrower) in an aggregate amount per year no greater than the aggregateamount of dividends per annum that were declarable and payable on such TreasuryCapital Stock immediately prior to such retirement;

####  

#### (iii)                               theredemption, repurchase or other acquisition or retirement of SubordinatedIndebtedness of the Borrower or a Subsidiary Guarantor made by exchange for, orout of the proceeds of the substantially concurrent sale of, new Indebtednessof the Borrower or a Subsidiary Guarantor, as the case may be, which isincurred in compliance with Section 7.03 so long as (A) the principalamount (or accreted value, if applicable) of such new Indebtedness does notexceed the principal amount of (or accreted value, if applicable), *plus* any accrued and unpaid interest on, the SubordinatedIndebtedness being so redeemed, repurchased, exchanged, acquired or retired forvalue, *plus* the amount of any premium requiredto be paid under the terms of the instrument governing the SubordinatedIndebtedness being so redeemed, repurchased, exchanged, acquired or retired andany reasonable fees and expenses incurred in connection with such redemption,repurchase, exchange, acquisition or retirement and the issuance of such newIndebtedness, (B) such new Indebtedness is subordinated to the Obligationsat least to the same extent as such Subordinated Indebtedness so repurchased,exchanged, redeemed, acquired or retired for value, (C) such newIndebtedness has a final scheduled maturity date equal to or later than thefinal scheduled maturity date of the Subordinated Indebtedness being soredeemed, repurchased, exchanged, acquired or retired, and (D) such newIndebtedness has a Weighted Average Life to Maturity equal to or greater thanthe remaining Weighted Average Life to Maturity of the SubordinatedIndebtedness being so redeemed, repurchased, exchanged, acquired or retired;

####  

#### (iv)                              aRestricted Payment to pay for the repurchase, retirement or other acquisitionor retirement for value of Equity Interests (other than Disqualified Stock) ofthe Borrower or any of its direct or indirect parent companies held by anyfuture, present or former employee, director or consultant of the Borrower, anyof its Subsidiaries or any of its direct or indirect parent companies, or anyof their respective estates, spouses or former spouses, pursuant to anymanagement equity plan or stock option plan or any other management or employeebenefit plan or agreement (including, for the avoidance of doubt, any principaland interest payable on any notes issued by the Borrower or any direct orindirect parent company in connection with any such repurchase, retirement orother acquisition or retirement); *provided, however*,that the aggregate Restricted Payments made under this clause (iv) do notexceed in any calendar year $15,000,000 (which shall increase to $30,000,000subsequent to the consummation of an underwritten public Equity Offering by theBorrower or any direct or indirect parent company of the Borrower) with unusedamounts in any calendar year being carried over to succeeding calendar yearssubject to a

 

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#### maximum(without giving effect to the following proviso) of $30,000,000 in any calendaryear (which shall increase to $60,000,000 subsequent to the consummation of anunderwritten public Equity Offering by the Borrower or any direct or indirectparent company of the Borrower); *provided further*,that such amount in any calendar year may be increased by an amount not toexceed (A) the cash proceeds from the sale of Equity Interests (other thanDisqualified Stock) of the Borrower and, to the extent contributed to theBorrower, Equity Interests of any of the Borrower’s direct or indirect parent companies,in each case to members of management, directors or consultants of theBorrower, any of its Subsidiaries or any of its direct or indirect parentcompanies that occurs after the Closing Date, to the extent the cash proceedsfrom the sale of such Equity Interests have not otherwise been applied to thepayment of Restricted Payments by virtue of Section 7.02(b)(iii), *plus*, in respect of any sale of Equity Interests inconnection with an exercise of stock options, an amount equal to the amountrequired to be withheld by the Borrower or any of its direct or indirect parentcompanies in connection with such exercise under applicable law to the extentsuch amount is repaid to the Borrower or its direct or indirect parent company,as applicable, constituted a Restricted Payment and has not otherwise beenapplied to the payment of Restricted Payments by virtue of Section 7.02(b)(iii),*plus* (B) the cash proceeds of keyman life insurance policies received by the Borrower or its RestrictedSubsidiaries after the Closing Date, less (C) the amount of any RestrictedPayments previously made with the cash proceeds described in clauses (A) and(B) of this clause (iv); and *provided further*,that cancellation of Indebtedness owing to the Borrower from employees, directorsor consultants of the Borrower, any of the Borrower’s direct or indirect parentcompanies or any of the Borrower’s Restricted Subsidiaries in connection with arepurchase of Equity Interests of the Borrower or any of its direct or indirectparent companies will not be deemed to constitute a Restricted Payment forpurposes of this Section 7.02 or any other provision of this Agreement;

####  

#### (v)                                 thedeclaration and payment of dividends to holders of any class or series ofDisqualified Stock of the Borrower or any of its Restricted Subsidiaries issuedin accordance with Section 7.03 to the extent such dividends are includedin the definition of “Fixed Charges”;

####  

#### (vi)                              (A) thedeclaration and payment of dividends to holders of any class or series ofDesignated Preferred Stock (other than Disqualified Stock) issued by theBorrower after the Closing Date, (B) the declaration and payment ofdividends to a direct or indirect parent company of the Borrower, the proceedsof which will be used to fund the payment of dividends to holders of any class orseries of Designated Preferred Stock (other than Disqualified Stock) ofsuch parent company issued after the Closing Date, *provided*that the amount of dividends paid pursuant to this clause (B) shall notexceed the aggregate amount of cash actually contributed to the Borrower fromthe sale of such Designated Preferred Stock, or (C) the declaration andpayment of dividends on Refunding Capital Stock that is Preferred Stock inexcess of the dividends declarable and payable thereon pursuant to Section 7.02(b)(ii);*provided, however*, in the case of

 

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#### each ofSections 7.02(b)(vi)(A), (B) and (C), that for the most recently endedfour full fiscal quarters for which internal financial statements are availableimmediately preceding the date of issuance of such Designated Preferred Stockor the declaration of such dividends on Refunding Capital Stock that isPreferred Stock, after giving effect to such issuance or declaration on a proforma basis, (x) the Borrower and its Restricted Subsidiaries on aconsolidated basis would have had a Fixed Charge Coverage Ratio of at least2.00 to 1.00 and (y) the Borrower is in ProForma Compliance withSection 7.05;

####  

#### (vii)                           Investmentsin Unrestricted Subsidiaries having an aggregate Fair Market Value, takentogether with all other Investments made pursuant to this clause (vii) thatare at the time outstanding, without giving effect to the sale of anUnrestricted Subsidiary to the extent the proceeds of such sale do not consistof, or have not been subsequently sold or transferred for, cash or marketablesecurities, not to exceed $75,000,000 (with the Fair Market Value of eachInvestment being measured at the time made and without giving effect to subsequentchanges in value); *provided* thatimmediately after giving effect to such Investment, (I) no Default shall haveoccurred and be continuing, (II) the Borrower is in ProFormaCompliance with Section 7.05 (determined on a proformabasis taking into account such Investment) and (III)  the Consolidated Total Leverage Ratio is lessthan 6.00 to 1.00 (determined on a pro forma basis after giving effect to suchInvestment);

####  

#### (viii)                        repurchasesof Equity Interests deemed to occur upon exercise of stock options or warrantsif such Equity Interests represent a portion of the exercise price of suchoptions or warrants;

####  

#### (ix)                                thedeclaration and payment of dividends on the Borrower’s common stock (or thepayment of dividends to any direct or indirect parent entity to fund a paymentof dividends on such entity’s common stock), following the first publicoffering of the Borrower’s common stock or the common stock of any of itsdirect or indirect parent companies after the Closing Date, of up to 6% perannum of the net cash proceeds received by or contributed to the Borrower in orfrom any public offering, other than public offerings with respect to theBorrower’s common stock registered on Form S-8 and other than any publicsale constituting an Excluded Contribution;

####  

#### (x)                                   RestrictedPayments that are made with Excluded Contributions;

####  

#### (xi)                                otherRestricted Payments in an aggregate amount taken together with all otherRestricted Payments made pursuant to this clause (xi) that are at the timeoutstanding, without giving effect to the sale of an Investment to the extentthe proceeds of such sale do not consist of, or have not been subsequently soldor transferred for, cash or marketable securities, not to exceed $75,000,000(with the Fair Market Value of each Investment being measured at the time madeand without giving effect to subsequent changes in value); *provided*that immediately

 

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#### after givingpro forma effect to such Restricted Payment and any related financing transaction,the Consolidated Total Leverage Ratio is less than 6.00 to 1.00;

####  

#### (xii)                             distributionsor payments of Receivables Fees;

####  

#### (xiii)                          anyRestricted Payment used to fund the Transaction and the fees and expensesrelated thereto or owed to Affiliates, in each case with respect to anyRestricted Payment to or owed to an Affiliate to the extent permitted by thecovenant described under Section 7.07;

####  

#### (xiv)                         therepurchase, redemption or other acquisition or retirement for value of anySubordinated Indebtedness pursuant to a “change of control” offer to purchaseor provisions similar to those described under Section 2.05(c); *provided* that, prior to such repurchase, redemption or otheracquisition, the Borrower (or a third party to the extent permitted by thisAgreement) shall have (x) in the case of a “change of control”, repaid in fullall then outstanding Loans or (y) in the case of an asset sale, made an AssetSale/Casualty Event Offer with respect to the outstanding Loans and repaid allsuch Loans validly tendered for prepayment and not withdrawn in connection withsuch Asset Sale/Casualty Event Offer;

####  

#### (xv)                            thedeclaration and payment of dividends or distributions by the Borrower to, orthe making of loans to, any direct or indirect parent company in amountsrequired for any direct or indirect parent companies to pay, in each casewithout duplication,

####  

(A)  franchise taxes and other fees, taxes and expenses requiredto maintain their corporate existence;

 

(B)  federal, state, provincial and local income taxes, to theextent such income taxes are attributable to the income of the Borrower and itsRestricted Subsidiaries and, to the extent of the amount actually received fromits Unrestricted Subsidiaries, in amounts required to pay such taxes to theextent attributable to the income of such Unrestricted Subsidiaries; *provided* that in each case the amount of such payments inany fiscal year does not exceed the excess (if any) of (I) the amount that theBorrower and its Restricted Subsidiaries would be required to pay in respect offederal, state provincial, municipal and local income taxes for such fiscalyear were the Borrower, its Restricted Subsidiaries and its UnrestrictedSubsidiaries (to the extent described above) to pay such taxes separately fromany such parent company over (II) the aggregate federal, state, provincial,municipal and local income taxes paid by the Borrower and its RestrictedSubsidiaries;

 

(C)  customary salary, bonus and other benefits payable toofficers and employees of any direct or indirect parent company of the Borrowerto the extent such salaries, bonuses and other benefits are attributable to theownership or operation of the Borrower and its Restricted Subsidiaries;

 

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(D) general corporate operating and overhead costs and expenses of any direct orindirect parent company of the Borrower to the extent such costs and expensesare attributable to the ownership or operation of the Borrower and itsRestricted Subsidiaries; and

 

(E)  feesand expenses other than to Affiliates of the Borrower related to anyunsuccessful equity or debt offering of such parent company;

 

#### (xvi)                         the distribution, by dividendor otherwise, of shares of Capital Stock of, or Indebtedness owed to the Borroweror a Restricted Subsidiary by, Unrestricted Subsidiaries (other thanUnrestricted Subsidiaries, the primary assets of which are Cash Equivalents);

####  

#### (xvii)                      cash payments in lieu of theissuance of fractional shares in connection with the exercise of warrants,options or other securities convertible into or exchangeable for Capital Stockof the Borrower or any direct or indirect parent company of the Borrower;provided, that any such cash payment shall not be for the purpose of evadingthe limitation of this covenant;

####  

#### (xviii)                   the payment of dividends and otherdistributions in an amount equal to any reduction in taxes actually realized bythe Borrower and its Restricted Subsidiaries in the form of refunds orcredits or from deductions when applied to offset income or gain as a directresult of (I) transaction fees and expenses, (II) commitment and otherfinancing fees or (III) severance, change in control and other compensationexpense incurred in connection with the exercise, repurchase, rollover or payoutof stock options or bonuses, in each case in connection with the Transaction;and

####  

#### (xix)                           mandatory redemptions ofSubordinated Discount Notes (and any exchange notes issued in respect thereof)pursuant to the Subordinated Discount Notes Indenture due to the existence ofan AHYDO Amount (as defined in the Subordinated Discount Notes Indenture);

####  

*provided, however*,that at the time of, and after giving effect to, any Restricted Paymentpermitted under Sections 7.02(b)(xi), (xvi), (xviii) and (xix), no Defaultshall have occurred and be continuing or would occur as a consequence thereof.

 

### (c)                                  The Borrower shallnot permit any Unrestricted Subsidiary to become a Restricted Subsidiary exceptpursuant to the penultimate sentence of the definition of “UnrestrictedSubsidiary”. For purposes of designating any Restricted Subsidiary as anUnrestricted Subsidiary, all outstanding Investments by the Borrower and theRestricted Subsidiaries (except to the extent repaid) in the Subsidiary sodesignated shall be deemed to be Investments in an amount determined as setforth in the last sentence of the definition of “Investment”. Such designationshall be permitted only if a Restricted Payment in such amount would bepermitted at such time, whether pursuant to Section 7.02(a) or under

 

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### Sections 7.02(b)(vii), (x), (xi) or (xvi), or pursuant to thedefinition of “Permitted Investments,” and if such Subsidiary otherwise meetsthe definition of an “Unrestricted Subsidiary”.

###  

## SECTION 7.03. Limitation onIncurrence of Indebtedness and Issuance of Disqualified Stock and PreferredStock. (a)  The Borrower will not, and will not permit any of itsRestricted Subsidiaries to, directly or indirectly, create, incur, issue, assume,guarantee or otherwise become directly or indirectly liable, contingently orotherwise (collectively, “**incur**”and collectively, an “**incurrence**”)with respect to any Indebtedness (including Acquired Indebtedness) and theBorrower will not issue any shares of Disqualified Stock and will not permitany Restricted Subsidiary to issue any shares of Disqualified Stock orPreferred Stock.

##  

### (b)                                 The limitations setforth in Section 7.03(a) shall not apply to any of the followingitems (collectively, “**Permitted Debt**”):

###  

#### (i)                                     (x) Indebtednessincurred pursuant to the ABL Loan Documents by the Borrower or any RestrictedSubsidiary; *provided* thatimmediately after giving effect to any such incurrence, the aggregate principalamount of all Indebtedness incurred under this clause (x) and then outstandingdoes not exceed the greater of (A) $1,200,000,000 *less* up to $150,000,000 in the aggregateof all principal payments with respect to such Indebtedness made following theClosing Date pursuant to Section 2.05(c)(i) (*provided* that commitments arecorrespondingly reduced in connection therewith) *less* the aggregate principal amount of outstandingobligations under or in respect of Receivables Facilities and (B) (i) 90.0%of the eligible credit card and debit card receivables of the Borrower and itsRestricted Subsidiaries *plus* (ii) 90%of the net appraised orderly liquidation value of the eligible inventory of theBorrower and its Restricted Subsidiaries and (y) Indebtedness incurred pursuantto the Loan Documents by the Borrower or any Restricted Subsidiary;

####  

#### (ii)                                  the incurrence by theBorrower or any Subsidiary Guarantor of Indebtedness represented by (a) theSenior Notes issued on the Closing Date (including any guarantees thereof) andthe exchange notes and related guarantees to be issued in exchange for theSenior Notes pursuant to the Registration Rights Agreement (other than anyAdditional Notes (as defined in the Senior Notes Indenture)), (b) theSenior Subordinated Notes issued on the Closing Date (including any guaranteesthereof) and the exchange notes and related guarantees to be issued in exchangefor the Senior Subordinated Notes pursuant to the Registration Rights Agreement(other than any Additional Notes (as defined in the Senior Subordinated NotesIndenture)) and (c) the Subordinated Discount Notes issued on the ClosingDate (including any guarantees thereof) and the exchange notes and relatedguarantees to be issued in exchange for the Subordinated Discount Notespursuant to the Registration Rights Agreement (other than any Additional Notes(as defined in the Subordinated Discount Notes Indenture));

####  

#### (iii)                               Indebtedness existing onthe Closing Date and set forth in Schedule 7.03 (other than Indebtednessdescribed in clauses (i) and (ii) above of this Section 7.03);

####  

#### (iv)                              (x) Indebtedness(including Capitalized Lease Obligations) incurred, or Disqualified Stock andPreferred Stock issued, by the Borrower or any of its Restricted

 

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#### Subsidiaries, to finance the purchase, leaseor improvement of property (real or personal) or equipment that is used oruseful in a Similar Business, whether through the direct purchase of assets orthe Capital Stock of any Person owning such assets and (y) any Indebtednessincurred or Disqualified Stock or Preferred Stock issued to refund, refinanceor replace any other Indebtedness incurred or Disqualified Stock or PreferredStock issued pursuant to this clause (iv); *provided*that the aggregate amount of Indebtedness incurred and Disqualified Stock andPreferred Stock issued pursuant to clauses (x) and (y) of this clause (iv) doesnot exceed $125,000,000 at any one time outstanding;

####  

#### (v)                                 Indebtedness incurredby the Borrower or any of its Restricted Subsidiaries constitutingreimbursement obligations with respect to letters of credit issued in theordinary course of business, including letters of credit in respect of workers’compensation claims, health, disability or other employee benefits or property,casualty or liability insurance or self-insurance, or other Indebtedness withrespect to reimbursement type obligations regarding workers’ compensationclaims; *provided, however*, thatupon the drawing of such letters of credit or the incurrence of suchIndebtedness, such obligations are reimbursed within 30 days following suchdrawing or incurrence;

####  

#### (vi)                              Indebtedness arising fromagreements of the Borrower or its Restricted Subsidiaries providing forindemnification, adjustment of purchase price or similar obligations, in eachcase, incurred or assumed in connection with the disposition of any business,assets or a Subsidiary, other than guarantees of Indebtedness incurred by anyPerson acquiring all or any portion of such business, assets or a Subsidiaryfor the purpose of financing such acquisition; *provided,however*, that

####  

(A)  suchIndebtedness is not reflected on the balance sheet of the Borrower or any ofits Restricted Subsidiaries prepared in accordance with GAAP (contingentobligations referred to in a footnote to financial statements and not otherwisereflected on the balance sheet will not be deemed to be reflected on suchbalance sheet for purposes of this clause (vi)(A)); and

 

(B)  themaximum assumable liability in respect of all such Indebtedness shall at notime exceed the gross proceeds including non-cash proceeds (the Fair MarketValue of such non-cash proceeds being measured at the time received and withoutgiving effect to any subsequent changes in value) actually received by theBorrower and its Restricted Subsidiaries in connection with such disposition;

 

#### (vii)                           Indebtedness of the Borrowerto a Restricted Subsidiary; *provided*that any such Indebtedness owing to a Restricted Subsidiary that is not aSubsidiary Guarantor is expressly subordinated in right of payment to the Obligations;*provided further*, that anysubsequent issuance or transfer of any Capital Stock or any other event whichresults in any Restricted Subsidiary ceasing to be a Restricted Subsidiary orany other subsequent transfer of any such Indebtedness (except to the Borroweror another Restricted Subsidiary or any pledge of such Indebtednessconstituting a Permitted Lien) shall be 

 

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#### deemed, in each case, to be an incurrence ofsuch Indebtedness not permitted by this clause (vii);

####  

#### (viii)                        Indebtedness of a RestrictedSubsidiary to the Borrower or another Restricted Subsidiary; *provided* that if a Subsidiary Guarantorincurs such Indebtedness to a Restricted Subsidiary that is not a SubsidiaryGuarantor, such Indebtedness is expressly subordinated in right of payment tothe obligations of such Subsidiary Guarantor under its Guaranty; *provided further*, that any subsequentissuance or transfer of any Capital Stock or any other event which results inany such Restricted Subsidiary ceasing to be a Restricted Subsidiary or anysubsequent transfer of any such Indebtedness (except to the Borrower or anotherRestricted Subsidiary or any pledge of such Indebtedness constituting aPermitted Lien) shall be deemed, in each case, to be an incurrence of suchIndebtedness not permitted by this clause (viii);

####  

#### (ix)                                shares of PreferredStock of a Restricted Subsidiary issued to the Borrower or another RestrictedSubsidiary, *provided* that anysubsequent issuance or transfer of any Capital Stock or any other event whichresults in any such Restricted Subsidiary ceasing to be a Restricted Subsidiaryor any other subsequent transfer of any such shares of Preferred Stock (exceptto the Borrower or another of its Restricted Subsidiaries or any pledge of suchCapital Stock constituting a Permitted Lien) shall be deemed in each case to bean issuance of such shares of Preferred Stock not permitted by this clause(ix);

####  

#### (x)                                   (x) HedgingObligations (excluding Hedging Obligations entered into for speculativepurposes) for the purpose of limiting interest rate risk, exchange rate risk orcommodity pricing risk and (y) Indebtedness in respect of Cash ManagementServices provided by any Lender or any ABL Lender or any affiliate of any suchlender (or any Person that was a Lender, an ABL Lender or an affiliate of anysuch lender at the time the applicable agreement pursuant to which such CashManagement Services are provided was entered into);

####  

#### (xi)                                obligations in respectof performance, bid, appeal and surety bonds and performance and completionguarantees or obligations in respect of letters of credit related theretoprovided by the Borrower or any of its Restricted Subsidiaries in the ordinarycourse of business;

####  

#### (xii)                             Indebtedness orDisqualified Stock of the Borrower and Indebtedness, Disqualified Stock orPreferred Stock of the Borrower or any Restricted Subsidiary not otherwisepermitted hereunder in an aggregate principal amount or liquidation preference,which when aggregated with the principal amount and liquidation preference ofall other Indebtedness, Disqualified Stock and Preferred Stock then outstandingand incurred pursuant to this clause (xii), does not at any one timeoutstanding exceed $125,000,000;

####  

#### (xiii)                          the incurrence by the Borroweror any Restricted Subsidiary of Indebtedness or issuance by the Borrower or anyRestricted Subsidiary of Disqualified Stock or Preferred Stock which serves torefund or refinance any Indebtedness incurred

 

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#### or Disqualified Stock or Preferred Stockissued as permitted under Sections 7.03(b)(ii) and (iii) above, thisclause (xiii) and Section 7.03(b)(xiv) below or any Indebtedness incurredor Disqualified Stock or Preferred Stock issued to so refund or refinance suchIndebtedness, Disqualified Stock or Preferred Stock including additionalIndebtedness incurred or Disqualified Stock or Preferred Stock issued to paypremiums (including tender premiums), defeasance costs and fees in connectiontherewith (the “**Refinancing Indebtedness**”)prior to its respective maturity; *provided,however*, that such Refinancing Indebtedness (A) has a WeightedAverage Life to Maturity at the time such Refinancing Indebtedness is incurredwhich is not less than the remaining Weighted Average Life to Maturity of theIndebtedness, Disqualified Stock or Preferred Stock being refunded orrefinanced, (B) to the extent such Refinancing Indebtedness refinances (i) Indebtednesssubordinated or pari passu to the Obligations or the Guaranty of any SubsidiaryGuarantor, such Refinancing Indebtedness is subordinated or pari passu to theObligations or such Guaranty, as the case may be, at least to the sameextent as the Indebtedness being refinanced or refunded or (ii) DisqualifiedStock or Preferred Stock, such Refinancing Indebtedness must be DisqualifiedStock or Preferred Stock, respectively, and (C) shall not include (I)Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of theBorrower that is not a Subsidiary Guarantor that refinances Indebtedness,Disqualified Stock or Preferred Stock of the Borrower, (II) Indebtedness,Disqualified Stock or Preferred Stock of a Subsidiary of the Borrower that isnot a Subsidiary Guarantor that refinances Indebtedness, Disqualified Stock orPreferred Stock of a Subsidiary Guarantor, or (III) Indebtedness, DisqualifiedStock or Preferred Stock of the Borrower or a Restricted Subsidiary thatrefinances Indebtedness, Disqualified Stock or Preferred Stock of anUnrestricted Subsidiary, and *providedfurther*, that subclause (A) of this clause (xiii) will notapply to any refunding or refinancing of any Indebtedness outstanding under theABL Credit Agreement;

####  

#### (xiv)                         Indebtedness, DisqualifiedStock or Preferred Stock of (x) the Borrower or a Restricted Subsidiaryincurred or issued to finance an acquisition or (y) Persons that are acquiredby the Borrower or any Restricted Subsidiary or merged into or amalgamated orconsolidated with the Borrower or a Restricted Subsidiary in accordance with theterms of this Agreement; *provided*that after giving effect to such acquisition, merger, amalgamation orconsolidation, either (A) the Borrower could satisfy the Fixed ChargeCoverage Ratio Incurrence Test, or (B) the Fixed Charge Coverage Ratio ofthe Borrower and its Restricted Subsidiaries is greater than immediately priorto such acquisition, merger, amalgamation or consolidation;

####  

#### (xv)                            Indebtedness arising fromthe honoring by a bank or other financial institution of a check, draft orsimilar instrument drawn against insufficient funds in the ordinary course ofbusiness; *provided* that suchIndebtedness is extinguished within five Business Days of its incurrence;

####  

#### (xvi)                         Indebtedness of the Borroweror any of its Restricted Subsidiaries supported by a letter of credit issuedpursuant to the ABL Credit Agreement, in a principal amount not in excess ofthe stated amount of such letter of credit;

 

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#### (xvii)                      (A) any guarantee by theBorrower or a Restricted Subsidiary of Indebtedness or other obligations of anyRestricted Subsidiary, so long as the incurrence of such Indebtedness by suchRestricted Subsidiary is permitted under the terms of this Agreement or (B) anyguarantee by a Restricted Subsidiary of Indebtedness of the Borrower permittedto be incurred under the terms of this Agreement; *provided* that such guarantee is incurred in accordance with Section 7.09;

####  

#### (xviii)                   Indebtedness of Foreign Subsidiariesof the Borrower incurred not to exceed, together with any other Indebtednessincurred under this clause (xviii), at any time outstanding the greater of (x)$75,000,000 and (y) 10.0% of Total Assets of Foreign Subsidiaries;

####  

#### (xix)                           Indebtedness, DisqualifiedStock or Preferred Stock of a Restricted Subsidiary incurred or issued tofinance or assumed in connection with an acquisition, and (B) Indebtednessincurred to refund, refinance or replace any other Indebtedness, DisqualifiedStock or Preferred Stock permitted under this clause (xix), in each case in anaggregate principal amount not to exceed, together with all other Indebtedness,Disqualified Stock and/or Preferred Stock issued under this clause (xix),$100,000,000 in the aggregate at any one time outstanding; *provided* that any Indebtedness incurredpursuant to preceding clause (B) shall satisfy the requirements of “RefinancingIndebtedness” set forth in the proviso appearing in Section 7.03(b)(xiii)to the same extent as if such proviso were set forth in its entirety in thisclause (xix);

####  

#### (xx)                              Indebtedness of theBorrower or any of its Restricted Subsidiaries consisting of (x) the financingof insurance premiums or (y) take-or-pay obligations contained in supplyarrangements in each case, incurred in the ordinary course of business; and

####  

#### (xxi)                           Indebtedness consisting ofIndebtedness issued by the Borrower or any of its Restricted Subsidiaries tocurrent or former officers, directors, employees and consultants thereof, theirrespective estates, spouses or former spouses, in each case to finance thepurchase or redemption of Equity Interests of the Borrower or any direct orindirect parent company of the Borrower to the extent described in Section 7.02(b)(iv).

####  

### (c)                                  For purposes ofdetermining compliance with this covenant:

###  

#### (i)                                     in the event thatan item of Indebtedness, Disqualified Stock or Preferred Stock (or any portionthereof) meets the criteria of more than one of the categories of permittedIndebtedness, Disqualified Stock or Preferred Stock described in Sections7.03(b)(i) through (xxi) above, the Borrower, in its sole discretion, willclassify or reclassify such item of Indebtedness, Disqualified Stock orPreferred Stock (or any portion thereof) and will only be required to includethe amount and type of such Indebtedness, Disqualified Stock or Preferred Stockin one of the above clauses; *provided*that all Indebtedness outstanding under the ABL Loan Documents and the LoanDocuments on the Closing Date will at all times be deemed to be outstanding inreliance on Section 7.03(b)(i); and

 

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#### (ii)                                  at the time ofincurrence, the Borrower will be entitled to divide and classify an item ofIndebtedness in more than one of the types of Indebtedness described in Section 7.03(b) above.

####  

### (d)                                 The accrual ofinterest, the accretion of accreted value and the payment of interest in the form ofadditional Indebtedness, Disqualified Stock or Preferred Stock will not bedeemed to be an incurrence of Indebtedness, Disqualified Stock or PreferredStock for purposes of this Section 7.03.

###  

### (e)                                  For purposes ofdetermining compliance with any Dollar-denominated restriction on theincurrence of Indebtedness, the Dollar-equivalent principal amount ofIndebtedness denominated in a foreign currency shall be calculated based on therelevant currency exchange rate in effect on the date such Indebtedness wasincurred, in the case of term debt, or first committed, in the case ofrevolving credit debt; *provided*that if such Indebtedness is incurred to refinance other Indebtednessdenominated in a foreign currency, and such refinancing would cause theapplicable Dollar-denominated restriction to be exceeded if calculated at therelevant currency exchange rate in effect on the date of such refinancing, suchDollar-denominated restriction shall be deemed not to have been exceeded solong as the principal amount of such refinancing Indebtedness does not exceedthe principal amount of such Indebtedness being refinanced.

###  

### (f)                                    The principalamount of any Indebtedness incurred to refinance other Indebtedness, ifincurred in a different currency from the Indebtedness being refinanced, shallbe calculated based on the currency exchange rate applicable to the currenciesin which such respective Indebtedness is denominated that is in effect on thedate of such refinancing.

###  

SECTION 7.04. Liens. The Borrowerwill not, and will not permit any Subsidiary Guarantor to, directly orindirectly, create, incur, assume or suffer to exist any Lien on any asset orproperty of the Borrower or any Subsidiary Guarantor now owned or hereafteracquired, or any income or profits therefrom, or assign or convey any right toreceive income therefrom, except:

 

### (a)                                  in the case of the TLPriority Collateral, any Permitted Collateral Lien;

###  

### (b)                                 in the case of the ABLPriority Collateral or any other asset or property, any Permitted Lien.

###  

SECTION 7.05. Consolidated SecuredDebt Ratio. Permit the ratio of (a) the Consolidated TotalIndebtedness of the Borrower and its Restricted Subsidiaries that is secured byLiens as at the last day of any Test Period set forth below to (b) theBorrower’s EBITDA for such Test Period, in each case with such pro formaadjustments to EBITDA as are appropriate and consistent with the pro formaadjustment provisions set forth in the definition of Fixed Charge CoverageRatio, to be greater than the ratio set forth below opposite such RelevantReference Period below:

 

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| **Calendar Year  Ended** | ** ** | **Test Period  Ended Closest to  January 31** | ** ** | **Test Period  Ended Closest to  April 30** | ** ** | **Test Period  Ended Closest to  July 31** | ** ** | **Test Period  Ended Closest to  October 31** | ** ** |
|-------------------------------|------------|-------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|
| 2008                          |       | 5.95:1.00                                                         |       | 5.95:1.00                                                       |       | 5.95:1.00                                                      |       | 5.95:1.00                                                         |       |
| 2009                          |       | 5.95:1.00                                                         |       | 5.50:1.00                                                       |       | 5.50:1.00                                                      |       | 5.50:1.00                                                         |       |
| 2010                          |       | 5.50:1.00                                                         |       | 5.00:1.00                                                       |       | 5.00:1.00                                                      |       | 5.00:1.00                                                         |       |
| 2011                          |       | 5.00:1.00                                                         |       | 4.50:1.00                                                       |       | 4.50:1.00                                                      |       | 4.50:1.00                                                         |       |
| 2012                          |       | 4.50:1.00                                                         |       | 4.00:1.00                                                       |       | 4.00:1.00                                                      |       | 4.00:1.00                                                         |       |
| 2013                          |       | 4.00:1.00                                                         |       | 4.00:1.00                                                       |       | 4.00:1.00                                                      |       | 4.00:1.00                                                         |       |

 

## SECTION 7.06. Merger, Amalgamation,Consolidation or Sale of All or Substantially All Assets. (a)  TheBorrower may not consolidate, merge or amalgamate with or into or wind upinto (whether or not the Borrower is the surviving corporation), or sell,assign, transfer, lease, convey or otherwise dispose of all or substantiallyall of its properties or assets, in one or more related transactions, to anyPerson unless:

##  

#### (i)                                     the Borrower isthe surviving corporation or the Person formed by or surviving any suchconsolidation or merger (if other than the Borrower) or to which such sale,assignment, transfer, lease, conveyance or other disposition will have beenmade is a corporation organized or existing under the laws of the jurisdictionof organization of the Borrower or the laws of the United States, any statethereof or the District of Columbia (or any territory thereof) (the Borrower orsuch Person, as the case may be, being herein called the “SuccessorBorrower”);

####  

#### (ii)                                  the SuccessorBorrower, if other than the Borrower, expressly assumes all the obligations ofthe Borrower under this Agreement and the other Loan Documents pursuant tosupplements to the Loan Documents or other documents or instruments, in eachcase in a form reasonably satisfactory to the Administrative Agent;

####  

#### (iii)                               immediately after suchtransaction, no Default exists;

####  

#### (iv)                              immediately after giving proforma effect to such transaction and any related financing transactions,as if such transactions had occurred at the beginning of the applicablefour-quarter period, (A) either (1) the Successor Borrower couldsatisfy the Fixed Charge Coverage Ratio Incurrence Test or (2) the FixedCharge Coverage Ratio for the Successor Borrower would be greater than theFixed Charge Coverage Ratio for the Borrower and its Restricted Subsidiariesimmediately prior to such transaction and (B) the Successor Borrower is inProForma Compliance with Section 7.05;

####  

#### (v)                                 each RestrictedSubsidiary that is a Subsidiary Guarantor, unless it is the other party to thetransactions described above, in which case Section 7.06(c)(i)(B) shallapply, shall have by supplement to the Loan Documents confirmed that itsGuaranty shall apply to such Person’s obligations under the Loan Documents andthe Loans; and

####  

#### (vi)                              the Borrower shall havedelivered to the Administrative Agent an Officer’s Certificate and an Opinionof Counsel, each stating that such consolidation,

 

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#### merger or transfer and such supplements tothe Loan Documents, if any, comply with this Agreement and the other LoanDocuments.

####  

### (b)                                 The Successor Borrowerwill succeed to, and be substituted for the Borrower, as the case may be,under this Agreement and the other Loan Documents. The foregoing clauses (iii),(iv), (v) and (vi) of Section 7.06(a) shall not apply tothe merger contemplated by the Recapitalization Agreement. Notwithstanding Section 7.06(a)(iii) and(iv), (i) any Restricted Subsidiary may consolidate with or mergeinto or transfer all or part of its properties and assets to the Borrower,and (ii) the Borrower may merge with an Affiliate of the Borrower, asthe case may be, solely for the purpose of reincorporating the Borrower ina State of the United States, so long as the amount of Indebtedness of theBorrower and its Restricted Subsidiaries is not increased thereby.

###  

### (c)                                  No Guarantor will,and the Borrower will not permit any Guarantor (other than the Borrower) to,consolidate, merge or amalgamate with or into or wind up into (whether or notthe Borrower or a Guarantor is the surviving corporation), or sell, assign,transfer, lease, convey or otherwise dispose of all or substantially all of itsproperties or assets, in one or more related transactions, to any Personunless:

###  

#### (i)                                     (A)  suchGuarantor is the surviving corporation or the Person formed by or surviving anysuch consolidation or merger (if other than such Guarantor) or to which suchsale, assignment, transfer, lease, conveyance or other disposition will havebeen made is a corporation organized or existing under the laws of thejurisdiction of organization of such Guarantor, as the case may be, or thelaws of the United States, any state thereof or the District of Columbia or anyterritory thereof or, in the case of a Canadian Subsidiary Guarantor, aprovince or territory of Canada (such Guarantor or such Person, as the case may be,being herein called the “**Successor Guarantor**”);

####  

(B)  theSuccessor Guarantor, if other than such Guarantor, expressly assumes all theobligations of such Guarantor under the Guaranty and the other Loan Documentspursuant to a joinder agreement and/or supplements to the Loan Documents orother documents or instruments, in each case in a form reasonablysatisfactory to the Administrative Agent;

 

(C) immediately after such transaction, no Default exists;

 

(D)  theBorrower shall have delivered to the Administrative Agent an Officer’sCertificate and an Opinion of Counsel, each stating that such consolidation,merger or transfer and such joinder agreement, supplements and/or otherdocuments or instruments, if any, comply with this Agreement and the other LoanDocuments; and

 

(E)  if aconsolidation, merger or amalgamation includes any Canadian Subsidiary and suchCanadian Subsidiary is not the surviving entity, such transaction shall be onterms conditions reasonably satisfactory to the Administrative Agent (whoseconsent shall not be unreasonably withheld); or

 

#### (ii)                                  the transaction ismade in compliance with Section 7.01.

 

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### (d)                                 In the case of Section 7.06(c)(i),the Successor Guarantor will succeed to, and be substituted for, such Guarantorunder such Guarantor’s Guaranty and the other Loan Documents. Notwithstandingthe foregoing, any Subsidiary Guarantor may merge or amalgamate into orwith or wind up into or transfer all or part of its properties and assetsto another Subsidiary Guarantor or the Borrower.

###  

## SECTION 7.07. Transactions withAffiliates. (a)  The Borrower will not, and will not permit any of itsRestricted Subsidiaries to, make any payment to, or sell, lease, transfer orotherwise dispose of any of its properties or assets to, or purchase anyproperty or assets from, or enter into or make or amend any transaction,contract, agreement, understanding, loan, advance or guarantee with, or for thebenefit of, any Affiliate of the Borrower (each of the foregoing, an “**Affiliate Transaction**”) involving aggregatepayments or consideration in excess of $10,000,000, unless:  (i) such Affiliate Transaction is onterms that are not materially less favorable to the Borrower or its relevantRestricted Subsidiary than those that would have been obtained in a comparabletransaction by the Borrower or such Restricted Subsidiary with an unrelatedPerson on an arm’s-length basis, and (ii) the Borrower delivers to theAdministrative Agent with respect to any Affiliate Transaction or series ofrelated Affiliate Transactions involving aggregate payments or consideration inexcess of $30,000,000, a resolution adopted by the majority of the Board ofDirectors of the Borrower approving such Affiliate Transaction and set forth inan Officer’s Certificate certifying that such Affiliate Transaction complieswith clause (i) above.

##  

### (b)                                 The limitations setforth in Section 7.07(a) will not apply to the following:

###  

#### (i)                                     transactionsbetween or among the Borrower or any of its Restricted Subsidiaries;

####  

#### (ii)                                  Restricted Paymentspermitted by the provisions of Section 7.02 and Investments constituting “PermittedInvestments”;

####  

#### (iii)                               the payment ofmanagement, consulting, monitoring and advisory fees and termination fees andrelated indemnities and expenses pursuant to the Sponsor Management Agreement;

####  

#### (iv)                              the payment of reasonableand customary fees and compensation paid to, and indemnities and reimbursementsprovided on behalf of, officers, directors, employees or consultants ofBorrower, any of its direct or indirect parent companies or any of itsRestricted Subsidiaries;

####  

#### (v)                                 transactions in whichthe Borrower or any of its Restricted Subsidiaries, as the case may be,delivers to the Administrative Agent a letter from an Independent FinancialAdvisor stating that such transaction is fair to the Borrower or suchRestricted Subsidiary from a financial point of view or stating that the termsare not materially less favorable to the Borrower or its relevant RestrictedSubsidiary than those that would have been obtained in a comparable transactionby the Borrower or such Restricted Subsidiary with an unrelated Person on anarm’s-length basis;

 

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#### (vi)                              any agreement as ineffect as of the Closing Date, or any amendment thereto (so long as any suchamendment is not disadvantageous in any material respect to the Lenders whentaken as a whole as compared to the applicable agreement as in effect on theClosing Date);

####  

#### (vii)                           the existence of, or theperformance by the Borrower or any of its Restricted Subsidiaries of itsobligations under the terms of, any stockholders agreement (including anyregistration rights agreement or purchase agreement related thereto) to whichit is a party as of the Closing Date and any similar agreements which it may enterinto thereafter; *provided, however*,that the existence of, or the performance by the Borrower or any of itsRestricted Subsidiaries of obligations under any future amendment to any suchexisting agreement or under any similar agreement entered into after theClosing Date shall only be permitted by this clause (vii) to the extentthat the terms of any such amendment or new agreement are not otherwisedisadvantageous in any material respect to the Lenders when taken as a whole ascompared to the original agreement in effect on the Closing Date;

####  

#### (viii)                        the Transaction and the paymentof all fees and expenses related to the Transaction, including TransactionExpenses, in each case as disclosed in the offering memorandum relating to theSenior Notes and the Senior Subordinated Notes;

####  

#### (ix)                                transactions withcustomers, clients, suppliers, or purchasers or sellers of goods or services,in each case in the ordinary course of business and otherwise in compliancewith the terms of this Agreement which are fair to the Borrower and itsRestricted Subsidiaries, in the reasonable determination of the Board ofDirectors of the Borrower or the senior management thereof, or are on terms atleast as favorable as would reasonably have been obtained at such time from anunaffiliated party;

####  

#### (x)                                   the issuance ofEquity Interests (other than Disqualified Stock) of the Borrower to any director indirect parent of the Borrower or to any Permitted Holder or to anydirector, officer, employee or consultant of the Borrower, any Subsidiary orany direct or indirect parent of the Borrower;

####  

#### (xi)                                sales of accountsreceivable, or participations therein, in connection with any ReceivablesFacility;

####  

#### (xii)                             payments by the Borroweror any of its Restricted Subsidiaries to any of the Investors made for anyfinancial advisory, financing, underwriting or placement services or in respectof other investment banking activities, including, without limitation, inconnection with acquisitions or divestitures which payments are approved by amajority of the Board of Directors of the Borrower in good faith or which areotherwise permitted by this Agreement;

####  

#### (xiii)                          payments or loans (orcancellation of loans) to employees or consultants of the Borrower, any of itsdirect or indirect parent companies or any of its Restricted Subsidiaries andemployment agreements, stock option plans and other similar

 

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#### arrangements with such employees orconsultants which, in each case, are approved by the Borrower in good faith;and

####  

#### (xiv)                         investments by the Investorsin securities of the Borrower or any of its Restricted Subsidiaries, so long as(A) the investment is being offered generally to other investors on thesame or more favorable terms and (B) the investment constitutes less than5% of the proposed or outstanding issue amount of such class ofsecurities.

####  

SECTION 7.08. Dividend and OtherPayment Restrictions Affecting Restricted Subsidiaries. The Borrower willnot, and will not permit any of its Restricted Subsidiaries that are notSubsidiary Guarantors to, directly or indirectly, create or otherwise cause orsuffer to exist or become effective any consensual encumbrance or consensualrestriction on the ability of any such Restricted Subsidiary to:

 

(x)                                   (A) pay dividends or make any other distributions to the Borrower or any of itsRestricted Subsidiaries on its Capital Stock or with respect to any otherinterest or participation in, or measured by, its profits, or (B) pay anyIndebtedness owed to the Borrower or any of its Restricted Subsidiaries;

 

(y)                                 makeloans or advances to the Borrower or any of its Restricted Subsidiaries; or

 

(z)                                   sell,lease or transfer any of its properties or assets to the Borrower or any of itsRestricted Subsidiaries,

 

*provided* that theforegoing limitations shall not apply (in each case) to such encumbrances orrestrictions existing under or by reason of:

 

#### (i)                                     contractualencumbrances or restrictions in effect on the Closing Date, including pursuantto the New Notes Documentation and the ABL Loan Documents;

####  

#### (ii)                                  the Loan Documents;

####  

#### (iii)                               purchase moneyobligations for property acquired in the ordinary course of business thatimpose restrictions of the nature described in clause (z) of this Section 7.08above on the property so acquired;

####  

#### (iv)                              applicable law or anyapplicable rule, regulation or order;

####  

#### (v)                                 any agreement or otherinstrument of a Person acquired by the Borrower or any of its RestrictedSubsidiaries in existence at the time of such acquisition (but not created incontemplation thereof), which encumbrance or restriction is not applicable toany Person, or the properties or assets of any Person, other than the Person soacquired and its Subsidiaries, or the property or assets of the Person soacquired and its Subsidiaries;

####  

#### (vi)                              contracts for the sale ofassets, including customary restrictions with respect to a Subsidiary of theBorrower pursuant to an agreement that has been entered

 

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#### into for the sale or disposition of all orsubstantially all of the Capital Stock or assets of such Subsidiary;

####  

#### (vii)                           Secured Indebtednessotherwise permitted to be incurred pursuant to Section 7.03 that limitsthe right of the debtor to dispose of the assets securing such Indebtedness;

####  

#### (viii)                        restrictions on cash or otherdeposits or net worth imposed by customers under contracts entered into in theordinary course of business;

####  

#### (ix)                                other Indebtedness,Disqualified Stock or Preferred Stock of Foreign Subsidiaries permitted to beincurred or issued subsequent to the Closing Date pursuant to the provisions ofSection 7.03;

####  

#### (x)                                   customary provisionsin any joint venture agreement and other similar agreement relating solely tosuch joint venture;

####  

#### (xi)                                customary provisions containedin leases, subleases, licenses or sublicenses and other agreements, in eachcase, entered into in the ordinary course of business;

####  

#### (xii)                             any encumbrances orrestrictions of the type referred to in clauses (x), (y) and (z) of this Section 7.08above imposed by any amendments, modifications, restatements, renewals,increases, supplements, refundings, replacements or refinancings of thecontracts, instruments or obligations referred to in clauses (i) through(xi) above; *provided* that suchamendments, modifications, restatements, renewals, increases, supplements,refundings, replacements or refinancings are, in the good faith judgment of theBorrower, no more restrictive in any material respect with respect to suchencumbrances and other restrictions taken as a whole than those prior to suchamendment, modification, restatement, renewal, increase, supplement, refunding,replacement or refinancing;

####  

#### (xiii)                          any other agreement governingIndebtedness entered into after the Closing Date that contains encumbrances andother restrictions that are, in the good faith judgment of the Borrower, nomore restrictive in any material respect taken as a whole with respect to anyRestricted Subsidiary than those encumbrances and other restrictions that arein effect on the Closing Date with respect to that Restricted Subsidiarypursuant to agreements in effect on the Closing Date; and

####  

#### (xiv)                         restrictions created inconnection with any Receivables Facility that, in the good faith determinationof the Borrower are necessary or advisable to effect such Receivables Facility.

####  

SECTION 7.09. Limitation onGuarantees of Indebtedness by Restricted Subsidiaries. The Borrower willnot permit any of its Wholly-Owned Subsidiaries that are RestrictedSubsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-OwnedSubsidiaries guarantee other capital markets debt securities), other than aSubsidiary Guarantor

 

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or a Foreign Subsidiary, to guarantee the payment of any Indebtednessof the Borrower or any other Subsidiary Guarantor unless:

 

### (a)                                  such RestrictedSubsidiary within 30 days executes and delivers a joinder agreement for therelevant Guaranty, except that with respect to a guarantee of Indebtedness ofthe Borrower or any Subsidiary Guarantor, if such Indebtedness is by itsexpress terms subordinated in right of payment to the Obligations (includingsuch Subsidiary Guarantor’s Guaranty), any such guarantee by such RestrictedSubsidiary with respect to such Indebtedness shall be subordinated in right ofpayment to the relevant Guaranty substantially to the same extent as suchIndebtedness is subordinated to the Obligations;

###  

### (b)                                 such RestrictedSubsidiary waives and will not in any manner whatsoever claim or take thebenefit or advantage of, any rights of reimbursement, indemnity or subrogationor any other rights against the Borrower or any other Restricted Subsidiary asa result of any payment by such Restricted Subsidiary under its Guaranty; and

###  

### (c)                                  such Restricted Subsidiaryshall deliver to the Administrative Agent an Opinion of Counsel to the effectthat:

###  

#### (i)                                     such Guaranty hasbeen duly executed and authorized; and

####  

#### (ii)                                  such Guarantyconstitutes a valid, binding and enforceable obligation of such RestrictedSubsidiary, except insofar as enforcement thereof may be limited bybankruptcy, insolvency or similar laws (including, without limitation, all lawsrelating to fraudulent transfers) and except insofar as enforcement thereof issubject to general principles of equity;

####  

*provided* that this Section 7.09shall not be applicable to any guarantee of any Restricted Subsidiary thatexisted at the time such Person became a Restricted Subsidiary and was notincurred in connection with, or in contemplation of, such Person becoming aRestricted Subsidiary.

 

SECTION 7.10. Change in Nature ofBusiness. The Borrower shall not, and shall not permit any of itsRestricted Subsidiaries to, engage in any material line of businesssubstantially different from those lines of business conducted by the Borrowerand the Restricted Subsidiaries on the date hereof or any business reasonablyrelated or ancillary thereto or a reasonable extension thereof.

 

SECTION 7.11. [Reserved].

 

SECTION 7.12. Use of Proceeds. TheBorrower shall not, and shall not permit any of its Restricted Subsidiaries to,use the proceeds of any Borrowing, whether directly or indirectly, in a mannerinconsistent with the uses set forth in the preliminary statements to thisAgreement.

 

SECTION 7.13. Accounting Changes.The Borrower shall not, and shall not permit any of its Restricted Subsidiariesto, make any change in its fiscal year, fiscal quarter or

 

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fiscal month; *provided, however*,that the Borrower may, upon written notice to the Administrative Agent, changeits fiscal year, fiscal quarter or fiscal month to any other fiscal year,fiscal quarter or fiscal month, as the case may be, reasonably acceptableto the Administrative Agent, in which case, the Borrower and the AdministrativeAgent will, and are hereby authorized by the Lenders to, make any adjustmentsto this Agreement that are necessary to reflect such change in fiscal year,fiscal quarter or fiscal month, as the case may be.

 

## SECTION 7.14. Amendments of Indebtedness,Etc. (a) Without the consent of the Required Lenders, the Borrowerwill not amend, modify or alter (i) the subordination provisions of theSenior Subordinated Notes Indenture, the Subordinated Discount Notes Indentureand any other Junior Financing Documentation (and the component definitions asused therein), or (ii) any other term or condition of the SeniorSubordinated Notes Indenture, the Subordinated Discount Notes Indenture and anyother Junior Financing Documentation, in the case of this clause (ii), in amanner materially adverse to the interests of the Lenders.

##  

### (b)                                 The Borrower shallnot, and shall not permit any of its Restricted Subsidiaries to, designate anyIndebtedness (or related interest obligations) as “Designated SeniorIndebtedness” (as defined in each of the Senior Subordinated Notes Indentureand the Subordinated Discount Notes Indenture) or any similar term (as definedin any Junior Financing Documentation), in each case, except for Obligations ofthe type described in clause (x) of the definition thereof and ABL Loans (andrelated obligations).

###  

# **ARTICLE VIII**

#  

# **Events Of Default andRemedies**

#  

SECTION 8.01. Events of Default. Anyof the following shall constitute an Event of Default:

 

### (a)                                  *Non-Payment*. The Borrower or any otherLoan Party fails to pay (i) when and as required to be paid herein, anyamount of principal of any Loan, or (ii) within five (5) BusinessDays after the same becomes due, any interest on any Loan or any other amountpayable hereunder or with respect to any other Loan Document; or

###  

### (b)                                 *Specific Covenants*. The Borrower fails toperform or observe any term, covenant or agreement contained in any ofSections 6.03(a) or 6.05(a) (solely with respect to the Borrower) or Article 7;provided, that any Event of Default under Section 7.05 is subject to cureas contemplated by Section 8.05; or

###  

### (c)                                  *Other Defaults*. Any Loan Party fails toperform or observe any other covenant or agreement (not specified in Section 8.01(a) or(b) above) contained in any Loan Document on its part to be performedor observed and such failure continues for thirty (30) days after noticethereof by the Administrative Agent to the Borrower; or

###  

### (d)                                 *Representations and Warranties*. Anyrepresentation, warranty, certification or statement of fact made or deemedmade by or on behalf of the Borrower or any other Loan Party herein, in anyother Loan Document, or in any document

 

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### required to be delivered in connectionherewith or therewith shall be incorrect or misleading in any material respectwhen made or deemed made; or

###  

### (e)                                  *Cross-Default*. Any Loan Party or anyRestricted Subsidiary (i) fails to make any payment beyond the applicablegrace period with respect thereto, if any (whether by scheduled maturity,required prepayment, acceleration, demand, or otherwise) in respect of anyIndebtedness (other than Indebtedness hereunder) having an aggregate principalamount of not less than the Threshold Amount, or (ii) fails to observe orperform any other agreement or condition relating to any suchIndebtedness, or any other event occurs (other than, with respect toIndebtedness consisting of Swap Contracts, termination events or equivalentevents pursuant to the terms of such Swap Contracts), the effect of whichdefault or other event is to cause, or to permit the holder or holders of suchIndebtedness (or a trustee or agent on behalf of such holder or holders orbeneficiary or beneficiaries) to cause, with the giving of notice if required,such Indebtedness to become due or to be repurchased, prepaid, defeased orredeemed (automatically or otherwise), or an offer to repurchase, prepay,defease or redeem such Indebtedness to be made, prior to its stated maturity; *provided* that, any such failure or theoccurrence of any such other event referred to in sub-clauses (i) and (ii) relatingto Indebtedness under the ABL Credit Agreement shall constitute an Event ofDefault under this Section 8.01(e) only after the earliest to occurof (x) expiration of a 60-day period following the commencement of such failureor the date of such occurrence, (y) any acceleration of the ABL Obligations (asdefined in the Intercreditor Agreement) or (z) the commencement of the Exerciseof Any Secured Creditor Remedies (as defined in the Intercreditor Agreement) bythe ABL Collateral Agent or any ABL Lender as a result of such failure oroccurrence; *provided further*,that preceding sub-clause (ii) shall not apply to secured Indebtednessthat becomes due as a result of the voluntary sale or transfer of the propertyor assets securing such Indebtedness, if such sale or transfer is permittedhereunder and under the documents providing for such Indebtedness; or

###  

### (f)                                    *Insolvency Proceedings, Etc.*Any LoanParty or any of the Restricted Subsidiaries institutes or consents to theinstitution of any proceeding under any Debtor Relief Law (or any CanadianSubsidiary Guarantor institutes or consents to the institution of any proposalor notice of intent to file a proposal), or makes an assignment for the benefitof creditors; or applies for or consents to the appointment of any receiver,trustee, custodian, conservator, monitor, liquidator, rehabilitator,administrator, administrative receiver or similar officer for it or for all orany material part of its property; or any receiver, trustee, custodian,conservator, monitor, liquidator, rehabilitator, administrator, administrativereceiver or similar officer is appointed without the application or consent ofsuch Person and the appointment continues undischarged or unstayed for sixty(60) calendar days; or any proceeding under any Debtor Relief Law relating toany such Person or to all or any material part of its property isinstituted without the consent of such Person and continues undismissed orunstayed for sixty (60) calendar days, or an order for relief is entered in anysuch proceeding; or

###  

### (g)                                 *Inability to Pay Debts; Attachment*. (i) AnyLoan Party or any Restricted Subsidiary becomes unable or admits in writing itsinability or fails generally to pay its debts in excess of the Threshold Amountas they become due, or (ii) any writ or warrant

 

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### of attachment or execution or similar processis issued or levied against all or any material part of the property ofthe Loan Parties, taken as a whole, and is not released, vacated or fullybonded within forty-five (45) days after its issue or levy; or

###  

### (h)                                 *Judgments*. There is entered against anyLoan Party or any Restricted Subsidiary a final judgment or order for thepayment of money in an aggregate amount exceeding the Threshold Amount (to theextent not covered by independent third-party insurance as to which the insurerhas been notified of such judgment or order and has not denied coverage) andsuch judgment or order shall not have been satisfied, vacated, discharged orstayed or bonded pending an appeal for a period of forty-five (45) consecutivedays; or

###  

### (i)                                     (A) *ERISA*. (i) An ERISA Event occurs withrespect to a Pension Plan or Multiemployer Plan which has resulted or couldreasonably be expected to result in liability of any Loan Party in an aggregateamount which could reasonably be expected to result in a Material AdverseEffect, or (ii) any Loan Party or any ERISA Affiliate fails to pay whendue, after the expiration of any applicable grace period, any installmentpayment with respect to its withdrawal liability under Section 4201 ofERISA under a Multiemployer Plan in an aggregate amount which could reasonablybe expected to result in a Material Adverse Effect; or

###  

(B) *Pension Plans*. Except as could notreasonably be expected to result in a Material Adverse Effect, (i) aPension Event shall occur which, in Collateral Agent’s determination,constitutes grounds for the termination under any Laws, of any Pension Plan or (ii) theappointment by the appropriate Governmental Authority of a trustee for anyPension Plan, or (iii) if any Pension Plan shall be terminated or any suchtrustee shall be requested or appointed, or (iv) if a Loan Party is indefault with respect to payments to a Pension Plan resulting from theircomplete or partial withdrawal from such Pension Plan or (v) any eventthat may reasonably be expected to have a Material Adverse Effect or anyLien arises (save for contribution amounts not yet due) in connection with anyPension Plan.

 

### (j)                                     *Invalidity of Loan Documents*. Any materialprovision of any Loan Document, at any time after its execution and deliveryand for any reason other than as expressly permitted hereunder or thereunder(including as a result of a transaction permitted under Section 7.01 or7.06) or as a result of acts or omissions by the Administrative Agent or anyLender or the satisfaction in full of all the Obligations, ceases to be in fullforce and effect; or any Loan Party contests in writing the validity orenforceability of any provision of any Loan Document or any Lien created underany Loan Document; or any Loan Party denies in writing that it has any orfurther liability or obligation under any Loan Document (other than as a resultof repayment in full of the Obligations and termination of the AggregateCommitments), or purports in writing to revoke or rescind any Loan Document; or

###  

### (k)                                  *Collateral Documents*. Any CollateralDocument after delivery thereof pursuant to Section 4.01 or 6.11 shall forany reason (other than pursuant to the terms thereof, including as a result ofa transaction permitted under Section 7.01 or 7.06) cease

 

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### to create a valid and perfected lien, withthe priority required by the Collateral Documents and the IntercreditorAgreement (or other security purported to be created on the applicableCollateral), on and security interest in any material portion of the Collateralpurported to be covered thereby, subject to Liens permitted under Section 7.04,except to the extent that any such loss of perfection or priority results from (i) thefailure of the Administrative Agent or the Collateral Agent to maintainpossession of certificates or notes actually delivered to it representingsecurities or instruments pledged under the Collateral Documents, (ii) tofile Uniform Commercial Code or PPSA continuation statements in theapplicable filing offices properly notified by the relevant Loan Party and (iii) anyother failure of the Administrative Agent or the Collateral Agent to maintainperfection in circumstances where such failure does not result from the breachor non-compliance by a Loan Party with the Loan Documents, and except as toCollateral consisting of real property to the extent that such losses arecovered by a lender’s title insurance policy and such insurer has not deniedcoverage; or

###  

### (l)                                     *Change of Control*. A Change of Controlshall occur; or

###  

### (m)                               *Junior Financing Documentation*. (i) Anyof the Obligations of the Loan Parties under the Loan Documents for any reasonshall cease to be “Senior Indebtedness” (or any comparable term) or “SeniorSecured Financing” (or any comparable term) under, and as defined in any JuniorFinancing Documentation or (ii) the subordination provisions set forth inany Junior Financing Documentation shall, in whole or in part, cease to beeffective or cease to be legally valid, binding and enforceable against theholders of any Subordinated Indebtedness, if applicable.

###  

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

 

#### (i)                                     declare thecommitment of each Lender to make Loans to be terminated, whereupon suchcommitments and obligation shall be terminated;

####  

#### (ii)                                  declare the unpaidprincipal amount of all outstanding Loans, all interest accrued and unpaidthereon, and all other amounts owing or payable hereunder or under any otherLoan Document to be immediately due and payable, without presentment, demand,protest or other notice of any kind, all of which are hereby expressly waivedby the Borrower; and

####  

#### (iii)                               exercise on behalf ofitself and the Lenders all rights and remedies available to it and the Lendersunder the Loan Documents or applicable Law, subject to the terms of theIntercreditor Agreement;

####  

*provided* that uponthe occurrence of an Event of Default under Section 8.01(f) withrespect to the Borrower, the obligation of each Lender to make Loans shallautomatically terminate, and the unpaid principal amount of all outstandingLoans and all interest and other amounts as aforesaid shall automaticallybecome due and payable, in each case without further act of the AdministrativeAgent or any Lender.

 

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SECTION 8.03. Exclusion of ImmaterialSubsidiaries. Solely for the purpose of determining whether a Default hasoccurred under Section 8.01(f) or (g), any reference in any suchclause to any Restricted Subsidiary or Loan Party shall be deemed not toinclude any Restricted Subsidiary affected by any event or circumstancesreferred to in any such clause that did not, as of the last day of the mostrecent completed fiscal quarter of the Borrower, have assets with a value inexcess of 5.0% of the Total Assets of the Borrower and the RestrictedSubsidiaries and did not, as of the four quarter period ending on the last dayof such fiscal quarter, have revenues exceeding 5.0% of the total revenues ofthe Borrower and the Restricted Subsidiaries (it being agreed that allRestricted Subsidiaries affected by any event or circumstance referred to inany such clause shall be considered together, as a single consolidatedRestricted Subsidiary, for purposes of determining whether the conditionspecified above is satisfied).

 

SECTION 8.04. Application of Funds.Subject in all respects to the provisions of the Intercreditor Agreement, afterthe exercise of remedies provided for in Section 8.02 (or after the Loanshave automatically become immediately due and payable as set forth in theproviso to Section 8.02), any amounts received on account of theObligations shall be applied by the Administrative Agent in the followingorder:

 

*First*, to payment of that portion of theObligations constituting fees, indemnities, expenses and other amounts (otherthan principal and interest, but including Attorney Costs payable under Section 10.04and amounts payable under Article III) payable to each of theAdministrative Agent and the Collateral Agent in its capacity as such;

 

*Second*, to payment of that portion of theObligations constituting fees, indemnities and other amounts (other thanprincipal and interest) payable to the Lenders (including Attorney Costspayable under Section 10.05 and amounts payable under Article III),ratably among them in proportion to the amounts described in this clause Secondpayable to them;

 

*Third*, to payment of that portion of theObligations constituting accrued and unpaid interest on the Loans, ratablyamong the Lenders in proportion to the respective amounts described in thisclause Third payable to them;

 

*Fourth*, to payment of that portion of theObligations constituting unpaid principal of the Loans and the terminationvalue under Secured Hedge Agreements, ratably among the Lenders and the otherSecured Parties in proportion to the respective amounts described in thisclause Fourth held by them;

 

*Fifth*, to the payment of all other Obligationsof the Loan Parties that are due and payable to the Administrative Agent andthe other Secured Parties on such date, ratably based upon the respectiveaggregate amounts of all such Obligations owing to the Administrative Agent andthe other Secured Parties on such date; and

 

*Last*, the balance, if any, after all of theObligations have been indefeasibly paid in full, to the Borrower or asotherwise required by Law.

 

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## SECTION 8.05. Company’s Right to Cure.(a) Notwithstanding anything to the contrary contained in Section 8.01,in the event of any Event of Default under any covenant set forth in Section 7.05and until the expiration of the tenth (10th) day after the date on whichfinancial statements are required to be delivered with respect to theapplicable fiscal quarter hereunder, the Borrower may issue EquityInterests (other than Disqualified Stock) to any of the Investors (each, a “**Permitted Cure Issuance**”) and apply theamount of the net cash proceeds thereof to increase EBITDA with respect to suchapplicable quarter; *provided* thatsuch net cash proceeds (i) are actually received by the Borrower no laterthan ten (10) days after the date on which financial statements arerequired to be delivered with respect to such fiscal quarter hereunder and (ii) donot exceed the aggregate amount necessary to cure such Event of Default under Section 7.05for any applicable period. The parties hereby acknowledge that this Section 8.05(a) may notbe relied on for purposes of calculating any financial ratios other than asapplicable to Section 7.05 and shall not result in any adjustment to anyamounts other than the amount of the EBITDA referred to in the immediatelypreceding sentence (including, without limitation, as used in determiningEBITDA for purposes of computing the Consolidated Total Leverage Ratio as usedin the definition of “Applicable Rate”).

##  

### (b)                                 In each period of fourfiscal quarters, there shall be at least two (2) fiscal quarters in whichno cure set forth in Section 8.05(a) is made.

###  

# **ARTICLE IX**

#  

# **Administrative Agentand Other Agents**

#  

## SECTION 9.01. Appointment andAuthorization of Agents. (a)  Each Lender hereby irrevocably appoints,designates and authorizes the Administrative Agent to take such action on itsbehalf under the provisions of this Agreement and each other Loan Document andto exercise such powers and perform such duties as are expressly delegatedto it by the terms of this Agreement or any other Loan Document, together withsuch powers as are reasonably incidental thereto. Notwithstanding any provisionto the contrary contained elsewhere herein or in any other Loan Document, theAdministrative Agent shall have no duties or responsibilities, except thoseexpressly set forth herein, nor shall the Administrative Agent have or bedeemed to have any fiduciary relationship with any Lender or participant, andno implied covenants, functions, responsibilities, duties, obligations orliabilities shall be read into this Agreement or any other Loan Document orotherwise exist against the Administrative Agent. Without limiting thegenerality of the foregoing sentence, the use of the term “agent” herein and inthe other Loan Documents with reference to any Agent is not intended to connoteany fiduciary or other implied (or express) obligations arising under agencydoctrine of any applicable Law. Instead, such term is used merely as a matterof market custom, and is intended to create or reflect only an administrativerelationship between independent contracting parties.

##  

### (b)                                 The AdministrativeAgent shall also act as the “collateral agent” under the Loan Documents, andeach of the Lenders (in its capacities as a Lender and a potential Hedge Bank)hereby irrevocably appoints and authorizes the Administrative Agent to act asthe agent of (and to hold any security interest created by the CollateralDocuments for and on behalf of or on trust for) such Lender for purposes ofacquiring, holding and enforcing (subject to the Intercreditor Agreement) anyand all Liens on Collateral granted by any of the Loan Parties to

 

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### secure any of the Secured Obligations, together with such powers anddiscretion as are reasonably incidental thereto. In this connection, theAdministrative Agent, as “collateral agent” (and any co-agents, sub-agents andattorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.02for purposes of holding or enforcing any Lien on the Collateral (or any portionthereof) granted under the Collateral Documents, or for exercising any rightsand remedies thereunder at the direction of the Administrative Agent), shall beentitled to the benefits of all provisions of this Article IX (including, Section 9.07,as though such co-agents, sub-agents and attorneys-in-fact were the “collateralagent” under the Loan Documents) as if set forth in full herein with respectthereto.

###  

SECTION 9.02. Delegation of Duties.The Administrative Agent may execute any of its duties under thisAgreement or any other Loan Document (including for purposes of holding orenforcing any Lien on the Collateral (or any portion thereof) granted under theCollateral Documents or of exercising any rights and remedies thereunder) by orthrough agents, employees or attorneys-in-fact, such sub-agents as shall bedeemed necessary by the Administrative Agent and shall be entitled to advice ofcounsel and other consultants or experts concerning all matters pertaining tosuch duties. The Administrative Agent shall not be responsible for thenegligence or misconduct of any agent or sub-agent or attorney-in-fact that itselects in the absence of gross negligence or willful misconduct (as determinedin the final judgment of a court of competent jurisdiction).

 

SECTION 9.03. Liability of Agents.No Agent-Related Person shall (a) be liable for any action taken oromitted to be taken by any of them under or in connection with this Agreementor any other Loan Document or the transactions contemplated hereby (except forits own gross negligence or willful misconduct, as determined by the finaljudgment of a court of competent jurisdiction, in connection with its dutiesexpressly set forth herein), or (b) be responsible in any manner to anyLender or Participant for any recital, statement, representation or warrantymade by any Loan Party or any officer thereof, contained herein or in any otherLoan Document, or in any certificate, report, statement or other documentreferred to or provided for in, or received by the Administrative Agent underor in connection with, this Agreement or any other Loan Document, or thevalidity, effectiveness, genuineness, enforceability or sufficiency of thisAgreement or any other Loan Document, or the perfection or priority of any Lienor security interest created or purported to be created under the CollateralDocuments, or for any failure of any Loan Party or any other party to any LoanDocument to perform its obligations hereunder or thereunder. NoAgent-Related Person shall be under any obligation to any Lender or Participantto ascertain or to inquire as to the observance or performance of any of theagreements contained in, or conditions of, this Agreement or any other LoanDocument, or to inspect the properties, books or records of any Loan Party orany Affiliate thereof.

 

## SECTION 9.04. Reliance by Agents. (a) Each Agent shall be entitled to rely, and shall be fully protected in relying,upon any writing, communication, signature, resolution, representation, notice,consent, certificate, affidavit, letter, telegram, facsimile, telex ortelephone message, electronic mail message, statement or other document orconversation believed by it to be genuine and correct and to have been signed,sent or made by the proper Person or Persons, and upon advice and statements oflegal counsel (including counsel to any Loan Party), independent accountantsand other experts selected by such Agent. Each Agent shall be fully justifiedin failing or refusing to take any action under any Loan Document unless itshall first

 

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## receive such advice or concurrence of the Required Lenders as it deemsappropriate and, if it so requests, it shall first be indemnified to itssatisfaction by the Lenders against any and all liability and expense which may beincurred by it by reason of taking or continuing to take any such action. EachAgent shall in all cases be fully protected in acting, or in refraining fromacting, under this Agreement or any other Loan Document in accordance with arequest or consent of the Required Lenders (or such greater number of Lendersas may be expressly required hereby in any instance) and such request andany action taken or failure to act pursuant thereto shall be binding upon allthe Lenders.

##  

### (b)                                 For purposes ofdetermining compliance with the conditions specified in Section 4.01, eachLender that has signed this Agreement shall be deemed to have consented to,approved or accepted or to be satisfied with, each document or other matterrequired thereunder to be consented to or approved by or acceptable orsatisfactory to a Lender unless the Administrative Agent shall have receivednotice from such Lender prior to the proposed Closing Date specifying itsobjection thereto.

###  

SECTION 9.05. Notice of Default. TheAdministrative Agent shall not be deemed to have knowledge or notice of theoccurrence of any Default, except with respect to defaults in the payment ofprincipal, interest and fees required to be paid to the Administrative Agentfor the account of the Lenders, unless the Administrative Agent shall havereceived written notice from a Lender or the Borrower referring to thisAgreement, describing such Default and stating that such notice is a “**notice of default**”. The AdministrativeAgent will notify the Lenders of its receipt of any such notice. TheAdministrative Agent shall take such action with respect to any Event ofDefault as may be directed by the Required Lenders in accordance with Article 8;*provided* that unless and untilthe Administrative Agent has received any such direction, the AdministrativeAgent may (but shall not be obligated to) take such action, or refrainfrom taking such action, with respect to such Event of Default as it shall deemadvisable or in the best interest of the Lenders.

 

SECTION 9.06. Credit Decision; Disclosureof Information by Agents. Each Lender acknowledges that no Agent-RelatedPerson has made any representation or warranty to it, and that no act by anyAgent hereafter taken, including any consent to and acceptance of anyassignment or review of the affairs of any Loan Party or any Affiliate thereof,shall be deemed to constitute any representation or warranty by anyAgent-Related Person to any Lender as to any matter, including whetherAgent-Related Persons have disclosed material information in their possession. EachLender represents to each Agent that it has, independently and without relianceupon any Agent-Related Person and based on such documents and information as ithas deemed appropriate, made its own appraisal of and investigation into the business,prospects, operations, property, financial and other condition and creditworthinessof the Loan Parties and their respective Subsidiaries, and all applicable bankor other regulatory Laws relating to the transactions contemplated hereby, andmade its own decision to enter into this Agreement and to extend credit to theBorrower and the other Loan Parties hereunder. Each Lender also represents thatit will, independently and without reliance upon any Agent-Related Person andbased on such documents and information as it shall deem appropriate at thetime, continue to make its own credit analysis, appraisals and decisions intaking or not taking action under this Agreement and the other Loan Documents,and to make such investigations as it deems necessary to inform itself asto the business, prospects, operations, property, financial and other conditionand

 

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creditworthiness of the Borrower and the other Loan Parties. Except fornotices, reports and other documents expressly required to be furnished to theLenders by any Agent herein, such Agent shall not have any duty orresponsibility to provide any Lender with any credit or other informationconcerning the business, prospects, operations, property, financial and othercondition or creditworthiness of any of the Loan Parties or any of theirrespective Affiliates which may come into the possession of anyAgent-Related Person.

 

SECTION 9.07. Indemnification ofAgents. Whether or not the transactions contemplated hereby areconsummated, the Lenders shall indemnify upon demand each Agent-Related Person(to the extent not reimbursed by or on behalf of any Loan Party and withoutlimiting the obligation of any Loan Party to do so), prorata,and hold harmless each Agent-Related Person from and against any and allIndemnified Liabilities incurred by it; *provided*that no Lender shall be liable for the payment to any Agent-Related Person ofany portion of such Indemnified Liabilities resulting from such Agent-RelatedPerson’s own gross negligence or willful misconduct, as determined by the finaljudgment of a court of competent jurisdiction; *provided*that no action taken in accordance with the directions of the Required Lenders(or such other number or percentage of the Lenders as shall be required by theLoan Documents) shall be deemed to constitute gross negligence or willfulmisconduct for purposes of this Section 9.07. In the case of anyinvestigation, litigation or proceeding giving rise to any Indemnified Liabilities,this Section 9.07 applies whether any such investigation, litigation orproceeding is brought by any Lender or any other Person. Without limitation ofthe foregoing, each Lender shall reimburse the Administrative Agent upon demandfor its ratable share of any costs or out-of-pocket expenses (includingAttorney Costs) incurred by the Administrative Agent in connection with thepreparation, execution, delivery, administration, modification, amendment orenforcement (whether through negotiations, legal proceedings or otherwise) of,or legal advice in respect of rights or responsibilities under, this Agreement,any other Loan Document, or any document contemplated by or referred to herein,to the extent that the Administrative Agent is not reimbursed for such expensesby or on behalf of the Borrower. The undertaking in this Section 9.07shall survive termination of the Aggregate Commitments, the payment of allother Obligations and the resignation of the Administrative Agent.

 

SECTION 9.08. Agents in theirIndividual Capacities. DBNY and its Affiliates may make loans to,issue letters of credit for the account of, accept deposits from, acquireEquity Interests in and generally engage in any kind of banking, trust,financial advisory, underwriting or other business with each of the LoanParties and their respective Affiliates as though DBNY were not theAdministrative Agent hereunder and without notice to or consent of the Lenders.The Lenders acknowledge that, pursuant to such activities, DBNY or its Affiliatesmay receive information regarding any Loan Party or its Affiliates(including information that may be subject to confidentiality obligationsin favor of such Loan Party or such Affiliate) and acknowledge that theAdministrative Agent shall be under no obligation to provide such informationto them. With respect to its Loans, DBNY shall have the same rights and powersunder this Agreement as any other Lender and may exercise such rights andpowers as though it were not the Administrative Agent DBNY, and the terms “**Lender**” and “**Lenders**” include DBNY in its individual capacity.

 

SECTION 9.09. Successor Agents. TheAdministrative Agent may resign as the Administrative Agent upon thirty(30) days’ notice to the Lenders and the Borrower. If the Administrative Agentresigns under this Agreement, the Required Lenders shall appoint from

 

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among the Lenders a successor agent for the Lenders, which successoragent shall be consented to by the Borrower at all times other than during theexistence of an Event of Default under Section 8.01(f) or (g) (whichconsent of the Borrower shall not be unreasonably withheld or delayed). If nosuccessor agent is appointed prior to the effective date of the resignation ofthe Administrative Agent, the Administrative Agent may appoint, afterconsulting with the Lenders and the Borrower, a successor agent from among theLenders. Upon the acceptance of its appointment as successor agent hereunder,the Person acting as such successor agent shall succeed to all the rights,powers and duties of the retiring Administrative Agent and the term “**Administrative Agent**”, shall mean suchsuccessor administrative agent and/or supplemental administrative agent, as thecase may be, and the retiring Administrative Agent’s appointment, powersand duties as the Administrative Agent shall be terminated. After the retiringAdministrative Agent’s resignation hereunder as the Administrative Agent, theprovisions of this Article 9 and Sections 10.04 and 10.05 shall inure toits benefit as to any actions taken or omitted to be taken by it while it wasthe Administrative Agent under this Agreement. If no successor agent hasaccepted appointment as the Administrative Agent by the date which is thirty(30) days following the retiring Administrative Agent’s notice of resignation,the retiring Administrative Agent’s resignation shall nevertheless thereuponbecome effective and the Lenders shall perform all of the duties of theAdministrative Agent hereunder until such time, if any, as the Required Lendersappoint a successor agent as provided for above. Upon the acceptance of anyappointment as the Administrative Agent hereunder by a successor and upon theexecution and filing or recording of such financing statements, or amendmentsthereto, and such amendments or supplements to the Mortgages, and such otherinstruments or notices, as may be necessary or desirable, or as theRequired Lenders may request, in order to (a) continue the perfectionof the Liens granted or purported to be granted by the Collateral Documents or (b) otherwiseensure that the Collateral and Guarantee Requirement is satisfied, theAdministrative Agent shall thereupon succeed to and become vested with all therights, powers, discretion, privileges, and duties of the retiringAdministrative Agent, and the retiring Administrative Agent shall be dischargedfrom its duties and obligations under the Loan Documents. After the retiringAdministrative Agent’s resignation hereunder as the Administrative Agent, theprovisions of this Article 9 shall continue in effect for its benefit inrespect of any actions taken or omitted to be taken by it while it was actingas the Administrative Agent.

 

SECTION 9.10. Administrative Agent May FileProofs of Claim. In case of the pendency of any receivership, insolvency,liquidation, bankruptcy, reorganization, arrangement, adjustment, compositionor other judicial proceeding relative to any Loan Party, the AdministrativeAgent (irrespective of whether the principal of any Loan shall then be due andpayable as herein expressed or by declaration or otherwise and irrespective ofwhether the Administrative Agent shall have made any demand on the Borrower)shall be entitled and empowered, by intervention in such proceeding orotherwise:

 

### (a)                                  to file and prove aclaim for the whole amount of the principal and interest owing and unpaid inrespect of the Loans and all other Obligations that are owing and unpaid and tofile such other documents as may be necessary or advisable in order tohave the claims of the Lenders and the Administrative Agent (including anyclaim for the reasonable compensation, expenses, disbursements and advances ofthe Lenders and the Administrative Agent and their respective agents andcounsel and all other amounts due

 

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### the Lenders and the Administrative Agentunder Sections 2.09 and 10.04) allowed in such judicial proceeding; and

###  

### (b)                                 to collect and receiveany monies or other property payable or deliverable on any such claims and todistribute the same;

###  

and any custodian, receiver, assignee, trustee, liquidator,sequestrator or other similar official in any such judicial proceeding ishereby authorized by each Lender to make such payments to the AdministrativeAgent and, in the event that the Administrative Agent shall consent to themaking of such payments directly to the Lenders, to pay to the AdministrativeAgent any amount due for the reasonable compensation, expenses, disbursementsand advances of the Agents and their respective agents and counsel, and anyother amounts due the Administrative Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be deemed toauthorize the Administrative Agent to authorize or consent to or accept or adopton behalf of any Lender any plan of reorganization, arrangement, adjustment orcomposition affecting the Obligations or the rights of any Lender or toauthorize the Administrative Agent to vote in respect of the claim of anyLender in any such proceeding.

 

SECTION 9.11. Collateral and GuarantyMatters. The Lenders irrevocably agree, subject to the terms of theIntercreditor Agreement:

 

### (a)                                  that any Lien on anyproperty granted to or held by the Administrative Agent or the Collateral Agentunder any Loan Document shall be automatically released (i) upontermination of the Aggregate Commitments and payment in full of all Obligations(other than (x) obligations under Secured Hedge Agreements not yet due andpayable, and (y) contingent indemnification obligations not yet accrued andpayable), (ii) at the time the property subject to such Lien istransferred or to be transferred as part of or in connection with anytransfer permitted hereunder or under any other Loan Document to any Personother than the Borrower or any other Subsidiary Guarantor, (iii) subjectto Section 10.01, if the release of such Lien is approved, authorized orratified in writing by the Required Lenders, (iv) if the property subjectto such Lien is owned by a Subsidiary Guarantor, upon release of suchSubsidiary Guarantor from its obligations under its Guaranty pursuant to clause(c) below or (v) as required pursuant to the terms of theIntercreditor Agreement;

###  

### (b)                                 to release orsubordinate any Lien on any property granted to or held by the AdministrativeAgent or the Collateral Agent under any Loan Document to the holder of any Lienon such property that is permitted by Section 7.04 to the extent requiredby law or the terms of this Agreement (other than Liens securing the PariPassu Lien Obligations); and

###  

### (c)                                  that any RestrictedSubsidiary that is a Subsidiary Guarantor shall be automatically released fromits obligations under its Guaranty if such Person ceases to be a RestrictedSubsidiary as a result of a transaction or designation permitted hereunder(including as a result of a Restricted Subsidiary that is a SubsidiaryGuarantor being

 

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### redesignated as an Unrestricted Subsidiary); *provided* that no such release shall occurif such Subsidiary Guarantor continues to be a guarantor in respect of the NewNotes, any Subordinated Indebtedness or the ABL Credit Agreement.

###  

Upon request by the Administrative Agent atany time, the Required Lenders (or such greater number of Lenders as may berequired under Section 10.01) will confirm in writing the AdministrativeAgent’s authority to release or subordinate its interest in particular types oritems of property, or to release any Subsidiary Guarantor from its obligationsunder its Guaranty pursuant to this Section 9.11. In each case asspecified in this Section 9.11, the Administrative Agent will (and eachLender irrevocably authorizes the Administrative Agent to), at the Borrower’sexpense, execute and deliver to the applicable Loan Party such documents assuch Loan Party may reasonably request to evidence the release orsubordination of such item of Collateral from the assignment and securityinterest granted under the Collateral Documents, or to evidence the release ofsuch Subsidiary Guarantor from its obligations under its Guaranty, in each casein accordance with the terms of the Loan Documents and this Section 9.11.

 

SECTION 9.12. Other Agents; Arrangersand Managers. None of the Lenders or other Persons identified on the facingpage or signature pages of this Agreement as a “syndication agent”, “co-documentationagent”, “joint bookrunner” or “arranger” shall have any right, power,obligation, liability, responsibility or duty under this Agreement other thanthose applicable to all Lenders as such. Without limiting the foregoing, noneof the Lenders or other Persons so identified shall have or be deemed to haveany fiduciary relationship with any Lender. Each Lender acknowledges that ithas not relied, and will not rely, on any of the Lenders or other Persons soidentified in deciding to enter into this Agreement or in taking or not takingaction hereunder.

 

## SECTION 9.13. Appointment ofSupplemental Administrative Agents. (a)  It is the purpose of thisAgreement and the other Loan Documents that there shall be no violation of anyLaw of any jurisdiction denying or restricting the right of bankingcorporations or associations to transact business as agent or trustee in suchjurisdiction. It is recognized that in case of litigation under this Agreementor any of the other Loan Documents, and in particular in case of theenforcement of any of the Loan Documents, or in case the Administrative Agentdeems that by reason of any present or future Law of any jurisdiction it may notexercise any of the rights, powers or remedies granted herein or in any of theother Loan Documents or take any other action which may be desirable ornecessary in connection therewith, the Administrative Agent is herebyauthorized to appoint an additional individual or institution selected by theAdministrative Agent in its sole discretion as a separate trustee, co-trustee,administrative agent, collateral agent, administrative sub-agent oradministrative co-agent (any such additional individual or institution beingreferred to herein individually, as a “**SupplementalAdministrative Agent**” and collectively, as “**Supplemental Administrative Agents**”).

##  

### (b)                                 In the event that theAdministrative Agent appoints a Supplemental Administrative Agent with respectto any Collateral, (i) each and every right, power, privilege or dutyexpressed or intended by this Agreement or any of the other Loan Documents tobe exercised by or vested in or conveyed to the Administrative Agent withrespect to such Collateral shall be exercisable by and vest in suchSupplemental Administrative Agent to the extent, and only to the extent,necessary to enable such Supplemental Administrative Agent to exercise such

 

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### rights, powers and privileges with respect to such Collateral and toperform such duties with respect to such Collateral, and every covenantand obligation contained in the Loan Documents and necessary to the exercise orperformance thereof by such Supplemental Administrative Agent shall run to and beenforceable by either the Administrative Agent or such SupplementalAdministrative Agent, and (ii) the provisions of this Article IX andof Sections 10.04 and 10.05 that refer to the Administrative Agent shall inureto the benefit of such Supplemental Administrative Agent and all referencestherein to the Administrative Agent shall be deemed to be references to theAdministrative Agent and/or such Supplemental Administrative Agent, as thecontext may require.

###  

### (c)                                  Should any instrumentin writing from the Borrower or any other Loan Party be required by anySupplemental Administrative Agent so appointed by the Administrative Agent formore fully and certainly vesting in and confirming to him or it such rights,powers, privileges and duties, the Borrower shall, or shall cause such LoanParty to, execute, acknowledge and deliver any and all such instrumentspromptly upon request by the Administrative Agent. In case any SupplementalAdministrative Agent, or a successor thereto, shall die, become incapable of acting,resign or be removed, all the rights, powers, privileges and duties of suchSupplemental Administrative Agent, to the extent permitted by Law, shall vestin and be exercised by the Administrative Agent until the appointment of a newSupplemental Administrative Agent.

###  

SECTION 9.14. SolidaryInterests/Quebec Liens (Hypothecs). Without limiting the generality of theforegoing, for the purposes of creating a solidarité active in accordance with Article 1541of the Civil Code of Quebec, between each Secured Credit Party, takenindividually, on the one hand, and the Administrative Agent, on the other hand,the Borrower, the Guarantors and each such Secured Credit Party acknowledge andagree with the Administrative Agent that such Secured Credit Party and theAdministrative Agent are hereby conferred the legal status of solidarycreditors of the Borrower and the Guarantors in respect of all Obligations,present and future, owed by the Borrowers or the Guarantors to each suchSecured Credit Party and the Administrative Agent (collectively, the “SolidaryClaim”). Accordingly, but subject (for the avoidance of doubt) to Article 1542of the Civil Code of Quebec, the Borrower and the Guarantors are irrevocablybound towards the Administrative Agent and each Secured Credit Party in respectof the entire Solidary Claim of the Administrative Agent and such SecuredCredit Party. As a result of the foregoing, the parties hereto acknowledge thatthe Administrative Agent and each Secured Credit Party shall at all times havea valid and effective right of action for the entire Solidary Claim of theAdministrative Agent and such Secured Credit Party and the right to give fullacquittance for it. Accordingly, without limiting the generality of theforegoing, the Administrative Agent, as solidary creditor with each SecuredCredit Party, shall at all times have a valid and effective right of action inrespect of all Obligations, present and future, owed by the Borrower or theGuarantors to the Administrative Agent and to the Credit Parties or any of themand the right to give a full acquittance for same. For greater certainty, theforegoing provisions of this paragraph, and the rights of the Credit Parties,shall at all times be subject to the provisions of this Agreement.

 

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# **ARTICLE X**

#  

# **Miscellaneous**

#  

SECTION 10.01. Amendments, Etc. Exceptas otherwise set forth in this Agreement, no amendment, modification,supplement or waiver of any provision of this Agreement or any other LoanDocument, and no consent to any departure by the Borrower or any other LoanParty therefrom, shall be effective unless in writing signed by the RequiredLenders and the Borrower or the applicable Loan Party, as the case may be,and each such waiver, amendment, modification, supplement or consent shall beeffective only in the specific instance and for the specific purpose for whichgiven; *provided* that, no suchamendment, modification, supplement, waiver or consent shall:

 

### (a)                                  extend or increasethe Commitment of any Lender without the written consent of such Lender (itbeing understood that a waiver of any condition precedent set forth in Section 4.01or the waiver of any Default or mandatory prepayment or offer to purchase ofthe Loans shall not constitute an extension or increase of any Commitment ofany Lender);

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### (b)                                 postpone any datescheduled for, or reduce or forgive the amount of, any payment of principal orinterest under Section 2.07 or 2.08 without the written consent of eachLender directly affected thereby, it being understood that the waiver of (oramendment to the terms of) any mandatory prepayment or offer to purchase of theLoans shall not constitute a postponement of any date scheduled for the paymentof principal or interest;

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### (c)                                  reduce the principalof, or the rate of interest specified herein on, any Loan, or (subject toclause (i) of the second proviso to this Section 10.01) any fees orother amounts payable hereunder or under any other Loan Document without thewritten consent of each Lender directly affected thereby, it being understoodthat any change to the definition of Consolidated Total Leverage Ratio or inthe component definitions thereof shall not constitute a reduction in the rate;*provided* that only the consent ofthe Required Lenders shall be necessary to amend the definition of “DefaultRate” or to waive any obligation of the Borrower to pay interest at the DefaultRate;

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### (d)                                 change any provisionof this Section 10.01, the definition of “Required Lenders” or “ProRata Share” or Section 2.12(a) and (g), 2.13 or 8.04 withoutthe written consent of each Lender directly affected thereby;

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### (e)                                  other than in atransaction permitted under Section 7.01 or 7.06, release all orsubstantially all of the Collateral in any transaction or series ofrelated transactions, without the written consent of each Lender; or

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### (f)                                    other than inconnection with a transaction permitted under Section 7.01 or 7.06,release all or substantially all of the aggregate value of the Guaranties,without the written consent of each Lender;

 

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and *provided further*,that (i) no amendment, waiver or consent shall, unless in writing andsigned by the Administrative Agent in addition to the Lenders required above,affect the rights or duties of, or any fees or other amounts payable to, theAdministrative Agent under this Agreement or any other Loan Document (includingin its capacity as Collateral Agent) and (ii) Section 10.07(h) may notbe amended, waived or otherwise modified without the consent of each GrantingLender all or any part of whose Loans are being funded by an SPC at thetime of such amendment, waiver or other modification. Any such waiver and anysuch amendment, modification or supplement in accordance with the terms of thisSection 10.01 shall apply equally to each of the Lenders and shall bebinding on the Loan Parties, the Lenders, the Agents and all future holders ofthe Loans and the Commitments. Notwithstanding anything to the contrary herein,no Defaulting Lender shall have any right to approve or disapprove anyamendment, waiver or consent hereunder, except that the Commitment of suchLender may not be increased or extended without the consent of such Lender(it being understood that any Commitments or Loans held or deemed held by anyDefaulting Lender shall be excluded for a vote of the Lenders hereunderrequiring any consent of the Lenders).

 

Notwithstanding the foregoing, this Agreementmay be amended (or amended and restated) with the written consent of theRequired Lenders, the Administrative Agent and the Borrower (a) to add oneor more additional credit facilities to this Agreement and to permit theextensions of credit from time to time outstanding thereunder and the accruedinterest and fees in respect thereof to share ratably in the benefits of thisAgreement and the other Loan Documents with the Loan and the accrued interestand fees in respect thereof and (b) to include appropriately the Lendersholding such credit facilities in any determination of the Required Lenders.

 

In addition, notwithstanding the foregoing,this Agreement may be amended with the written consent of theAdministrative Agent, the Borrower and the Lenders providing the relevantReplacement Term Loans to permit the refinancing of all outstanding Loans (“**Refinanced Term Loans**”) with a replacementterm loan tranche denominated in Dollars (“**ReplacementTerm Loans**”) hereunder; *provided*that (a) the aggregate principal amount of such Replacement Term Loansshall not exceed the aggregate principal amount of such Refinanced Term Loans, (b) theApplicable Rate for such Replacement Term Loans shall not be higher than theApplicable Rate for such Refinanced Term Loans, (c) the Weighted AverageLife to Maturity of such Replacement Term Loans shall not be shorter than theWeighted Average Life to Maturity of such Refinanced Term Loans at the time ofsuch refinancing (except to the extent of nominal amortization for periodswhere amortization has been eliminated as a result of prepayment of the Loans)and (d) all other terms applicable to such Replacement Term Loans shall besubstantially identical to, or less favorable to the Lenders providing suchReplacement Term Loans than, those applicable to such Refinanced Term Loans,except to the extent necessary to provide for covenants and other termsapplicable to any period after the latest final maturity of the Loans in effectimmediately prior to such refinancing.

 

## SECTION 10.02. Notices and OtherCommunications; Facsimile Copies. (a) General. Unless otherwiseexpressly provided herein, all notices and other communications provided forhereunder or under any other Loan Document shall be in writing (including byfacsimile transmission). All such written notices shall be mailed, faxed ordelivered to the applicable address, facsimile number or electronic mailaddress, and all notices and other

 

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## communications expressly permitted hereunder to be given by telephoneshall be made to the applicable telephone number, as follows:

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#### (i)                                     if to the Borroweror the Administrative Agent, to the address, facsimile number, electronic mailaddress or telephone number specified for such Person on Schedule 10.02 orto such other address, facsimile number, electronic mail address or telephonenumber as shall be designated by such party in a notice to the other parties;and

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#### (ii)                                  if to any otherLender, to the address, facsimile number, electronic mail address or telephonenumber specified in its Administrative Questionnaire or to such other address,facsimile number, electronic mail address or telephone number as shall bedesignated by such party in a notice to the Borrower, and the AdministrativeAgent.

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All such notices and other communications shall be deemed to be givenor made upon the earlier to occur of (i) actual receipt by the relevantparty hereto and (ii) (A) if delivered by hand or by courier, whensigned for by or on behalf of the relevant party hereto; (B) if deliveredby mail, four (4) Business Days after deposit in the mails, postageprepaid; (C) if delivered by facsimile, when sent and receipt has beenconfirmed by telephone; and (D) if delivered by electronic mail (which form ofdelivery is subject to the provisions of Section 10.02(c)), whendelivered; *provided* that noticesand other communications to the Administrative Agent pursuant to Article 2shall not be effective until actually received by such Person. In no eventshall a voice mail message be effective as a notice, communication orconfirmation hereunder.

 

### (b)                                 Effectiveness of FacsimileDocuments and Signatures. Loan Documents may be transmitted and/or signedby facsimile. The effectiveness of any such documents and signatures shall,subject to applicable Law, have the same force and effect as manually signedoriginals and shall be binding on all Loan Parties, the Agents and the Lenders.

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### (c)                                  Reliance by Agentsand Lenders. The Administrative Agent and the Lenders shall be entitled to relyand act upon any notices (including telephonic Committed Loan Notices)purportedly given by or on behalf of the Borrower even if (i) such noticeswere not made in a manner specified herein, were incomplete or were notpreceded or followed by any other form of notice specified herein, or (ii) theterms thereof, as understood by the recipient, varied from any confirmationthereof. The Borrower shall indemnify each Agent-Related Person and each Lenderfrom all losses, costs, expenses and liabilities resulting from the reliance bysuch Person on each notice purportedly given by or on behalf of the Borrower inthe absence of gross negligence or willful misconduct. All telephonic noticesto the Administrative Agent may be recorded by the Administrative Agent,and each of the parties hereto hereby consents to such recording.

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SECTION 10.03. No Waiver; CumulativeRemedies. No failure by any Lender or the Administrative Agent to exercise,and no delay by any such Person in exercising, any right, remedy, power orprivilege hereunder or under any other Loan Document shall operate as a waiverthereof; nor shall any single or partial exercise of any right, remedy, poweror privilege hereunder preclude any other or further exercise thereof or theexercise of any other right, remedy, power or privilege. The rights, remedies,powers and privileges herein provided, and

 

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provided under each other Loan Document, are cumulative and notexclusive of any rights, remedies, powers and privileges provided by Law.

 

## SECTION 10.04. Attorney Costs andExpenses. The Borrower agrees (a) if the Closing Date occurs, to payor reimburse the Administrative Agent, the Collateral Agent, the SyndicationAgent, the Co-Documentation Agents and the Arrangers for all reasonableout-of-pocket costs and expenses incurred in connection with the preparation,negotiation, syndication and execution of this Agreement and the other LoanDocuments, and any amendment, waiver, consent or other modification of theprovisions hereof and thereof (whether or not the transactions contemplatedthereby are consummated), and the consummation and administration of thetransactions contemplated hereby and thereby, including all Attorney Costs ofWhite & Case LLP and local counsel in any other relevant jurisdiction(but excluding all other Attorney Costs), and (b) to pay or reimburse theAdministrative Agent, the Collateral Agent, the Syndication Agent, theCo-Documentation Agents, the Arrangers and each Lender for all out-of-pocketcosts and expenses incurred in connection with the enforcement of any rights orremedies under this Agreement or the other Loan Documents (including all suchcosts and expenses incurred during any legal proceeding, including anyproceeding under any Debtor Relief Law, and including all Attorney Costs of asingle law firm acting as counsel to the Administrative Agent in each relevantjurisdiction). The foregoing costs and expenses shall include all reasonablesearch, filing, recording and title insurance charges and fees and taxesrelated thereto, and other (reasonable, in the case of Section 10.04(a))out-of-pocket expenses incurred by any Agent. The agreements in this Section 10.04shall survive the termination of the Aggregate Commitments and repayment of allother Obligations. All amounts due under this Section 10.04 shall be paidwithin ten (10) Business Days of receipt by the Borrower of an invoicerelating thereto setting forth such expenses in reasonable detail. If any LoanParty fails to pay when due any costs, expenses or other amounts payable by ithereunder or under any Loan Document, such amount may be paid on behalf ofsuch Loan Party by the Administrative Agent in its sole discretion.

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SECTION 10.05. Indemnification by theBorrower. Whether or not the transactions contemplated hereby areconsummated, the Borrower shall indemnify and hold harmless each Agent-RelatedPerson, each Lender and their respective Affiliates, directors, officers,employees, counsel, agents, trustees, investment advisors and attorneys-in-fact(collectively, the “**Indemnitees**”)from and against any and all liabilities, obligations, losses, damages,penalties, claims, demands, actions, judgments, suits, costs, expenses anddisbursements (including Attorney Costs) of any kind or nature whatsoever(other than Taxes, which are governed by Sections 3.01 and 10.15 herein) which may atany time be imposed on, incurred by or asserted against any such Indemnitee inany way relating to or arising out of or in connection with (a) theexecution, delivery, enforcement, performance or administration of any LoanDocument or any other agreement, letter or instrument delivered in connectionwith the transactions contemplated thereby or the consummation of thetransactions contemplated thereby, (b) any Commitment, Loan or the use orproposed use of the proceeds therefrom, or (c) any actual or allegedpresence or release of Hazardous Materials on or from any property currently orformerly owned or operated by the Borrower, any Subsidiary or any other LoanParty, or any Environmental Liability related in any way to the Borrower, any Subsidiaryor any other Loan Party, or (d) any actual or prospective claim,litigation, investigation or proceeding relating to any of the foregoing,whether based on contract, tort or any other theory (including

 

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any investigation of, preparation for, or defense of any pending orthreatened claim, investigation, litigation or proceeding) and regardless ofwhether any Indemnitee is a party thereto (all the foregoing, collectively, the“**Indemnified Liabilities**”), in allcases, whether or not caused by or arising, in whole or in part, out of thenegligence of the Indemnitee; *provided*that such indemnity shall not, as to any Indemnitee, be available to the extentthat such liabilities, obligations, losses, damages, penalties, claims,demands, actions, judgments, suits, costs, expenses or disbursements (x)resulted from the gross negligence, bad faith or willful misconduct of suchIndemnitee or of any Affiliate, director, officer, employee, counsel, agent orattorney-in-fact of such Indemnitee, and (y) resulted from a breach by suchIndemnitee of its obligations to a Loan Party. No Indemnitee shall be liablefor any damages arising from the use by others of any information or othermaterials obtained through IntraLinks or other similar information transmissionsystems in connection with this Agreement, nor shall any Indemnitee or any LoanParty have any liability for any special, punitive, indirect or consequentialdamages relating to this Agreement or any other Loan Document or arising out ofits activities in connection herewith or therewith (whether before or after theClosing Date). In the case of an investigation, litigation or other proceedingto which the indemnity in this Section 10.05 applies, such indemnity shallbe effective whether or not such investigation, litigation or proceeding isbrought by any Loan Party, its directors, stockholders or creditors or anIndemnitee or any other Person, whether or not any Indemnitee is otherwise aparty thereto and whether or not any of the transactions contemplated hereunderor under any of the other Loan Documents is consummated. All amounts due underthis Section 10.05 shall be paid within ten (10) Business Days afterdemand therefor; *provided, however*,that such Indemnitee shall promptly refund such amount to the extent that thereis a final judicial or arbitral determination that such Indemnitee was notentitled to indemnification or contribution rights with respect to such paymentpursuant to the express terms of this Section 10.05. The agreements inthis Section 10.05 shall survive the resignation of the AdministrativeAgent, the replacement of any Lender, the termination of the AggregateCommitments and the repayment, satisfaction or discharge of all the other Obligations.

 

SECTION 10.06. Payments Set Aside.To the extent that any payment by or on behalf of the Borrower is made to anyAgent or any Lender, or any Agent or any Lender exercises its right of setoff,and such payment or the proceeds of such setoff or any part thereof issubsequently invalidated, declared to be fraudulent or preferential, set asideor required (including pursuant to any settlement entered into by such Agent orsuch Lender in its discretion) to be repaid to a trustee, receiver or any otherparty, in connection with any proceeding under any Debtor Relief Law orotherwise, then (a) to the extent of such recovery, the obligation or part thereoforiginally intended to be satisfied shall be revived and continued in fullforce and effect as if such payment had not been made or such setoff had notoccurred, and (b) each Lender severally agrees to pay to theAdministrative Agent upon demand its applicable share of any amount sorecovered from or repaid by any Agent, *plus*interest thereon from the date of such demand to the date such payment is madeat a rate per annum equal to the Federal Funds Rate from time to time ineffect.

 

## SECTION 10.07. Successors and Assigns.(a)  The provisions of this Agreement shall be binding upon and inure tothe benefit of the parties hereto and their respective successors and assignspermitted hereby, except that the Borrower may not assign or otherwisetransfer any of its rights or obligations hereunder without the prior writtenconsent of each Lender (except as

 

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## expressly permitted by Sections 7.06(a) and (b)) and no Lender may assignor otherwise transfer any of its rights or obligations hereunder except (i) toan Eligible Assignee, (ii) by way of participation in accordance with theprovisions of Section 10.07(e), (iii) by way of pledge or assignmentof a security interest subject to the restrictions of Section 10.07(g) and(i) or (iv) to an SPC in accordance with the provisions of Section 10.07(h) (andany other attempted assignment or transfer by any party hereto shall be nulland void). Nothing in this Agreement, expressed or implied, shall be construedto confer upon any Person (other than the parties hereto, their respectivesuccessors and assigns permitted hereby, Participants to the extent provided inSection 10.07(e) and, to the extent expressly contemplated hereby,the Indemnitees) any legal or equitable right, remedy or claim under or byreason of this Agreement.

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### (b)                                 (i)  Subject tothe conditions set forth in paragraph (b)(ii) below, any Lender may assignto one or more assignees (“Assignees”) all or a portion of its rights andobligations under this Agreement (including all or a portion of its Commitmentand the Loans at the time owing to it) with the prior written consent (suchconsent not to be unreasonably withheld, delayed or conditioned) of:

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(A)                              theBorrower, *provided* that noconsent of the Borrower shall be required for an assignment to a Lender, anAffiliate of a Lender, an Approved Fund or, if an Event of Default under Section 8.01(a),(f) or (g) has occurred and is continuing, any Assignee; and

 

(B)                                theAdministrative Agent, *provided*that no consent of the Administrative Agent shall be required for an assignment(i) of all or any portion of a Loan to a Lender, an Affiliate of a Lenderor an Approved Fund or (ii) to an Agent or an Affiliate of an Agent.

 

#### (ii)                                  Assignments shall besubject to the following additional conditions:

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(A)                              exceptin the case of an assignment to a Lender or an Affiliate of a Lender orApproved Fund or an assignment of the entire remaining amount of the assigningLender’s Commitment or Loans, the amount of the Commitment or Loans of theassigning Lender subject to each such assignment (determined as of the date theAssignment and Assumption with respect to such assignment is delivered to theAdministrative Agent) shall not be less than $1,000,000 unless each of theBorrower and the Administrative Agent otherwise consents, *provided* that (1) no such consent ofthe Borrower shall be required if an Event of Default under Section 8.01(a),(f) or (g) has occurred and is continuing and (2) such amountsshall be aggregated in respect of each Lender and its Affiliates or ApprovedFunds, if any;

 

(B)                                theparties to each assignment shall execute and deliver to the AdministrativeAgent an Assignment and Assumption, together with a processing and recordationfee of $3,500; and

 

(C)                                theAssignee, if it shall not be a Lender, shall deliver to the AdministrativeAgent an Administrative Questionnaire.

 

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### (c)                                  Subject to acceptanceand recording thereof by the Administrative Agent pursuant to Section 10.07(d),from and after the effective date specified in each Assignment and Assumption,the Eligible Assignee thereunder shall be a party to this Agreement and, to theextent of the interest assigned by such Assignment and Assumption, have therights and obligations of a Lender under this Agreement, and the assigningLender thereunder shall, to the extent of the interest assigned by suchAssignment and Assumption, be released from its obligations under thisAgreement (and, in the case of an Assignment and Assumption covering all of theassigning Lender’s rights and obligations under this Agreement, such Lendershall cease to be a party hereto but shall continue to be entitled to thebenefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to factsand circumstances occurring prior to the effective date of such assignment). Uponrequest, and the surrender by the assigning Lender of its Note, the Borrower(at its expense) shall execute and deliver a Note to the assignee Lender. Anyassignment or transfer by a Lender of rights or obligations under thisAgreement that does not comply with this clause (c) shall be treated forpurposes of this Agreement as a sale by such Lender of a participation in suchrights and obligations in accordance with Section 10.07(e).

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### (d)                                 The AdministrativeAgent, acting solely for this purpose as an agent of the Borrower, shallmaintain at the Administrative Agent’s Office a copy of each Assignment andAssumption delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Commitments of, and principal amounts (andrelated interest amounts) of the Loans owing to each Lender pursuant to theterms hereof from time to time (the “**Register**”).The entries in the Register shall be conclusive, absent manifest error, and theBorrower, the Agents and the Lenders shall treat each Person whose name isrecorded in the Register pursuant to the terms hereof as a Lender hereunder forall purposes of this Agreement, notwithstanding notice to the contrary. TheRegister shall be available for inspection by the Borrower, any Agent and anyLender, at any reasonable time and from time to time upon reasonable priornotice.

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### (e)                                  Any Lender may atany time, without the consent of, or notice to, the Borrower or theAdministrative Agent, sell participations to any Person (other than a naturalperson) (each, a “**Participant**”) inall or a portion of such Lender’s rights and/or obligations under thisAgreement (including all or a portion of its Commitment and/or the Loans owingto it); *provided* that (i) suchLender’s obligations under this Agreement shall remain unchanged, (ii) suchLender shall remain solely responsible to the other parties hereto for theperformance of such obligations and (iii) the Borrower, the Agents and theother Lenders shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement. Anyagreement or instrument pursuant to which a Lender sells such a participationshall provide that such Lender shall retain the sole right to enforce thisAgreement and the other Loan Documents and to approve any amendment,modification or waiver of any provision of this Agreement or the other LoanDocuments; *provided* that suchagreement or instrument may provide that such Lender will not, without theconsent of the Participant, agree to any amendment, waiver or othermodification described in the first proviso to Section 10.01 that directlyaffects such Participant. Subject to Section 10.07(f), the Borrower agreesthat each Participant shall be entitled to the benefits of Sections 3.01, 3.04and 3.05 to the same extent as if it were a Lender and had acquired itsinterest by assignment pursuant to Section 10.07(c) but shall not beentitled to recover greater amounts under such Sections than the selling Lenderwould be entitled to recover. To the extent permitted by applicable Law, eachParticipant also

 

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### shall be entitled to the benefits of Section 10.09 as though itwere a Lender; *provided* that suchParticipant agrees to be subject to Section 2.13 as though it were aLender.

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### (f)                                    A Participant shallnot be entitled to receive any greater payment under Section 3.01, 3.04 or3.05 than the applicable Lender would have been entitled to receive withrespect to the participation sold to such Participant, unless the sale of theparticipation to such Participant is made with the Borrower’s prior writtenconsent. A Participant shall not be entitled to the benefits of Section 3.01unless the Borrower is notified of the participation sold to such Participantand such Participant agrees, for the benefit of the Borrower, to comply with Section 10.15as though it were a Lender.

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### (g)                                 Any Lender, withoutthe consent of the Borrower or the Administrative Agent, may at any timepledge or assign a security interest in all or any portion of its rights underthis Agreement (including under its Note, if any) to secure obligations of suchLender, including any pledge or assignment to secure obligations to a FederalReserve Bank; *provided* that nosuch pledge or assignment shall release such Lender from any of its obligationshereunder or substitute any such pledgee or assignee for such Lender as a partyhereto.

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### (h)                                 Notwithstandinganything to the contrary contained herein, any Lender (a “**Granting Lender**”) may grant to a specialpurpose funding vehicle identified as such in writing from time to time by theGranting Lender to the Administrative Agent and the Borrower (an “**SPC**”) the option to provide all or any part ofany Loan that such Granting Lender would otherwise be obligated to makepursuant to this Agreement; *provided*that (i) nothing herein shall constitute a commitment by any SPC to fundany Loan, and (ii) if an SPC elects not to exercise such option orotherwise fails to make all or any part of such Loan, the Granting Lendershall be obligated to make such Loan pursuant to the terms hereof. Each partyhereto hereby agrees that (i) neither the grant to any SPC nor theexercise by any SPC of such option shall increase the costs or expenses orotherwise increase or change the obligations of the Borrower under thisAgreement (including its obligations under Section 3.01, 3.04 or 3.05), (ii) noSPC shall be liable for any indemnity or similar payment obligation under thisAgreement for which a Lender would be liable, and (iii) the GrantingLender shall for all purposes, including the approval of any amendment, waiveror other modification of any provision of any Loan Document, remain the lenderof record hereunder. The making of a Loan by an SPC hereunder shall utilize theCommitment of the Granting Lender to the same extent, and as if, such Loan weremade by such Granting Lender. Notwithstanding anything to the contrarycontained herein, any SPC may (i) with notice to, but without priorconsent of the Borrower and the Administrative Agent and with the payment of aprocessing fee of $3,500, assign all or any portion of its right to receivepayment with respect to any Loan to the Granting Lender and (ii) discloseon a confidential basis any non-public information relating to its funding ofLoans to any rating agency, commercial paper dealer or provider of any suretyor Guarantee or credit or liquidity enhancement to such SPC.

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Notwithstanding anything to the contrary contained herein, (1) anyLender, without the consent of the Borrower or the Administrative Agent, may inaccordance with applicable Law create a security interest in all or any portionof the Loans owing to it and the Note, if any, held by it and (2) anyLender that is a Fund, without the consent of the Borrower or theAdministrative Agent, may create a security interest in all or any portionof the Loans owing to it and the Note, if any,

 

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held by it to the trustee for holders of obligations owed, orsecurities issued, by such Fund as security for such obligations or securities;*provided* that unless and untilsuch trustee actually becomes a Lender in compliance with the other provisionsof this Section 10.07, (i) no such pledge shall release the pledgingLender from any of its obligations under the Loan Documents and (ii) suchtrustee shall not be entitled to exercise any of the rights of a Lender underthe Loan Documents even though such trustee may have acquired ownershiprights with respect to the pledged interest through foreclosure or otherwise.

 

SECTION 10.08. Confidentiality. Eachof the Agents and the Lenders agrees to maintain the confidentiality of theInformation, except that Information may be disclosed (a) to itsAffiliates and its and its Affiliates’ directors, officers, employees,trustees, investment advisors and agents, including accountants, legal counseland other advisors (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of such Informationand instructed to keep such Information confidential); (b) to the extentrequested by any Governmental Authority; (c) to the extent required byapplicable Laws or regulations or by any subpoena or similar legal process; (d) toany other party to this Agreement; (e) subject to an agreement containingprovisions substantially the same as those of this Section 10.08 (or as may otherwisebe reasonably acceptable to the Borrower), to any pledgee referred to in Section 10.07(g),counterparty to a Swap Contract, Eligible Assignee of or Participant in, or anyprospective Eligible Assignee of or Participant in, any of its rights orobligations under this Agreement; (f) with the written consent of theBorrower; (g) to the extent such Information becomes publicly availableother than as a result of a breach of this Section 10.08; (h) to anyGovernmental Authority or examiner (including the National Association ofInsurance Commissioners or any other similar organization) regulating anyLender or its Affiliates; or (i) to any rating agency when required by it(it being understood that, prior to any such disclosure, such rating agencyshall undertake to preserve the confidentiality of any Information relating tothe Loan Parties received by it from such Lender). In addition, the Agents andthe Lenders may disclose the existence of this Agreement and informationabout this Agreement to market data collectors, similar service providers tothe lending industry, and service providers to the Agents and the Lenders inconnection with the administration and management of this Agreement, the otherLoan Documents, the Commitments, and the Loans. For the purposes of this Section 10.08,“**Information**” means allinformation received from any Loan Party relating to any Loan Party or itsbusiness, other than any such information that is publicly available to anyAgent or any Lender prior to disclosure by any Loan Party other than as aresult of a breach of this Section 10.08; *provided*that, in the case of information received from a Loan Party after the datehereof, such information is clearly identified at the time of delivery asconfidential or (ii) is delivered pursuant to Section 6.01, 6.02 or6.03 hereof.

 

SECTION 10.09. Setoff. Inaddition to any rights and remedies of the Lenders provided by Law, upon theoccurrence and during the continuance of any Event of Default, each Lender andits Affiliates is authorized at any time and from time to time, without priornotice to the Borrower or any other Loan Party, any such notice being waived bythe Borrower (on its own behalf and on behalf of each Loan Party and itsSubsidiaries) to the fullest extent permitted by applicable Law, to set off andapply any and all deposits (general or special, time or demand, provisional orfinal) at any time held by, and other Indebtedness at any time owing by, suchLender and its Affiliates to or for the credit or the account of the respectiveLoan Parties and their Subsidiaries against any and all Obligations owing tosuch Lender and its Affiliates

 

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hereunder or under any other Loan Document, now or hereafter existing,irrespective of whether or not such Agent or such Lender or Affiliate shallhave made demand under this Agreement or any other Loan Document and althoughsuch Obligations may be contingent or unmatured or denominated in acurrency different from that of the applicable deposit or Indebtedness. EachLender agrees promptly to notify the Borrower and the Administrative Agentafter any such set off and application made by such Lender; *provided*that the failure to give suchnotice shall not affect the validity of such setoff and application. The rightsof the Administrative Agent and each Lender under this Section 10.09 arein addition to other rights and remedies (including other rights of setoff)that the Administrative Agent and such Lender may have.

 

SECTION 10.10. Interest RateLimitation. Notwithstanding anything to the contrary contained in any LoanDocument, the interest paid or agreed to be paid under the Loan Documents shallnot exceed the maximum rate of non-usurious interest permitted by applicableLaw (the “**Maximum Rate**”). If anyAgent or any Lender shall receive interest in an amount that exceeds theMaximum Rate, the excess interest shall be applied to the principal of theLoans or, if it exceeds such unpaid principal, refunded to the Borrower. Indetermining whether the interest contracted for, charged, or received by anAgent or a Lender exceeds the Maximum Rate, such Person may, to the extentpermitted by applicable Law, (a) characterize any payment that is notprincipal as an expense, fee, or premium rather than interest, (b) excludevoluntary prepayments and the effects thereof, and (c) amortize, prorate,allocate, and spread in equal or unequal parts the total amount of interestthroughout the contemplated term of the Obligations hereunder.

 

SECTION 10.11. Counterparts. ThisAgreement and each other Loan Document may be executed in one or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument. Delivery by telecopierof an executed counterpart of a signature page to this Agreement andeach other Loan Document shall be effective as delivery of an original executedcounterpart of this Agreement and such other Loan Document. The Agents may alsorequire that any such documents and signatures delivered by telecopier beconfirmed by a manually signed original thereof; *provided* that the failure to request or deliver the sameshall not limit the effectiveness of any document or signature delivered bytelecopier.

 

SECTION 10.12. Integration. ThisAgreement, together with the other Loan Documents, comprises the complete andintegrated agreement of the parties on the subject matter hereof and thereofand supersedes all prior agreements, written or oral, on such subject matter. Inthe event of any conflict between the provisions of this Agreement and those ofany other Loan Document, the provisions of this Agreement shall control; *provided* that the inclusion ofsupplemental rights or remedies in favor of the Agents or the Lenders in anyother Loan Document shall not be deemed a conflict with this Agreement. EachLoan Document was drafted with the joint participation of the respectiveparties thereto and shall be construed neither against nor in favor of anyparty, but rather in accordance with the fair meaning thereof.

 

SECTION 10.13. Survival ofRepresentations and Warranties. All representations and warranties madehereunder and in any other Loan Document or other document delivered pursuanthereto or thereto or in connection herewith or therewith shall survive theexecution and delivery hereof and thereof. Such representations and warrantieshave

 

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been or will be relied upon by each Agent and each Lender, regardlessof any investigation made by any Agent or any Lender or on their behalf andnotwithstanding that any Agent or any Lender may have had notice orknowledge of any Default at the time of any Loan, and shall continue in fullforce and effect as long as any Loan or any other Obligation hereunder shallremain unpaid or unsatisfied (other than Obligations under Secured HedgeAgreements or contingent indemnification obligations, in any such case, notthen due and payable).

 

SECTION 10.14. Severability. Ifany provision of this Agreement or the other Loan Documents is held to beillegal, invalid or unenforceable, the legality, validity and enforceability ofthe remaining provisions of this Agreement and the other Loan Documents shallnot be affected or impaired thereby. The invalidity of a provision in aparticular jurisdiction shall not invalidate or render unenforceable suchprovision in any other jurisdiction.

 

## SECTION 10.15. Tax Forms. (a) Each Lender and Agent that is not a “United States person” within the meaningof Section 7701(a)(30) of the Code (each, a “**Foreign Lender**”) shall deliver to the Borrower and theAdministrative Agent, on or prior to the date which is ten (10) BusinessDays after the Closing Date (or upon accepting an assignment of an interestherein), two duly signed, properly completed copies of either IRS Form W-8BENor any successor thereto (relating to such Foreign Lender and entitling it toan exemption from, or reduction of, United States withholding tax on allpayments to be made to such Foreign Lender by the Borrower or any other LoanParty pursuant to this Agreement or any other Loan Document) or IRS Form W-8ECIor any successor thereto (relating to all payments to be made to such ForeignLender by the Borrower or any other Loan Party pursuant to this Agreement orany other Loan Document) or such other evidence reasonably satisfactory to theBorrower and the Administrative Agent that such Foreign Lender is entitled toan exemption from, or reduction of, United States withholding tax, includingany exemption pursuant to Section 871(h) or 881(c) of the Code,and in the case of a Foreign Lender claiming such an exemption under Section 881(c) ofthe Code, a certificate that establishes in writing to the Borrower and theAdministrative Agent that such Foreign Lender is not (i) a “bank” asdefined in Section 881(c)(3)(A) of the Code, (ii) a 10-percentstockholder within the meaning of Section 871(h)(3)(B) of the Code,or (iii) a controlled foreign corporation related to the Borrower with themeaning of Section 864(d) of the Code. Thereafter and from time totime, each such Foreign Lender shall (A) promptly submit to the Borrowerand the Administrative Agent such additional duly completed and signed copiesof one or more of such forms or certificates (or such successor forms orcertificates as shall be adopted from time to time by the relevant UnitedStates taxing authorities) as may then be available under then currentUnited States Laws and regulations to avoid, or such evidence as is reasonablysatisfactory to the Borrower and the Administrative Agent of any availableexemption from, or reduction of, United States withholding taxes in respect ofall payments to be made to such Foreign Lender by the Borrower or other LoanParty pursuant to this Agreement, or any other Loan Document, in each case, (1) onor before the date that any such form, certificate or other evidence expires orbecomes obsolete, (2) after the occurrence of any event requiring a changein the most recent form, certificate or evidence previously delivered by it tothe Borrower and the Administrative Agent and (3) from time to timethereafter if reasonably requested by the Borrower or the Administrative Agent,and (B) promptly notify the Borrower and the Administrative Agent of anychange in circumstances which would modify or render invalid any claimedexemption or reduction. In the event that a payment will be made to a Lender orAgent under the Canadian Guarantee, such Lender or Agent agrees to usereasonable

 

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## efforts (consistent with legal and regulatory restrictions and subjectto overall policy considerations of such Lender or Agent), if requested by aLoan Party, to deliver such other information prescribed by applicable laws orreasonably requested by the Loan Party as will enable such Loan Party todetermine whether such Lender or Agent is subject to Canadian withholding tax,is entitled to an exemption from Canadian withholding tax or is eligible for areduced rate of Canadian withholding tax; *provided,however*, that nothing in this Section 10.15(a) shallrequire a Lender or Agent to disclose any confidential information (including,without limitation, its tax returns or its calculations).

##  

### (b)                                 Each Foreign Lender,to the extent it does not act or ceases to act for its own account with respectto any portion of any sums paid or payable to such Foreign Lender under any ofthe Loan Documents (for example, in the case of a typical participation by suchForeign Lender), shall deliver to the Borrower and the Administrative Agent onthe date when such Foreign Lender ceases to act for its own account withrespect to any portion of any such sums paid or payable, and at such othertimes as may be necessary in the determination of the Borrower or theAdministrative Agent (in either case, in the reasonable exercise of itsdiscretion), (A) two duly signed completed copies of the forms or statementsrequired to be provided by such Foreign Lender as set forth above, to establishthe portion of any such sums paid or payable with respect to which such ForeignLender acts for its own account that is not subject to United Stateswithholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY(or any successor thereto), together with any information such Foreign Lenderchooses to transmit with such form, and any other certificate or statement ofexemption required under the Code, to establish that such Foreign Lender is notacting for its own account with respect to a portion of any such sums payableto such Foreign Lender.

###  

### (c)                                  Each Lender and Agentthat is a “United States person” within the meaning of Section 7701(a)(30)of the Code (each, a “**U.S. Lender**”)shall deliver to the Administrative Agent and the Borrower two duly signed,properly completed copies of IRS Form W-9 (or any successor form) on orprior to the Closing Date (or on or prior to the date it becomes a party tothis Agreement), certifying that such U.S. Lender is entitled to an exemptionfrom United States backup withholding tax.

###  

### (d)                                 No Loan Party shall berequired to pay any additional amount or any indemnity payment under Section 3.01to (A) any Lender to the extent Taxes are not due but for the failure ofsuch Lender to satisfy the foregoing provisions of this Section 10.15 or (B) anyLender to the extent such amounts are United States withholding taxes imposedon amounts payable to such Lender at the time such Lender becomes a party tothis Agreement, except to the extent such Lender’s assignor (if any) wasentitled, at the time of the assignment, to receive additional amounts from theBorrower with respect to such Taxes pursuant to Section 3.01 of thisAgreement; *provided* that (i) ifsuch Lender shall have satisfied the requirement of this Section 10.15 onthe date required in this Section 10.15, nothing in this Section 10.15shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01in the event that, as a result of any change in any applicable Law, treaty orgovernmental rule, regulation or order, or any change in the interpretation,administration or application thereof, such Lender is no longer properlyentitled to deliver forms, certificates or other evidence at a subsequent dateestablishing the fact that such Lender or other Person for the account of whichsuch Lender receives any sums payable under any of the Loan Documents is notsubject to withholding or is subject to

 

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### withholding at a reduced rate and (ii) nothing in this Section 10.15shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01in the event that the requirements of 10.15(b) have not been satisfied ifthe Borrower is entitled, under applicable Law, to rely on any applicable formsand statements required to be provided under this Section 10.15 by theForeign Lender that does not act or has ceased to act for its own account underany of the Loan Documents, including in the case of a typical participation.

###  

### (e)                                  The AdministrativeAgent may deduct and withhold any taxes required by any Laws to bededucted and withheld from any payment under any of the Loan Documents.

###  

## SECTION 10.16. GOVERNING LAW. (a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUEDIN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THATIF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN IN REGARD TOTHE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TOPROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWSOF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

##  

### (b)                                 ANY LEGAL ACTION ORPROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH ORRELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITHRESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASEWHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OFTHE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THESOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THISAGREEMENT, THE BORROWER, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND INRESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THEBORROWER, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUMNON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANYACTION OR PROCEEDING IN SUCH JURISDICTION, IN RESPECT OF ANY LOAN DOCUMENT OROTHER DOCUMENT RELATED THERETO.

###  

SECTION 10.17. WAIVER OF RIGHT TOTRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANYRIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISINGUNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTALTO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT,OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING ORHEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; ANDEACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION ORCAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANYPARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL

 

145

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COUNTERPART OR A COPY OF THIS SECTION 10.17 WITH ANY COURT ASWRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OFTHEIR RIGHT TO TRIAL BY JURY.

 

SECTION 10.18. Binding Effect. ThisAgreement shall become effective when it shall have been executed by theBorrower and the Administrative Agent shall have been notified by each Lender thateach such Lender has executed it and thereafter shall be binding upon and inureto the benefit of the Borrower, each Agent and each Lender and their respectivesuccessors and assigns, except that the Borrower shall not have the right toassign its rights hereunder or any interest herein without the prior writtenconsent of the Lenders, except as permitted by Section 7.04.

 

SECTION 10.19. Lender Action. EachLender agrees that it shall not take or institute any actions or proceedings,judicial or otherwise, for any right or remedy against any Loan Party or anyother obligor under any of the Loan Documents or the Secured Hedge Agreements(including the exercise of any right of setoff, rights on account of any banker’slien or similar claim or other rights of self-help), or institute any actionsor proceedings, or otherwise commence any remedial procedures, with respect toany Collateral or any other property of any such Loan Party, without the priorwritten consent of the Administrative Agent. The provisions of this Section 10.19are for the sole benefit of the Lenders and shall not afford any right to, orconstitute a defense available to, any Loan Party.

 

SECTION 10.20. USA PATRIOT Act;Proceeds of Crime Act. Each Lender hereby notifies the Borrower that pursuantto the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signedinto law October 26, 2001)) (the “**Act**”),it is required to obtain, verify and record information that identifies theLoan Parties, which information includes the name and address of the LoanParties and other information that will allow such Lender to identify the LoanParties in accordance with the Act. Each Loan Party is in compliance in allmaterial respects with the Act and the Proceeds of Crime Act.

 

SECTION 10.21. Judgment Currency.If, for the purposes of obtaining judgment in any court, it is necessary toconvert a sum due hereunder or any other Loan Document in one currency intoanother currency, the rate of exchange used shall be that at which inaccordance with normal banking procedures the Administrative Agent couldpurchase the first currency with such other currency on the Business Daypreceding that on which final judgment is given. The obligation of eachBorrower in respect of any such sum due from it to the Administrative Agent orthe Lenders hereunder or under the other Loan Documents shall, notwithstandingany judgment in a currency (the “**JudgmentCurrency**”) other than that in which such sum is denominated inaccordance with the applicable provisions of this Agreement (the “**Agreement Currency**”) be discharged only tothe extent that on the Business Day following receipt by the AdministrativeAgent of any sum adjudged to be so due in the Judgment Currency, theAdministrative Agent may in accordance with normal banking procedurespurchase the Agreement Currency with the Judgment Currency. If the amount ofthe Agreement Currency so purchased is less than the sum originally due to theAdministrative Agent from any Borrower in the Agreement Currency, such Borroweragrees, as a separate obligation and notwithstanding any such judgment, toindemnify the Administrative Agent or the Person to whom such obligation wasowing against such loss. If the amount of the Agreement Currency so purchased

 

146

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is greater than the sum originally due to the Administrative Agent insuch currency, the Administrative Agent agrees to return the amount of anyexcess to such Borrower (or to any other Person who may be entitledthereto under Applicable Law).

 

SECTION 10.22. Other Liens onCollateral; Terms of Intercreditor Agreement; Etc. (i)  EACH LENDERHERETO UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS SHALL BE CREATED ON THECOLLATERAL PURSUANT TO THE ABL CREDIT AGREEMENT AND THE ABL LOAN DOCUMENTS,WHICH LIENS (x) TO THE EXTENT CREATED WITH RESPECT TO ABL PRIORITY COLLATERAL,SHALL BE SENIOR TO THE LIENS CREATED UNDER THIS AGREEMENT AND THE RELATED LOANDOCUMENTS (WITH THE LIENS SO CREATED HEREUNDER AND UNDER THE OTHER LOANDOCUMENTS ON ABL PRIORITY COLLATERAL BEING SUBORDINATED TO SUCH LIENS PURSUANTTO THE TERMS OF THE INTERCREDITOR AGREEMENT) AND (Y) TO THE EXTENT CREATED WITHRESPECT TO TL PRIORITY COLLATERAL, SHALL BE REQUIRED TO BE SUBJECT TO THESUBORDINATION PROVISIONS (TO THE EXTENT APPLICABLE) OF THE INTERCREDITORAGREEMENT. THE INTERCREDITOR AGREEMENT ALSO HAS OTHER PROVISIONS WHICH AREBINDING UPON THE LENDERS AND THE HEDGE BANKS PURSUANT TO THIS AGREEMENT. PURSUANTTO THE EXPRESS TERMS OF SECTION 7.17 OF THE INTERCREDITOR AGREEMENT, INTHE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT ANDANY OF THE LOAN DOCUMENTS, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALLGOVERN AND CONTROL.

 

(ii)                                  EACH LENDERAUTHORIZES AND INSTRUCTS THE COLLATERAL AGENT AND THE ADMINISTRATIVE AGENT TOENTER INTO THE INTERCREDITOR AGREEMENT ON BEHALF OF SUCH LENDER, AND TO TAKEALL ACTIONS (AND EXECUTE ALL DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT INACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENT.

 

(iii)                               THE PROVISIONS OF THIS SECTION 10.22ARE NOT INTENDED TO SUMMARIZE ALL RELEVANT PROVISIONS OF THE INTERCREDITORAGREEMENT, THE FORM OF WHICH IS ATTACHED AS AN EXHIBIT TO THISAGREEMENT. REFERENCE MUST BE MADE TO THE INTERCREDITOR AGREEMENT ITSELF TOUNDERSTAND ALL TERMS AND CONDITIONS THEREOF. EACH LENDER IS RESPONSIBLE FORMAKING ITS OWN ANALYSIS AND REVIEW OF THE INTERCREDITOR AGREEMENT AND THE TERMSAND PROVISIONS THEREOF, AND NO AGENT (AND NONE OF ITS AFFILIATES) MAKES ANYREPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THEPROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT.

 

SECTION 10.23. Assignment ofObligations. The Borrower hereby agrees to assume any and all obligationsof Bain Paste Finco, LLC (“**Bain Finco**”)and Blackstone Paste Finco, LLC (“**BlackstoneFinco**”) under (i) the Commitment Letter dated as of July 13,2006 among Bain Finco, Blackstone Finco, Bain Capital Fund IX, LLC (“**Bain Fund**”), Blackstone Capital Partners VL.P. (“**Blackstone Fund**”), DeutscheBank AG New York Branch (“**DBNY**”),Deutsche Bank AG Cayman Islands Branch (“**DBCI**”),Deutsche Bank Securities

 

147

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Inc. (“**DBSI**”), J.P. MorganSecurities Inc. (“**JPMorgan**”),JPMorgan Chase Bank, N.A. (“**JPMorgan ChaseBank**”), Bank of America, N.A. (“**Bankof America**”), Banc of America Securities LLC (“BAS”), Banc ofAmerica Bridge LLC (“**Banc of America Bridge**”),Credit Suisse Securities (USA) LLC (“**CSSecurities**”) and Credit Suisse (“**CS**”),(ii) the Fee Letter dated as of July 13, 2006 among Bain Finco,Blackstone Finco, DBNY, DBCI, DBSI, JPMorgan, JPMorgan Chase Bank, Bank ofAmerica, BAS, Banc of America Bridge, CS Securities and CS and (iii) theEngagement Letter dated as of July 13, 2006 among Bain Finco, BlackstoneFinco, DBSI, JPMorgan, BAS and CS Securities. The Lenders party hereto herebyacknowledge and accept such assumption of obligations by the Borrower.

 

**[THEREMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]**

 

148

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

 
|   |   | MICHAELS STORES, INC. |
|--------|--------|----------------------------|
|   |   |                       |
|   |   |                       |
|   |   | By:                        |   /s/ Jeffrey N. Boyer |   |
|   |   |                       | Title:  President and Chief  Financial Officer |

 

----

 
|   |   | **DEUTSCHE BANK AG NEW YORK  BRANCH**, Individually and as Administrative Agent |
|--------|--------|---------------------------------------------------------------------------------|
|   |   | ** **                                                                      |
|   |   | ** **                                                                      |
|   |   | By:                                                                             |   /s/ Marguerite Sutton |   |
|   |   |                                                                            | Title: Director |
|   |   |                                                                            |   |
|   |   | By:                                                                             |   /s/ Omayra Laucella |   |
|   |   |                                                                            | Title: Vice President |

 

----

 
| ** ** | ** ** | **JPMORGAN CHASE BANK, N.A.,**   |
|------------|------------|----------------------------------|
|       |       |   as Syndication Agent |
|       |       |                             |
|       |       |                             |
|       |       | By:                              |   /s/  Barry Bergman |   |
|       |       |                             | Title: Managing Director |

 

----

 
|   |   | **BANK OF AMERICA, N.A.,**         |
|--------|--------|------------------------------------|
|   |   |   Co-Documentation Agent |
|   |   |                               |
|   |   |                               |
|   |   | By:                                |   /s/ Matthew C. Sclafani |   |
|   |   |                               | Title: Principal |

 

----

 
|   |   | **CREDIT SUISSE,**                    |
|--------|--------|---------------------------------------|
|   |   |   as Co-Documentation Agent |
|   |   |                                  |
|   |   |                                  |
|   |   | By:                                   |   /s/ Ian Nalitt |   |
|   |   |                                  | Title: Vice  President |
|   |   |                                  |   |
|   |   | By:                                   |   /s/ David Dodd |   |
|   |   |                                  | Title: Vice President |

 

----

 

SCHEDULE 1.01B

To Credit Agreement

 

Schedule 1.01B

CollateralDocuments

 

1. Guarantee Agreement, dated as of October 31, 2006, amongMichaels Stores, Inc., a Delaware corporation, the Subsidiaries of theBorrower identified therein and Deutsche Bank AG New York Branch, asAdministrative Agent.

 

2. Security Agreement, dated as of October 31, 2006, amongMichaels Stores, Inc., a Delaware corporation, the Subsidiaries of theBorrower identified therein and Deutsche Bank AG New York Branch, as CollateralAgent for the Secured Parties.

 

3. Canadian Guarantee, dated as of October 31, 2006, amongMichaels of Canada, ULC, a Nova Scotia unlimited liability company, andDeutsche Bank AG New York Branch, as Administrative Agent.

 

4. Canadian Security Agreement, dated as of October 31, 2006,among Michaels of Canada, ULC, a Nova Scotia unlimited liability company,and  Deutsche Bank AG New York Branch, asCollateral Agent for the Secured Parties.

 

5. Grant of Security Interest in United States Trademarks, dated as of October 31,2006, between Aaron Brothers, Inc., a Delaware corporation, and DeutscheBank AG New York Branch, as Collateral Agent.

 

6. Grant of Security Interest in United States Trademarks, dated as of October 31,2006, between Michaels Stores Procurement Company, Inc., a Delawarecorporation, and Deutsche Bank AG New York Branch, as Collateral Agent.

 

8. Grant of Security Interest in Canadian Trademarks, dated as of October 31,2006, between Michaels Stores Procurement Company, Inc., a Delawarecorporation, and Deutsche Bank AG New York Branch, as Collateral Agent.

 

----

 

SCHEDULE 1.01D

To CreditAgreement

 

Schedule 1.01D

MortgagedProperties

 

None.

 

----

 

SCHEDULE 1.01E

To CreditAgreement

 

Schedule 1.01E

ExcludedSubsidiary

 

None.

 

----

 

SCHEDULE 1.01F

To Credit Agreement

 

Schedule 1.01F

ForeignSubsidiary

 

None.

 

----

 

SCHEDULE 2.01

To CreditAgreement

 

Schedule 2.01

Commitments

 
| **LENDER**                        | ** ** | **COMMITMENT** | ** **    |
|-----------------------------------|------------|----------------|---------------|
| DEUTSCHE  BANK AG NEW YORK BRANCH |       | $              | 2,400,000,000 |   |
|                                   |            |                |               |  |

 

----

 

SCHEDULE 5.05

To CreditAgreement

Schedule 5.05

Financial Statements

 

1. See Risk Factor “We face risks relating to our historical stockoption practices” in the Offering Memorandum, dated October 25, 2006.

 

2. See Risk Factor “We face risks related to unresolved SEC staffcomments” in the Offering Memorandum, dated October 25, 2006.

 

----

 

SCHEDULE 5.10

To CreditAgreement

 

Schedule 5.10

Taxes

 

1. The Company currently has state income tax audits in process in thefollowing states: California (Fiscal Years 1994 – 2003); Colorado (Fiscal Years2002 – 2006); Connecticut (Fiscal Years 2002 – 2004); Maryland (Fiscal Years2002 – 2003); Massachusetts (Fiscal Years 2001 – 2004); New York (Fiscal Years2005 – 2007); North Carolina (Fiscal Year 2004); Ohio (Fiscal Years 2002 –2003); Wisconsin (1998 – 2004).

 

2. The Company currently has sales tax audits in process in thefollowing states:  California (1/1/03 to 9/30/06); Colorado (9/1/03 to8/31/06); Connecticut (11/1/01 to 10/31/04); Illinois (11/1/03 to 12/31/06);Kansas (1/1/04 to 3/31/05); Louisiana (4/1/02 to 3/31/05); Michigan (7/1/01 to3/31/05); Minnesota (4/1/01 to 3/31/05); North Carolina (12/1/01 to 9/30/05);Ohio (10/1/02 to 12/31/05); Texas (8/1/01 to 1/31/06); Virginia (10/1/03 to9/30/06); Washington (1/1/02 to 3/31/05); Wisconsin (4/1/01 to 3/31/05).

 

3. On May 17, 2006, the Company received approval of their May 10,2006 filing of Form 872, Consent to Extend the Time to Assess Tax, withthe IRS extending the assessment period for fiscal year 2002 to the expirationdate of December 31, 2006. The Company has filed an additional six-monthextension for the fiscal year 2002 return.

 

----

 

SCHEDULE 5.11

To CreditAgreement

 

Schedule 5.11

ERISA andother Pension Plan Compliance

 

None.

 

----

 

SCHEDULE 5.12

To CreditAgreement

 

Schedule 5.12

Subsidiariesand Other Equity Investments

 
| **Subsidiary**                                 |   | **Jurisdiction** |   | **Owner**                                      |   | **# of  Shares  Owned**       |   | **Total Shares  Outstanding** |   | **% of  Interest** |   | **%  Pledged** |   |
|------------------------------------------------|--------|------------------|--------|------------------------------------------------|--------|-------------------------------|--------|-------------------------------|--------|--------------------|--------|----------------|--------|
| Aaron Brothers, Inc.                      |   | Delaware         |   | Michaels Stores, Inc.                     |   | 100                           |   | 100                           |   | 100                | %      | 100            | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Michaels Finance Company, Inc.            |   | Delaware         |   | Michaels Stores, Inc.                     |   | 100                           |   | 100                           |   | 100                | %      | 100            | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Michaels Stores Card Services, LLC             |   | Virginia         |   | Michaels Stores, Inc.                     |   | 100                           |   | 100                           |   | 100                | %      | 100            | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Michaels Stores Procurement Company, Inc. |   | Delaware         |   | Michaels Stores, Inc.                     |   | 100                           |   | 100                           |   | 100                | %      | 100            | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Artistree, Inc.                           |   | Delaware         |   | Michaels Stores Procurement Company, Inc. |   | 100                           |   | 100                           |   | 100                | %      | 100            | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Michaels of Canada, ULC                        |   | Nova Scotia      |   | Michaels Stores, Inc.                     |   | 1,000 Common                  |   | 1,000                         |   | 100                | %      | 0              | %      |
|                                           |   |             |   |                                           |   |                          |   |                          |   |               |   |           |   |
| Michaels of Canada, ULC                        |   | Nova Scotia      |   | Michaels Stores, Inc.                     |   | 4,000 Class A  Preferred |   | 4,000                         |   | 100                | %      | 0              | %      |

 

----

 

SCHEDULE 6.07

To CreditAgreement

 

Schedule 6.07

Insurance

 

See attached.

 

----

 

SCHEDULE 7.03

To CreditAgreement

 

Schedule 7.03

ExistingIndebtedness

 

Letters of Credit as follows:

 
| **Issuing  Bank** |   | **Beneficiary**                                                                                                                                     |   | **Amount** |      |
|-------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|
| Bank of America   |   | Lumbermens Mutual Casualty Company  American Motorists Insurance Co.  American Manufacturers  Mutual Insurance Company  American Protection Company |   | US$        | 8,138,000 |   |
| Bank of America   |   | Zurich American Insurance Company                                                                                                                   |   | US$        | 1,000,000 |   |
| Bank of America   |   | Royal Indemnity Company                                                                                                                             |   | US$        | 5,600,000 |   |

 

----

 

SCHEDULE 7.04

To CreditAgreement

 

Schedule 7.04

Existing Liens

 
| **Name**                            | ** ** | **Jurisdiction** | ** ** | **Filing  Reference #** | ** ** | **Filing Date** | ** ** | **Secured Party  (of Record)**                                                   | ** ** | **Description** |
|-------------------------------------|------------|------------------|------------|-------------------------|------------|-----------------|------------|----------------------------------------------------------------------------------|------------|-----------------|
| Aaron Brothers, Inc.           |       | DE SOS           |       | 31159915                |       | 5/6/2003        |       | OCE-USA, Inc.                                                               |       | Equipment Lien  |
| Aaron Brothers, Inc.           |       | DE SOS           |       | 31934580                |       | 7/28/2003       |       | OCE-USA, Inc.                                                               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 11355853                |       | 10/9/2001       |       | Toyota Motor Credit Corp.                                                        |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 20954465                |       | 3/25/2002       |       | IBM Credit Corporation                                                           |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 20969240                |       | 3/25/2002       |       | IBM Credit Corporation                                                           |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 21273360                |       | 5/2/2002        |       | IBM Credit Corporation                                                           |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 22817736                |       | 10/28/2002      |       | US Bancorp                                                                       |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30548670                |       | 2/3/2003        |       | Fleet Capital Corporation, successor by merger to, BancBoston Leasing, Inc. |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30938483                |       | 4/10/2003       |       | BancBoston Leasing Inc., additional s/p: Ameritech Credit Corporation            |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30938657                |       | 4/10/2003       |       | BancBoston Leasing Inc., additional s/p: Ameritech Credit Corporation            |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30938756                |       | 4/10/2003       |       | BancBoston Leasing Inc., additional s/p: Ameritech Credit Corporation            |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30940315                |       | 4/10/2003       |       | BancBoston Leasing Inc., additional s/p: Ameritech Credit Corporation            |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30940653                |       | 4/10/2003       |       | Ameritech Credit Corporation                                                     |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 30940885                |       | 4/10/2003       |       | Ameritech Credit Corporation                                                     |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 31034225                |       | 4/22/2003       |       | Mobile Storage Group, Inc.                                                  |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 31057143                |       | 4/11/2003       |       | US Bancorp                                                                       |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 50136706                |       | 1/10/2005       |       | CPRE-1 END, Lakeline, L.P.                                                       |       | Fixture Filing. |

 

2

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| **Name**                            | ** ** | **Jurisdiction** | ** ** | **Filing  Reference #** | ** ** | **Filing Date** | ** ** | **Secured Party  (of Record)**                               | ** ** | **Description** |
|-------------------------------------|------------|------------------|------------|-------------------------|------------|-----------------|------------|--------------------------------------------------------------|------------|-----------------|
| Michaels Finance Company, Inc. |       | DE SOS           |       | 33215657                |       | 12/8/2003       |       | Fleet Business Credit, LLC                                   |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 33215780                |       | 12/8/2003       |       | Fleet Business Credit, LLC                                   |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 33216200                |       | 12/8/2003       |       | Fleet Business Credit, LLC                                   |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 43018878                |       | 10/26/2004      |       | Crown Lift Trucks                                            |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | DE SOS           |       | 43697440                |       | 12/31/2004      |       | US Bancorp                                                   |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | NC SOS           |       | 20040011219A            |       | 2/4/2004        |       | The CIT Group/Equipment Financing, Inc.                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 02-0032723574           |       | 6/7/2002        |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 04-00516990             |       | 12/19/2003      |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 04-00518513             |       | 12/22/2003      |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0005677230           |       | 10/21/2002      |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 04-00516699             |       | 12/19/2003      |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0006790247           |       | 10/31/2002      |       | US Bancorp                                                   |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017100719           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017100931           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017101285           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017101396           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017101518           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0017101629           |       | 2/11/2003       |       | Sumner Group                                                 |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 03-0023367064           |       | 4/7/2003        |       | Fleet Business Credit, LLC, addt’l s/p: EMC Corporation |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0019455877           |       | 6/22/2005       |       | Sumner Group Inc                                             |       | Equipment Lien  |

 

3

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| **Name**                            | ** ** | **Jurisdiction** | ** ** | **Filing  Reference #** | ** ** | **Filing Date** | ** ** | **Secured Party  (of Record)** | ** ** | **Description** |
|-------------------------------------|------------|------------------|------------|-------------------------|------------|-----------------|------------|--------------------------------|------------|-----------------|
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034548382           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034548837           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034549414           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034549858           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034550779           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034551245           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034551912           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |
| Michaels Finance Company, Inc. |       | TX SOS           |       | 05-0034552599           |       | 11/8/2005       |       | Sumner Group Inc               |       | Equipment Lien  |

 

4

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SCHEDULE 10.02 

To CreditAgreement

 

Schedule 10.02

AdministrativeAgent’s Office, Certain Addresses for Notices

 

**Deutsche Bank AG New York Branch**

60 Wall Street

New York, New York  10005

Fax:  212-797-6655

Attn:  Marguerite Sutton(marguerite.sutton@db.com)

 

**Michaels Stores, Inc.**

8000 Bent Branch Drive

Irving, Texas 75063

Fax: 972-409-1556

Attn: Lisa Klinger (klingerl@michaels.com)

 

With copies to:

Michaels Stores, Inc.

8000 Bent Branch Drive

Irving, Texas 75063

Fax: 972-409-1965

Attn: General Counsel

 

Bain Capital Partners, LLC

111 Huntington Avenue

Boston, Massachusetts  02199

Fax:  617-516-2010

Attn: Josh Bekenstein (jbekenstein@baincapital.com), Matthew Levin

(mlevin@baincapital.com) and Todd Cook(tcook@baincapital.com)

 

Blackstone Management Associates V LLC

345 Park Avenue

New York, New York  10154

Fax: 212-583-5717

Attn: Michael Chae (chae@blackstone.com) and Matthew Kabaker

(kabaker@blackstone.com)

 

Ropes & Gray LLP

One International Place

Boston, Massachusetts  02110

Fax: 617-951-7050

Attn: Byung Choi, Esquire (byung.choi@ropesgray.com)

 

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