Exhibit 10.2


 


Execution
Version


	
   

  	
   

  	
   

  



 


AMENDED AND RESTATED CREDIT AGREEMENT


 


dated as of


 


November 13,
2009


 


among


 


SELECT COMFORT
CORPORATION,


 


The Lenders Party Hereto,


 


JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent,


 


and


 


BANK OF AMERICA,
N.A.,


 


as Syndication
Agent


 






 


J.P. MORGAN
SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger


	
   

  	
   

  	
   

  



 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
  Definitions

  	
  1

  
	
  SECTION 1.01.

  	
  Defined
  Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Classification
  of Loans and Borrowings

  	
  19

  
	
  SECTION 1.03.

  	
  Terms
  Generally

  	
  19

  
	
  SECTION 1.04.

  	
  Accounting
  Terms; GAAP

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  The
  Credits

  	
  20

  
	
  SECTION 2.01.

  	
  Commitments

  	
  20

  
	
  SECTION 2.02.

  	
  Loans
  and Borrowings

  	
  21

  
	
  SECTION 2.03.

  	
  Requests
  for Revolving Borrowings

  	
  21

  
	
  SECTION 2.04.

  	
  Swingline
  Loans

  	
  22

  
	
  SECTION 2.05.

  	
  Letters
  of Credit

  	
  23

  
	
  SECTION 2.06.

  	
  Funding
  of Borrowings

  	
  28

  
	
  SECTION 2.07.

  	
  Interest
  Elections

  	
  29

  
	
  SECTION 2.08.

  	
  Termination
  and Reduction of Commitments

  	
  30

  
	
  SECTION 2.09.

  	
  Repayment
  of Loans; Evidence of Debt

  	
  31

  
	
  SECTION 2.10.

  	
  Prepayment
  of Loans

  	
  32

  
	
  SECTION 2.11.

  	
  Fees

  	
  33

  
	
  SECTION 2.12.

  	
  Interest

  	
  35

  
	
  SECTION 2.13.

  	
  Alternate
  Rate of Interest

  	
  35

  
	
  SECTION 2.14.

  	
  Increased
  Costs

  	
  36

  
	
  SECTION 2.15.

  	
  Break
  Funding Payments

  	
  37

  
	
  SECTION 2.16.

  	
  Taxes

  	
  37

  
	
  SECTION 2.17.

  	
  Payments
  Generally; Pro Rata Treatment; Sharing of Set-offs

  	
  38

  
	
  SECTION 2.18.

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
  41

  
	
  SECTION 2.19.

  	
  Defaulting
  Lenders

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  Representations
  and Warranties

  	
  43

  
	
  SECTION 3.01.

  	
  Organization;
  Powers

  	
  43

  
	
  SECTION 3.02.

  	
  Authorization;
  Enforceability

  	
  43

  
	
  SECTION 3.03.

  	
  Governmental
  Approvals; No Conflicts

  	
  43

  
	
  SECTION 3.04.

  	
  Financial
  Condition; No Material Adverse Change

  	
  44

  
	
  SECTION 3.05.

  	
  Properties

  	
  44

  
	
  SECTION 3.06.

  	
  Litigation
  and Environmental Matters

  	
  44

  
	
  SECTION 3.07.

  	
  Compliance
  with Laws and Agreements

  	
  45

  
	
  SECTION 3.08.

  	
  Investment
  and Holding Company Status

  	
  45

  
	
  SECTION 3.09.

  	
  Taxes

  	
  45

  
	
  SECTION 3.10.

  	
  ERISA

  	
  45

  
	
  SECTION 3.11.

  	
  Disclosure

  	
  45

  
	
  SECTION 3.12.

  	
  Subsidiaries

  	
  46

  
	
  SECTION 3.13.

  	
  Regulation
  U

  	
  46

  
	
  SECTION 3.14.

  	
  Security
  Documents

  	
  46

  
	
  SECTION 3.15.

  	
  Material
  Agreements

  	
  46

  
				



 

















 


	
  SECTION 3.16.

  	
  Labor
  Relations

  	
  46

  
	
  SECTION 3.17.

  	
  Related
  Agreements

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  Conditions

  	
  47

  
	
  SECTION 4.01.

  	
  Effective Date

  	
  47

  
	
  SECTION 4.02.

  	
  Each
  Credit Event

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
  Affirmative
  Covenants

  	
  49

  
	
  SECTION 5.01.

  	
  Financial
  Statements; Ratings Change and Other Information

  	
  49

  
	
  SECTION 5.02.

  	
  Notices
  of Material Events

  	
  50

  
	
  SECTION 5.03.

  	
  Existence;
  Conduct of Business

  	
  51

  
	
  SECTION 5.04.

  	
  Payment
  of Obligations

  	
  51

  
	
  SECTION 5.05.

  	
  Maintenance
  of Properties; Insurance

  	
  51

  
	
  SECTION 5.06.

  	
  Books
  and Records; Inspection Rights

  	
  51

  
	
  SECTION 5.07.

  	
  Compliance
  with Laws

  	
  52

  
	
  SECTION 5.08.

  	
  Use of
  Proceeds and Letters of Credit

  	
  52

  
	
  SECTION 5.09.

  	
  Further
  Assurances

  	
  52

  
	
  SECTION 5.10.

  	
  Appraisals

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  Negative
  Covenants

  	
  53

  
	
  SECTION 6.01.

  	
  Indebtedness

  	
  54

  
	
  SECTION 6.02.

  	
  Liens

  	
  55

  
	
  SECTION 6.03.

  	
  Fundamental
  Changes

  	
  56

  
	
  SECTION 6.04.

  	
  Investments,
  Loans, Advances, Guarantees and Acquisitions

  	
  56

  
	
  SECTION 6.05.

  	
  Swap
  Agreements

  	
  57

  
	
  SECTION 6.06.

  	
  Restricted
  Payments

  	
  57

  
	
  SECTION 6.07.

  	
  Transactions
  with Affiliates

  	
  57

  
	
  SECTION 6.08.

  	
  Restrictive
  Agreements

  	
  58

  
	
  SECTION 6.09.

  	
  Maximum
  Leverage Ratio

  	
  58

  
	
  SECTION 6.10.

  	
  EBITDA

  	
  58

  
	
  SECTION 6.11.

  	
  Interest
  Coverage

  	
  59

  
	
  SECTION 6.12.

  	
  Capital
  Expenditures

  	
  59

  
	
  SECTION 6.13.

  	
  Fiscal
  Year

  	
  59

  
	
  SECTION 6.14.

  	
  Restriction
  of Amendments to Certain Documents

  	
  59

  
	
  SECTION 6.15.

  	
  Cash
  Usage

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  Events
  of Default

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  The
  Administrative Agent and the Collateral Agent

  	
  62

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  Administrative
  Agent

  	
  62

  
	
  SECTION 8.02.

  	
  Collateral
  Agent

  	
  64

  
	
  SECTION 8.03.

  	
  Administrative
  Agent as UK Security Trustee

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
  Miscellaneous

  	
  65

  
	
  SECTION 9.01.

  	
  Notices

  	
  65

  
	
  SECTION 9.02.

  	
  Waivers;
  Amendments

  	
  66

  
	
  SECTION 9.03.

  	
  Expenses;
  Indemnity; Damage Waiver

  	
  67

  
				



 


ii

















 


	
  SECTION 9.04.

  	
  Successors
  and Assigns

  	
  69

  
	
  SECTION 9.05.

  	
  Survival

  	
  72

  
	
  SECTION 9.06.

  	
  Counterparts;
  Integration; Effectiveness

  	
  72

  
	
  SECTION 9.07.

  	
  Severability

  	
  72

  
	
  SECTION 9.08.

  	
  Right
  of Setoff

  	
  73

  
	
  SECTION 9.09.

  	
  Governing
  Law; Jurisdiction; Consent to Service of Process

  	
  73

  
	
  SECTION 9.10.

  	
  WAIVER
  OF JURY TRIAL

  	
  73

  
	
  SECTION 9.11.

  	
  Headings

  	
  74

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
  74

  
	
  SECTION 9.13.

  	
  Interest
  Rate Limitation

  	
  75

  
	
  SECTION 9.14.

  	
  USA
  PATRIOT Act

  	
  75

  
	
  SECTION 9.15.

  	
  Amendment
  and Restatement

  	
  75

  
	
  SECTION 9.16.

  	
  Restructuring
  Advisor

  	
  76

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.01 —
  Existing Letters of Credit

  	
   

  
	
  Schedule 2.01A —
  Existing Commitments

  	
   

  
	
  Schedule 2.01B —
  Commitments

  	
   

  
	
  Schedule 3.06 —
  Disclosed Matters

  	
   

  
	
  Schedule 3.12 — Subsidiaries

  	
   

  
	
  Schedule 6.01 —
  Existing Indebtedness

  	
   

  
	
  Schedule 6.02 —
  Existing Liens

  	
   

  
	
  Schedule 6.08 —
  Existing Restrictions

  	
   

  
	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  Exhibit A —
  Form of Assignment and Assumption

  	
   

  
				



 


iii
















 


AMENDED AND RESTATED
CREDIT AGREEMENT dated as of November 13, 2009, among SELECT COMFORT
CORPORATION, the LENDERS party hereto, JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, as Administrative Agent and Collateral Agent, and BANK OF AMERICA,
N.A., as Syndication Agent.


 


WHEREAS, Borrower, the
Administrative Agent and certain financial institutions (such financial
institutions, the “Existing Lenders”) are party to a Credit Agreement dated as
of June 9, 2006 (as amended through the date hereof, the “Existing Credit
Agreement”); and


 


WHEREAS, Borrower, the
Administrative Agent and the Existing Lenders have agreed to amend and restate
the Existing Credit Agreement to reflect the consummation of the transactions
contemplated by the Sterling Purchase Agreement on the Effective Date, subject
to the terms and conditions set forth in this Agreement;


 


NOW, THEREFORE, in
consideration of the mutual agreements herein contained, the parties agree that
the Existing Credit Agreement is hereby amended and restated in its entirety as
follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.01. 
Defined Terms.  As used in
this Agreement, the following terms have the meanings specified below:


 


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


 


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


 


“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.


 


“Administrative Agent”
means JPMorgan, in its capacity as administrative agent for the Lenders
hereunder.


 


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


 


“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.


 


“Agreement” means
this Amended and Restated Credit Agreement, as further amended, restated,
modified or supplemented from time to time.


 

















 


“Alternate
Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in
effect on such day plus 1⁄2 of 1%, and (c) the Adjusted LIBO Rate for a one
month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, for the
avoidance of doubt, the Adjusted LIBO Rate for any day shall, for purposes of
this definition, be based on the rate appearing on the Reuters Screen LIBOR01 Page (or
on any successor or substitute page) at approximately 11:00 a.m. London
time on such day (without any rounding). 
Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.


 


“Applicable Lending
Installation” is defined in Section 2.02(e).


 


“Applicable Percentage”
means, with respect to any Lender, the percentage of the total Commitments
represented by such Lender’s Commitment; provided that when a Defaulting
Lender shall exist, “Applicable Percentage” shall mean the percentage of the
total Commitments (disregarding any Defaulting Lender’s Commitment) represented
by such Lender’s Commitment.  If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments and to any Lender’s status as a Defaulting Lender at the time
of determination.


 


“Applicable Rate”
means, for any day during the periods set forth below, the rate per annum with
respect to the type of Loan set forth below:


 


	
   

  	
   

  	
  Applicable Rate

  	
   

  
	
  Period

  	
   

  	
  ABR

  	
   

  	
  LIBOR

  	
   

  
	
  Effective
  Date – 6/29/10

  	
   

  	
  4.50

  	
  %

  	
  5.50

  	
  %

  
	
  6/30/10
  – 12/30/10

  	
   

  	
  6.50

  	
  %

  	
  7.50

  	
  %

  
	
  12/31/10
  and thereafter

  	
   

  	
  8.50

  	
  %

  	
  9.50

  	
  %

  



 


“Approved Fund”
has the meaning assigned to such term in Section 9.04(b).


 


“Asset Disposition”
means, as to any asset or right of the Borrower or any Subsidiary, (a) any
sale, transfer or other disposition thereof in a single transaction or in a
series of related transactions (other than (i) the sale of inventory or
products in the ordinary course of business or the sale of obsolete or worn out
property in the ordinary course of business, (ii) the making of payments
for property and services used by the Borrower or any Subsidiary in the
ordinary course of business, and (iii) the sale of Permitted Investments
in the ordinary course of business), (b) any loss, destruction or damage
thereof or (c) any condemnation, confiscation, requisition, seizure or
taking thereof.


 


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


 


2

















 


“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitments.


 


“Bank
Products Agreement” means those certain cash management service agreements
entered into from time to time between the Borrower or any of its Subsidiaries
and a Lender or its Affiliates in connection with any of the Bank Products.


 


“Bank Products”
means any service or facility extended to the Borrower or any of its
Subsidiaries by any Lender or its Affiliates including: (a) credit cards, (b) credit
card processing services, (c) debit cards, (d) purchase cards
(including, without limitation, any purchase cards extended to the Borrower or
any Subsidiary pursuant to the Corporate Card Agreement), (e) cash
management, including controlled disbursement, accounts or services, and
Automated Clearing House processing of electronic funds transfers through the
direct Federal Reserve Fedline system and (f) Swap Agreement transactions.


 


“Bank Products
Obligations” means any and all obligations of the Credit Parties, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced
or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Bank Products, including all Swap
Obligations.


 


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


 


“Borrower” means
Select Comfort Corporation, a Minnesota corporation.


 


“Borrowing” means
Revolving Loans of the same Type, made, converted or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is
in effect, or (b) a Swingline Loan.


 


“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03.


 


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


 


“Capital Expenditures”
means, without duplication, any expenditures for any purchase or other
acquisition of any asset which would be classified as a fixed or capital asset
on a consolidated balance sheet of the Borrower and its Subsidiaries prepared
in accordance with GAAP, other than Capital Lease Obligations permitted under Section 6.01(e);
provided, that for purposes of Section 6.12 only, Capital
Expenditures shall include (without duplication) amounts paid for, or reimbursed
to, the Borrower or any Subsidiary by any developer, landlord or other third
party with respect to leasehold improvements at any retail location leased by
the Borrower or any Subsidiary that would otherwise be required to be
classified as a fixed or capital asset of the Borrower and its Subsidiaries if
paid for by the Borrower or its Subsidiaries.


 


3

















 


“Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.


 


“Change in Control”
means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof) of Equity
Interests representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Company; or (b) occupation
of a majority of the seats (other than vacant seats) on the board of directors
of the Company by Persons who were neither (i) nominated by the board of
directors of the Company nor (ii) appointed by directors so nominated.


 


“Change in Law”
means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or
in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the
Issuing Bank (or, for purposes of Section 2.14(b), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.


 


“Charges” has the
meaning set forth in Section 9.13.


 


“Class”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.


 


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


 


“Collateral” means
all property with respect to which any security interests have been granted
pursuant to any Security Document, including, without limitation, all Pledge
Agreement Collateral and all cash delivered as collateral pursuant to Section 2.05(j).


 


“Collateral Agent”
means the Administrative Agent acting as collateral agent for the Secured
Creditors pursuant to the Security Documents.


 


“Commitment”
means, with respect to each Lender, the commitment of such Lender to make
Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01B or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Commitment, as
applicable.  The initial aggregate amount
of the Lenders’ Commitments is $55,000,000.


 


4

















 


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings
correlative thereto.


 


“Corporate Card
Agreement” means that certain Bank of America Corporate Card Agreement
dated as of April 11, 2007 by and between FIA Card Services, N.A. and the
Borrower, together with any subsequent renewal or replacement of such agreement
with Bank of America or another entity reasonably satisfactory to the
Administrative Agent that provides similar financial arrangements to the
arrangements provided under the Bank of America Corporate Card Agreement, as
amended from time to time in accordance with the terms of this Agreement.


 


“Credit Card Program
Agreement” means (i) that certain Amended and Restated Private Label
Consumer Credit Card Program Agreement dated as of December 14, 2005 among
GE Money Bank, the Borrower and Select Comfort Retail Corporation (as amended
through the date hereof, the “Current GE Agreement”) and (ii) that
certain Help Card Agreement dated as of December 1, 2001 by and between
the Borrower and Dent-a-Med, Inc. d.b.a. The HELPcard (the “Current
Help Card Agreement”), in each case, together with any amendment,
supplement, extension or replacement thereof entered into in accordance with
the terms of this Agreement (including a replacement agreement with a new
provider of credit card services reasonably acceptable to the Administrative
Agent), the terms of which relating to the financial obligations of the
Borrower and its Subsidiaries are reasonably similar to those set forth in the
Current GE Agreement or the Current Help Card Agreement, as applicable.


 


“Credit Documents”
means this Agreement, each promissory note, if any, delivered pursuant to Section 2.09(e),
the Subsidiary Guaranty and each Security Document.


 


“Credit Party”
means any of Borrower or any Subsidiary Guarantor.


 


“Default” means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default.


 


“Defaulting Lender”
means any Lender, as determined by the Administrative Agent, that has (a) failed
to fund any portion of its Loans or participations in Letters of Credit or
Swingline Loans within three Business Days of the date required to be funded by
it hereunder, (b) notified the Borrower, the Administrative Agent, the
Issuing Bank, the Swingline Lender or any Lender in writing that it does not
intend to comply with any of its funding obligations under this Agreement or
has made a public statement to the effect that it does not intend to comply
with its funding obligations under this Agreement or under other agreements in
which it commits to extend credit, (c) failed, within three Business Days
after request by the Administrative Agent, to confirm that it will comply with
the terms of this Agreement relating to its obligations to fund prospective
Loans and participations in then outstanding Letters of Credit and Swingline
Loans, (d) otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within three
Business Days of the date when due, unless the subject of a good faith dispute,
or (e) (i) become or is insolvent or has a parent


 


5

















 


company that has
become or is insolvent or (ii) become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or custodian, appointed for
it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment or has a
parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or custodian appointed for it, or
has taken any action in furtherance of, or indicating its consent to, approval
of or acquiescence in any such proceeding or appointment.


 


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


 


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


 


“Domestic Subsidiary”
means each Subsidiary that is incorporated under the laws of the United States,
any State thereof or the District of Columbia.


 


“EBITDA” means,
for any applicable computation period, the Company’s and Subsidiaries’ Net
Income on a consolidated basis from continuing operations, plus, to the
extent included in the determination of Net Income, (a) income and
franchise taxes paid or accrued during such period, (b) Total Interest
Expense for such period, amortization and depreciation deducted in determining
Net Income for such period, (c) non-cash equity compensation expense
deducted in determining Net Income in such period, (d) non-cash impairment
expenses relating to store closures and/or remodelings during such period, (e) non-cash
charges or gains which are unusual, non-recurring or extraordinary during such
period and (f) fees paid by the Company for restructuring advisory
services and related legal and accounting services provided to the Company
and/or the Agent and the Lenders after the Effective Date.  For purposes of the computation of the
Leverage Ratio for any period during which an Acquired Entity or Business was
acquired, EBITDA shall be calculated on a pro forma basis as if such Acquired
Entity or Business had been acquired (and any related Indebtedness incurred) on
the first day of such computation period.


 


“Effective Date”
means the date on which the conditions specified in Section 4.01
are satisfied (or waived in accordance with Section 9.02).


 


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


 


“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or


 


6

















 


disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.


 


“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.


 


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


 


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


 


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


 


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


 


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


 


“Evergreen LC”
means a Letter of Credit which includes a provision which automatically extends
the expiry date thereof for a specified period unless, within some period of
time in advance of the then applicable expiry date thereof, the Administrative
Agent gives notice to the beneficiary to the effect that such Letter of Credit
will not be so extended.


 


“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the Issuing Bank
or any other recipient of any payment to be made by or on account of any


 


7

















 


obligation of the
Borrower hereunder, (a) franchise taxes or income taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
in which the Borrower is organized or in which its principal office is located
and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.18(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender’s failure to
comply with Section 2.16(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.16(a).


 


“Extraordinary
Receipts” means any cash received by or paid to or for the account of
Borrower or any Subsidiary not in the ordinary course of business (and not
consisting of proceeds of any permitted Debt or equity issuance or Asset
Disposition or amounts received in respect of foreign, United States, state or
local tax refunds), net of any out of pocket expenses incurred in obtaining
such payment.


 


“Federal Funds
Effective Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.


 


“Financial Officer”
means the chief financial officer, principal accounting officer, vice president-finance,
treasurer or controller of the Borrower.


 


“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is organized. 
For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.


 


“Foreign Subsidiary”
means any Subsidiary that is incorporated or organized under the laws of any
jurisdiction other than the United States of America, any State thereof or the
District of Columbia.


 


“GAAP” means
generally accepted accounting principles in the United States of America.


 


“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising


 


8

















 


executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.


 


“Guarantee” of or
by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account
party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.  The amount
of any Guarantee made by any guarantor shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made and (b) the maximum amount for which
such guarantor may be liable pursuant to the terms of the instrument embodying
such Guarantee, unless (in the case of a primary obligation that is not
Indebtedness) such primary obligation and the maximum amount for which such
guarantor may be liable are not stated or determinable, in which case the
amount of such Guarantee shall be such guarantor’s maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.


 


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


 


“Indebtedness” of
any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances and (k) all
Off-Balance Sheet Liabilities.  The
Indebtedness of any Person (x) shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is


 


9
















 


liable therefor as
a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor, and (y) shall exclude any liability or
obligations arising from a breach of a representation, warranty or other
contractual obligation (other than a Guarantee) arising under the Credit Card
Program Agreement.  For purposes of Section 6.01
and clause (f) of Article VII hereof only, all of the
obligations of the Borrower and its Subsidiaries under the Corporate Card
Agreement shall be deemed to constitute Indebtedness.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Interest Coverage
Ratio” means as of the end of each fiscal quarter of the Company, the ratio
of (a) EBITDA to (b) the Total Interest Expense, in each case for the
period of four fiscal quarters then ended, computed on a consolidated basis for
the Company and its Subsidiaries.


 


“Interest Election
Request” means a request by the Borrower to convert or continue a Revolving
Borrowing in accordance with Section 2.07.


 


“Interest Payment Date”
means (a) with respect to any ABR Loan (other than a Swingline Loan), the
last day of each March, June, September and December, (b) with
respect to any Eurodollar Borrowing, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.


 


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


 


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


 


“Issuing Bank”
means JPMorgan, in its capacity as the issuer of Letters of Credit hereunder,
and its successors in such capacity as provided in Section 2.05(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.


 


“JPMorgan” means
JPMorgan Chase Bank, National Association, a national banking association, and
its successors.


 


10

















 


“LC Disbursement”
means a payment made by the Issuing Bank pursuant to a Letter of Credit.


 


“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount
of all LC Disbursements that have not yet been reimbursed by or on behalf of
the Borrower at such time.  The LC
Exposure of any Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.


 


“Lenders” means
the Persons listed on Schedule 2.01 and any other Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.  Unless the context otherwise
requires, the term “Lenders” includes the Swingline Lender.


 


“Letter of Credit”
means each of the letters of credit listed on Schedule 1.01, which were
issued under the Existing Credit Agreement and upon the effectiveness of this
Agreement shall constitute “Letters of Credit” hereunder, and any letter of
credit issued on or after the Effective Date pursuant to this Agreement.


 


“Leverage Ratio”
means, as of the end of each fiscal quarter of the Company, the ratio of Total
Debt at such time to EBITDA for the period of four fiscal quarters of the
Borrower then ended, computed on a consolidated basis for the Borrower and its
Subsidiaries.


 


“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Reuters Screen LIBOR01 (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of
such Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period.  In the event that such
rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period.


 


“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.


 


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


 


11

















 


“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower and
the Subsidiaries taken as a whole, (b) the ability of the Credit Parties,
taken as a whole, to perform any of their obligations under the Credit
Documents or (c) the rights of or benefits available to the Lenders under
the Credit Documents.


 


“Material Indebtedness”
means Indebtedness (other than the Loans and Letters of Credit), or obligations
in respect of one or more Swap Agreements, of any one or more of the Borrower
and its Subsidiaries in an aggregate principal amount exceeding
$5,000,000.  For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the
Borrower or any Subsidiary in respect of any Swap Agreement at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
the Borrower or such Subsidiary would be required to pay if such Swap Agreement
were terminated at such time.


 


“Maturity Date”
means June 30, 2011.


 


“Maximum Rate” has
the meaning set forth in Section 9.15.


 


“Moody’s” means
Moody’s Investors Service, Inc.


 


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


 


“Net
Available Proceeds” means (a) with respect to any Asset Disposition, the aggregate
cash proceeds (including cash proceeds received pursuant to policies of
insurance and by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received) received by
the Borrower or any Subsidiary pursuant to such Asset Disposition net of (i) the
reasonable direct costs relating to such Asset Disposition (including sales
commissions and legal, accounting and investment banking fees, commissions and
expenses), (ii) any portion of such proceeds deposited in an escrow
account pursuant to the documentation relating to such Asset Disposition
(provided that such amounts shall be treated as Net Available Proceeds upon
their release from such escrow account to the Borrower or the applicable
Subsidiary), (iii) taxes paid or reasonably estimated by Borrower to be
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (iv) so long as
no Default has occurred and is continuing, any amount of insurance or
condemnation proceeds applied within 180 days to the restoration, repair or
replacement of property, and (v) amounts required to be applied to the
repayment of any Indebtedness secured by a Lien prior to the Lien of
Administrative Agent on the asset subject to such Asset Disposition or
otherwise required to be paid in connection with such Asset Disposition; (b) with
respect to any issuance of equity securities, the aggregate cash proceeds
received by the Borrower or any Subsidiary pursuant to such issuance, net of
the reasonable direct costs relating to such issuance (including reasonable
sales and underwriter’s commission and reasonable legal and accounting fees);
and (c) with respect to any Tax Refund or Extraordinary Receipt, the
aggregate cash proceeds received by the Borrower or any Subsidiary, net of the
reasonable direct costs incurred with respect thereto.


 


12

















 


“Net Income”
means, for any computation period, with respect to the Borrower on a consolidated
basis with its Subsidiaries (other than any Subsidiary which is restricted from
declaring or paying dividends or otherwise advancing funds to its parent
whether by contract or otherwise), cumulative net income earned during such
period (determined before the deduction of minority interests) as determined in
accordance with GAAP.


 


“Non-Extension Date”
means, with respect to any Evergreen LC, the date by which the Issuing Bank
must give notice to the beneficiary thereof of the non-renewal of such Evergreen
LC in order to avoid the automatic extension of the expiry date thereof.


 


“Obligations” means all now
existing and hereafter arising Indebtedness, obligations and other liabilities
of each of the Credit Parties to each of the Secured Creditors arising under
the Credit Documents, whether the same are fixed or contingent, due or to
become due, liquidated or unliquidated, including, without limitation, all
unpaid principal of and accrued and unpaid interest on the Loans, all LC
Exposure, all Swingline Exposure, all accrued and unpaid fees, and all
expenses, reimbursements, indemnities and other obligations under the Credit
Documents.


 


“Off-Balance Sheet
Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any liability under any so-called “synthetic lease”
arrangement or transaction entered into by such Person, or (c) any
obligation arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheets of such Person.


 


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


 


“Participant” has
the meaning set forth in Section 9.04.


 


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


 


“Permitted
Encumbrances” means:


 


(a)           Liens imposed by law for Taxes that
are not yet due or are being contested in compliance with Section 5.04;


 


(b)           carriers’, warehousemen’s, mechanics’,
landlords’, materialmen’s, repairmen’s and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations that are
not overdue by more than 30 days or are being contested in compliance with Section 5.04;


 


(c)           pledges and deposits made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;


 


13

















 


(d)           deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;


 


(e)           judgment Liens in respect of judgments
that do not constitute an Event of Default under clause (k) of Article VII;


 


(f)            easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Borrower or
any Subsidiary; and


 


(g)           Liens arising by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided, that (i) such
deposit account is not a dedicated cash collateral account and is not subject
to restrictions against access by the Borrower in excess of those set forth by
regulations promulgated by the Board and (ii) such deposit account is not
intended by the Borrower or any of its Subsidiaries to provide collateral to
the depository institution;


 


provided that the term “Permitted Encumbrances” shall not
include any Lien securing Indebtedness.


 


“Permitted
Investments” means:


 


(a)           direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America, in each case
maturing within 12 months from the date of acquisition thereof;


 


(b)           obligations
issued by any Federal agency of the United States of America, in each case
maturing within 12 months from the date of acquisition thereof;


 


(c)           municipal
investments and direct obligations of any State of the United States of
America, in each case with a rating of AA or higher by S&P and/or A1 or
higher by Moody’s and a maximum maturity of 12 months (for securities where the
interest rate is adjusted periodically (e.g. floating rate securities), the
reset date will be used to determine the maturity date);


 


(d)           investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a rating of A-1 from S&P
or P-1 from Moody’s;


 


(e)           investments
in certificates of deposit, banker’s acceptances and time deposits maturing
within 12 months from the date of acquisition thereof issued or guaranteed by
or placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;


 


14

















 


(f)            fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (e) above; and


 


(g)           money market funds that (i) comply with the criteria
set forth in Securities and Exchange Commission Rule 2a-7 under the
Investment Company Act of 1940, (ii) are rated AAA by S&P or Aaa by
Moody’s and (iii) have portfolio assets of at least $5,000,000,000.


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


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


 


“Pledge Agreements”
means, collectively, the Amended and Restated Pledge Agreements dated as of the
Effective Date made by the Borrower and certain of its Subsidiaries in favor of
the Collateral Agent for the benefit of the Secured Creditors, as the same may
be further amended, restated, modified or supplemented from time to time, and
each other document or instrument pursuant to which debt securities or Equity
Interests are pledged to the Collateral Agent for the benefit of the Secured
Creditors pursuant hereto.


 


“Pledge Agreement
Collateral” means all “Collateral” as defined in the Pledge Agreements.


 


“Prime Rate” means
the rate of interest per annum publicly announced from time to time by JPMorgan
as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.


 


“Register” has the
meaning set forth in Section 9.04.


 


“Related Agreements”
means the Sterling Purchase Agreement, the Settlement Agreement and the other
documents and instruments executed and delivered in connection therewith.


 


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


 


“Related Transactions”
means the transactions contemplated by the Sterling Purchase Agreement.


 


“Reports” means
reports prepared by the Administrative Agent or another Person showing the
results of appraisals, field examinations or audits pertaining to the Borrower’s
and


 


15

















 


its Subsidiaries’
assets from information furnished by or on behalf of the Borrower, after the
Administrative Agent has exercised its rights of inspection pursuant to this
Agreement.


 


“Required Equity
Issuance” means the issuance by the Borrower, in one or more transactions
which are consummated after the Effective Date, of equity securities which (a) together
with the equity securities issued on the Effective Date pursuant to the
Sterling Purchase Agreement, yield gross proceeds of not less than $25,000,000
and Net Available Proceeds of not less than $22,000,000, and (b) constitute
either (i) common stock, (ii) other equity securities or (iii) warrants,
options or similar rights to acquire common stock or other equity securities,
which in the case of clauses (ii) and (iii) contain terms and conditions
reasonably acceptable to the Administrative Agent and the Required Lenders; provided,
that if the aggregate Net Available Proceeds of the exercise of warrants,
options and similar rights to acquire common stock of the Borrower held by
employees, officers and directors of the Borrower and its Subsidiaries received
by the Borrower from the Effective Date through the date of determination
equals or exceeds $2,500,000, then the required levels of gross proceeds and
Net Available Proceeds specified above shall each be reduced dollar-for-dollar
by the aggregate Net Available Proceeds of such exercise.


 


“Required Lenders”
means, at any time, subject to Section 2.19(b), Lenders having
Revolving Credit Exposures unused Commitments representing more than 50% of the
sum of the total Revolving Credit Exposures and unused Commitments at such
time; provided, that if there are only two or three Lenders, the
Required Lenders shall mean at least two Lenders having Revolving Credit
Exposures and unused Commitments representing at least 662/3% of the sum
of the total Revolving Credit Exposures and unused Commitments at such time.


 


“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such Equity
Interests in the Borrower or any option, warrant or other right to acquire any
such Equity Interests in the Borrower.


 


“Revolving Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and its LC
Exposure and Swingline Exposure at such time.


 


“Revolving Loan”
means a Loan made pursuant to Section 2.01(b).


 


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


 


“Secured Creditors”
shall have the meaning assigned that term in the respective Security Documents.


 


“Secured Obligations”
means all Obligations and all Bank Products Obligations.


 


“Security Agreement”
means the Amended and Restated Security Agreement dated as of the Effective Date
made by the Borrower and certain of its Subsidiaries in favor of


 


16

















 


the Collateral
Agent for the benefit of the Secured Creditors, as the same may be further
amended, restated, modified or supplemented from time to time.


 


“Security Documents”
means and includes the Security Agreement, the Pledge Agreements, and each
other intellectual property security agreement or other document or instrument
pursuant to which collateral is granted to the Collateral Agent by Borrower or
a Subsidiary Guarantor for the benefit of the Secured Creditors to secure the
Obligations.


 


“Settlement Agreement”
means the Settlement, Mutual Termination and General Release, dated as of October 2,
2009, among the Borrower, Sterling SC Investor, LLC and Sterling Capital
Partners III, L.P.


 


“Sterling Purchase
Agreement” means that certain Securities Purchase Agreement, dated as of October 2,
2009, by and among Borrower and Sterling SC Investor, LLC, a Delaware limited
liability company.


 


“Statutory Reserve
Rate” means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Administrative Agent is subject with respect to the Adjusted
LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). 
Such reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D
or any comparable regulation.  The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.


 


“subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.


 


“Subsidiary” means
any subsidiary of the Borrower.


 


“Subsidiary Guarantor”
means each Subsidiary of the Borrower which is a party to the Subsidiary
Guaranty.


 


“Subsidiary Guaranty”
means the Amended and Restated Subsidiary Guaranty dated as of the date hereof
made by the Subsidiaries party thereto in favor of the Administrative


 


17

















 


Agent and the
Lenders, as the same may be further amended, restated, modified or supplemented
from time to time.  The Subsidiary
Guarantors initially party to the Subsidiary Guaranty are so designated on Schedule
3.12 hereto.


 


“Substantial Portion”
means, with respect to the property of the Borrower and its Subsidiaries,
property which (a) represents more than 10% of the consolidated assets of
the Borrower and its Subsidiaries as would be shown in the consolidated
financial statements of the Borrower and its Subsidiaries as at the beginning
of the twelve-month period ending with the last day of the month preceding the
month in which such determination is made, or (b) is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries as reflected in the financial statements referred
to in clause (a) above.


 


“Swap Agreement”
means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions; provided that no phantom stock or
similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of the Borrower
or the Subsidiaries shall be a Swap Agreement.


 


“Swap Obligations”
of a Person means any and all obligations of such Person, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all Swap Agreements, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction.


 


“Swingline Exposure”
means, at any time, the aggregate principal amount of all Swingline Loans
outstanding at such time.  The Swingline
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Swingline Exposure at such time.


 


“Swingline Lender”
means JPMorgan, in its capacity as lender of Swingline Loans hereunder.


 


“Swingline Loan”
means a Loan made pursuant to Section 2.04.


 


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


 


“Tax Refund” means
one or more federal or state income tax refunds.


 


“Total Debt”
means, all Indebtedness of the Borrower and its Subsidiaries, on a consolidated
basis, calculated in accordance with GAAP plus, without duplication, (a) all
Off-Balance Sheet Liabilities, (b) the face amount of all outstanding
letters of credit in respect of which the Borrower or any Subsidiary has any
actual or contingent reimbursement obligation and (c) the principal amount
of all Guarantees of the Borrower and its Subsidiaries.


 


18
















 


“Total Interest
Expense” means, for any period, total interest expense deducted in the
computation of Net Income for such period in accordance with GAAP (including
that attributable to Capital Lease Obligations and interest paid under
synthetic leases) of the Company and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Company and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs of
rate hedging in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP).


 


“Transactions”
means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans, the use of the proceeds thereof and the
issuance of Letters of Credit hereunder.


 


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


 


“UCC” means the
Uniform Commercial Code as from time to time in effect in the relevant
jurisdiction.


 


“UK Security Trustee”
means the Administrative Agent acting as trustee pursuant to any of the
Security Documents governed by English law.


 


“Wholly-Owned
Subsidiary” of a Person means (a) any subsidiary all of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited liability
company, association, joint venture or similar business organization 100% of
the ownership interests having ordinary voting power of which shall at the time
be so owned or controlled (other than in the case of Foreign Subsidiaries,
director’s qualifying shares and/or other nominal amounts of shares required to
be held by Persons other than the Borrower and its Subsidiaries under
applicable law).


 


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


 


SECTION 1.02. 
Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or
by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g.,
a “Eurodollar Revolving Loan”). 
Borrowings also may be classified and referred to by Class (e.g.,
a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or
by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).


 


SECTION 1.03. 
Terms Generally.  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without



 


19

















 


limitation”.  The word “will”
shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.


 


SECTION 1.04. 
Accounting Terms; GAAP. 
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.


 


ARTICLE II


 


The Credits


 


SECTION 2.01. 
Commitments.  (a) The
Lenders have heretofore made revolving loans and issued letters of credit to
Borrower under the Existing Credit Agreement, and as of the date of this
Agreement, immediately prior to the effectiveness hereof, (i) there are
outstanding (A) revolving loans with an aggregate principal amount of
$28,400,000 (collectively, the “Existing Revolving Loans”), and (B) letters
of credit (as set forth on Schedule 1.01 hereto) with an aggregate face
amount of $4,500,000, and (ii) the aggregate revolving loan commitments
are as set forth on Schedule 2.01A hereto.  On the Effective Date, the existing revolving
loan commitments shall be reduced by $25,000,000 and the remaining amount
thereof shall be allocated to the Lenders as set forth on Schedule 2.01B
and become Commitments hereunder in an aggregate amount of $55,000,000.


 


(b)        Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans denominated in Dollars
to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment, or (b) the
sum of the total Revolving Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and 


 


20

















 


reborrow Revolving Loans.  The parties acknowledge and agree that the
Existing Revolving Loans of each Lender outstanding immediately prior to the
effectiveness hereof shall continue as “Revolving Loans” hereunder of the same
Type as such Existing Revolving Loans immediately prior to the effectiveness
hereof.


 


SECTION 2.02. 
Loans and Borrowings.  (a) Each
Revolving Loan shall be made as part of a Borrowing consisting of Revolving
Loans made by the Lenders ratably in accordance with their respective
Commitments.  The failure of any Lender
to make any Loan required to be made by it shall not relieve any other Lender
of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s
failure to make Revolving Loans as required.


 


(b)   Subject to Section 2.14, each
Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.


 


(c)   At the commencement of each Interest Period
for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $1,000,000.  At the time that each ABR Borrowing is made,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $1,000,000; provided that an ABR Revolving
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount
that is an integral multiple of $100,000 and not less than $100,000.  Borrowings of more than one Type and Class may
be outstanding at the same time; provided that there shall not at any time be
more than a total of 10 Interest Periods outstanding.


 


(d)   Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.


 


(e)   Notwithstanding any other provision of this
Agreement, each Lender at its option may make any ABR Loan or Eurodollar Loan
by causing any domestic or foreign office, branch or Affiliate of such Lender
(an “Applicable Lending Installation”) to make such Loan that has been
designated by such Lender to the Administrative Agent.  All terms of this Agreement shall apply to
any such Applicable Lending Installation of such Lender and the Loans and any Notes
issued hereunder shall be deemed held by each Lender for the benefit of any
such Applicable Lending Installation. 
Each Lender may, by written notice to the Administrative Agent and the
Borrower, designate replacement or additional Applicable Lending Installations
through which Loans will be made by it and for whose account Loan payments are
to be made.


 


SECTION 2.03. 
Requests for Revolving Borrowings.  To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time,
three Business Days 


 


21

















 


before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the date
of the proposed Borrowing.  Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy or electronic mail to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower.  Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:


 


(i)            the aggregate amount of the requested Borrowing;


 


(ii)           the date of such Borrowing, which shall be a Business Day;


 


(iii)          whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;


 


(iv)          in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by clause
(a) of the definition of the term “Interest Period”;  and


 


(v)           the location and number of the Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of Section 2.07.


 


If no election as to the Type of such Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any such requested Eurodollar Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.


 


SECTION 2.04. 
Swingline Loans.  (a) Subject
to the terms and conditions set forth herein, the Swingline Lender agrees to
make Swingline Loans to the Borrower from time to time during the Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $5,000,000, or (ii) the sum of the total Revolving Credit
Exposures exceeding the total Commitments; provided that the Swingline Lender
shall not be required to make a Swingline Loan to refinance an outstanding
Swingline Loan.  Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Swingline Loans.


 


(b)   To request a Swingline Loan, the Borrower
shall notify the Administrative Agent of such request by telephone (confirmed
by telecopy or electronic mail), not later than 12:00 noon, New York City time,
on the day of a proposed Swingline Loan. 
Each such notice shall be irrevocable and shall specify (i) the
requested date (which shall be a Business Day), and (ii) the amount of the
requested Swingline Loan.  The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower.  The
Swingline Lender shall make each Swingline Loan available to the Borrower by
means of a credit to the general deposit account of the Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e),
by 


 


22

















 


remittance to the Issuing Bank) by 3:00 p.m., New
York City time, on the requested date of such Swingline Loan.


 


(c)   The Swingline Lender may by written notice
given to the Administrative Agent not later than 10:00 a.m., New York City
time, on any Business Day require the Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding.  Such notice shall specify the aggregate
amount of Swingline Loans in which Lenders will participate.  Promptly upon receipt of such notice, the
Administrative Agent will give notice thereof to each Lender, specifying in
such notice such Lender’s Applicable Percentage of such Swingline Loan or
Loans.  Each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender’s
Applicable Percentage of such Swingline Loan or Loans.  Each Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Lender shall comply
with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.06
with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis  mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. 
The Administrative Agent shall notify the Borrower of any participations
in any Swingline Loan acquired pursuant to this paragraph, and thereafter
payments in respect of such Swingline Loan shall be made to the Administrative
Agent and not to the Swingline Lender. 
Any amounts received by the Swingline Lender from the Borrower (or other
party on behalf of the Borrower) in respect of a Swingline Loan after receipt
by the Swingline Lender of the proceeds of a sale of participations therein
shall be promptly remitted to the Administrative Agent; any such amounts
received by the Administrative Agent shall be promptly remitted by the Administrative
Agent to the Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear; provided
that any such payment so remitted shall be repaid to the Swingline Lender or to
the Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason.  The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Borrower of any default
in the payment thereof.


 


SECTION 2.05. 
Letters of Credit.  (a) General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit denominated
in Dollars for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period.  In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Borrower to, or entered into by the Borrower
with, the Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.


 


(b)   Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions.  To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by 


 


23

















 


electronic communication, if arrangements for doing so
have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension, but in any case notice given not later than
11:00 a.m., New York City time, three Business Days prior to such date
shall be deemed to be sufficient) a notice requesting the issuance of a Letter
of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day), the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) of this Section), the amount
of such Letter of Credit, the name and address of the beneficiary thereof, and
such other information as shall be necessary to prepare, amend, renew or extend
such Letter of Credit.  If requested by
the Issuing Bank, the Borrower also shall submit a letter of credit application
on the Issuing Bank’s standard form in connection with any request for a Letter
of Credit.  A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) the
sum of the total Revolving Credit Exposures shall not exceed the total
Commitments.


 


(c)   Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and (ii) the
date that is five Business Days prior to the Maturity Date; provided
that with the prior consent of the Administrative Agent and the Issuing Bank,
such Issuing Bank may issue or extend an Evergreen LC with a later expiration
date so long as on the Maturity Date, whether or not an Event of Default
exists, the Borrower shall deposit in an account with the Administrative Agent,
in the name of the Administrative Agent and for the benefit of the Lenders, an
amount in cash equal to 105% of the undrawn amount of all outstanding Evergreen
LCs with an expiration date later than five Business Days prior to the Maturity
Date.  If the Borrower is required to
provide an amount of cash collateral hereunder as a result of an approaching
Maturity Date, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three (3) Business Days after all Letters
of Credit have expired and all related reimbursement obligations satisfied in
full.


 


(d)   Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit.  In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or reduction
or termination of the 


 


24

















 


Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.


 


(e)   Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt; provided that (i) if such LC Disbursement is not less than
$1,000,000, the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment
be financed with an ABR Revolving Borrowing and (ii) if such LC
Disbursement is not less than $100,000, the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with Section 2.04
that such payment be financed with a Swingline Loan, in each case, in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan, as applicable.  If the Borrower fails to make such payment
when due, such amount shall bear interest at the Alternate Base Rate and the
Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and
such Lender’s Applicable Percentage thereof. 
Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply,
mutatis  mutandis, to the payment obligations of the Lenders), and
the Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Lenders. 
Promptly following receipt by the Administrative Agent of any payment
from the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Lenders have
made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this
paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the
funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.


 


(f)    Obligations Absolute.  The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank
under a Letter of Credit against presentation of a draft or other document that
does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance 


 


25

















 


whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. 
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination.  In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.


 


(g)   Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  The
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy or electronic mail) of such demand for payment
and whether the Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such
notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.


 


(h)   Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.12(c) shall
apply.  Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph (e) of
this Section to reimburse the Issuing Bank shall be for the account of
such Lender to the extent of such payment.


 


26

















 


(i)    Replacement of the Issuing Bank.  The Issuing Bank may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced
Issuing Bank and the successor Issuing Bank. 
The Administrative Agent shall notify the Lenders of any such
replacement of the Issuing Bank.  At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank under
this Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.


 


(j)    Cash Collateralization.  If any Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to 105% of the LC Exposure as of such date
plus any accrued and unpaid interest thereon as set forth in clause (h) above;
provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of
Article VII.  Such deposit
shall be held by the Administrative Agent as collateral for the payment and
performance of the Secured Obligations. 
The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account.  Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in
such account.  Moneys in such account
shall be applied by the Administrative Agent to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other Secured Obligations in
accordance with the terms of this Agreement. 
If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.


 


(k)   Evergreen Letters of Credit.  The Lenders agree that, while an Evergreen LC
is outstanding and prior to the Maturity Date, at the option of the Borrower
and upon the written request of the Borrower received by the Issuing Bank (with
a copy to the Administrative Agent) no more than fifty (50) days and at least
twenty (20) days (or such shorter time as the Issuing Bank may agree in a
particular instance) prior to the effective Non-Extension Date thereof, the
Issuing Bank shall be entitled to authorize or permit the automatic extension
of such Evergreen LC.  Each such request
from the Borrower for extension of an Evergreen LC shall be in writing 


 


27

















 


and shall specify: (i) the Evergreen LC to be
extended; (ii) the proposed effective date of extension of the Evergreen
LC (which shall be a Business Day except to the extent it is the expiry date of
the applicable Evergreen LC and no action of the Issuing Bank is required on
such date); (iii) the revised expiry date of the Evergreen LC (which,
subject to Section 2.05(c), shall not be later than the earlier of (A) the
date one year after the then effective expiry date of such Evergreen LC and (B) the
date that is five Business Days prior to the Maturity Date); and (iv) such
other matters as the Issuing Bank may reasonably require.  The Issuing Bank shall be under no obligation
to so extend or permit the extension of any Evergreen LC if the Issuing Bank
would have no obligation as of the proposed effective date of extension to
issue or amend such Evergreen LC in its extended form under the terms of this
Agreement (including Section 4.02). 
If as of the date twenty (20) days prior to the Non-Extension Date of any
Evergreen LC the Issuing Bank would be entitled to authorize the extension of
such Evergreen LC in accordance with this Section 2.05(k) upon
the request of the Borrower but the Issuing Bank shall not have received a
request from the Borrower to cause or permit such extension or a written
direction from the Borrower to not cause or permit such extension, Borrower
shall be deemed to have delivered a request to cause the extension of such
Letter of Credit.  In addition, upon the
direction of the Borrower for any Evergreen LC, the Issuing Bank shall give
such notice as is necessary to prevent an automatic extension of the expiry
date of such Evergreen LC; provided, however, that in no event
shall the Issuing Bank have liability to any party thereto for its failure to
give such notice if written direction to give such notice is received by the
Issuing Bank less than twenty (20) days prior to the Non-Extension Date for
such Evergreen LC.  The Issuing Bank will
provide to the Administrative Agent and the Borrower a copy of any notice of
non-extension given to an Evergreen LC beneficiary pursuant to this Section.


 


SECTION 2.06. 
Funding of Borrowings.  (a) Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 noon, New York
City time, to the account of the Administrative Agent most recently designated
by it for such purpose by notice to the Lenders; provided that Swingline
Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request; provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall
be remitted by the Administrative Agent to the Issuing Bank.


 


(b)   Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount.  In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry


 


28
















 


rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to such Borrowing; provided,
that any payment made by the Borrower shall be made without prejudice to any
claim the Borrower may have against the Lender failing to make such payment to
the Administrative Agent.  If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.


 


SECTION 2.07. 
Interest Elections.  (a) Each
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert
such Borrowing to a different Type or to continue such Borrowing and, in the
case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section.  The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.  This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.


 


(b)   To make an election pursuant to this Section,
the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section 2.03
if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy or electronic mail to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.


 


(c)   Each telephonic and written Interest Election
Request shall specify the following information in compliance with Section 2.02:


 


(i)            the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses (iii) and
(iv) below shall be specified for each resulting Borrowing);


 


(ii)           the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;


 


(iii)          whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and


 


(iv)          if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.


 


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


 


29

















 


(d)   Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender’s portion of each resulting Borrowing.


 


(e)   If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. 
Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing, and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.


 


SECTION 2.08. 
Termination and Reduction of Commitments.  (a) Unless previously reduced to such
amount or any lesser amount pursuant to the following paragraph or Section 2.10,
the aggregate Commitments shall be automatically reduced to the amounts set
forth below on the corresponding dates set forth below:


 


	
  Date of Reduction

  	
   

  	
  New Amount of Aggregate

  Commitments

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  35,000,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  20,000,000

  	
   

  



 


Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments. 
Unless previously terminated, the Commitments shall terminate on the
Maturity Date.


 


(b)   The Borrower may at any time terminate, or
from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is an integral multiple
of $1,000,000 and not less than $1,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.09,
the sum of the Revolving Credit Exposures would exceed the total Commitments.


 


(c)   The Borrower shall notify the Administrative
Agent of any election to terminate or reduce the Commitments under paragraph (b) of
this Section at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof.  Promptly following receipt of
any notice, the Administrative Agent shall advise the Lenders of the contents
thereof.  Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to 


 


30

















 


the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.


 


SECTION 2.09. 
Repayment of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally
promises to pay (i) to the Administrative Agent for the account of each
applicable Lender the then unpaid principal amount of each of the Revolving
Loans on the Maturity Date, and (ii) to the Swingline Lender the then
unpaid principal amount of each of the Swingline Loans on the earlier of the
Maturity Date and the first date after such Swingline Loan is made that is the
15th or last day of a calendar month and is at least two Business Days after
such Swingline Loan is made; provided that on each date that a Revolving
Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.


 


(b)   Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.


 


(c)   The Administrative Agent shall maintain
accounts in which it shall record (i) the amount of each Loan made
hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent hereunder for the
account of the Lenders and each Lender’s share thereof.


 


(d)   The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.


 


(e)   Any Lender may request that Loans made by it
be evidenced by a promissory note.  In
such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender) and its registered assigns and in a form approved by
the Administrative Agent.  Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order
of the payee named therein (or if such promissory note is a registered note, to
such payee and its registered assigns).


 


(f)    If at any time the aggregate Revolving
Credit Exposure of the Lenders exceeds the aggregate Commitments of the Lenders,
whether as a result of a voluntary or mandatory Commitment reduction or
otherwise, the Borrower shall immediately prepay the Revolving Loans in the
amount of such excess.  To the extent
that, after the prepayment of all Revolving Loans an excess of the Revolving
Credit Exposure over the aggregate Commitments 


 


31

















 


still exists, the Borrower shall promptly cash
collateralize the Letters of Credit in the manner described in Section 2.05(j) in
an amount sufficient to eliminate such excess.


 


SECTION 2.10. 
Prepayment of Loans.  (a) The
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section.


 


(b)   The Borrower shall notify the Administrative
Agent (and, in the case of prepayment of a Swingline Loan, the Swingline
Lender) by telephone (confirmed by telecopy or electronic mail) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days
before the date of prepayment or (ii) in the case of prepayment of an ABR
Borrowing not later than 12:00 noon, New York City time, on the date of
prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.09.  Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof.  Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in
the case of an advance of a Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.


 


(c)   The Borrower shall make mandatory prepayments
of the Loans in amounts equal to the following:


 


(i)            concurrently with the receipt thereof by the Borrower or
any Subsidiary, an amount equal to 100% of the aggregate Net Available Proceeds
in excess of $1,000,000 realized upon any Asset Disposition or in the aggregate
for all Asset Dispositions in any fiscal year of the Borrower;


 


 (ii)          concurrently
with the receipt thereof by the Borrower or any Subsidiary, in an amount equal
to 100% of the Net Available Proceeds realized upon (A) the sale by the
Borrower of any equity or debt securities or by such Subsidiary of any debt
securities (other than (a) the proceeds realized by the Borrower from the
sale of securities pursuant to the Sterling Purchase Agreement and (b) the
proceeds of any sales of equity securities in an aggregate amount not to exceed
$2,500,000 in any fiscal year (1) pursuant to the exercise of any stock
options issued to any employee, officer or director of the Borrower as
compensation or (2) under any employee stock purchase plan of the
Borrower) or (B) any other incurrence of Indebtedness by the Borrower or
any Subsidiary (other than Indebtedness permitted to be incurred pursuant to Section 6.01(c),
(d), (e), (f) or (g)); provided, that (x) the
first $15,000,000 of securities included within the definition of Required
Equity Issuance which are issued during the period commencing on the Effective
Date and ending on March 31, 2010 (measured by reference to gross
proceeds) shall not trigger a Commitment reduction pursuant to this paragraph (ii) to
an amount less than $40,000,000, if issued prior to February 1, 2010, or
$35,000,000, if issued prior to 


 


32

















 


April 1, 2010, (y) the exception set forth
in clause (b) hereof shall not apply to the extent that any such proceeds
are received on or prior to March 31, 2010 and are applied in accordance
with the proviso to the definition of Required Equity Issuance and any amounts
so applied shall also be applied to reduce the basket set forth in such clause (b) in
respect of the fiscal year in which they are so applied, and (z) the
required prepayment percentage shall be reduced from (1) 100% to 0% with
respect to proceeds of any type of securities included within the definition of
Required Equity Issuance yielding gross proceeds of between $15,000,000 and
$20,000,000 in the aggregate after the Effective Date, and (2) subject to
clause (x) above, 100% to 50% with respect to proceeds of any type of
securities included within the definition of Required Equity Issuance yielding
gross proceeds of $20,000,000 or more in the aggregate after the Effective
Date; and


 


(iii)          concurrently with the receipt thereof by the Borrower or
any Subsidiary, an amount equal to (A) 75% of the Net Available Proceeds
realized from any Tax Refunds relating to federal income taxes, (B) 75% of
the Net Available Proceeds realized from any Tax Refunds relating to state
income taxes in excess of $250,000 in the aggregate in any fiscal year and (C) 75%
of the Net Available Proceeds realized from any Extraordinary Receipts in excess
of $250,000 in the aggregate in any fiscal year.


 


Except as otherwise provided in the proviso to Section 2.10(c)(ii),
all mandatory prepayments made pursuant to this Section 2.10(c) shall
result in a corresponding permanent reduction of the Commitments in the amount
of such mandatory prepayment; provided, that the Commitments shall only
be reduced in increments of $500,000 and any amounts not so applied in any
fiscal year shall not be carried over to the succeeding fiscal year.


 


SECTION 2.11. 
Fees.  (a) The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender (subject to Section 2.19 with respect to any Defaulting
Lender) a facility fee, which shall accrue at the rate of 1.00% per annum on
the daily amount of the Commitment of such Lender (whether used or unused)
during the period from and including the Effective Date to but excluding the
date on which such Commitment terminates; provided that, if such Lender
continues to have any Revolving Credit Exposure after its Commitment
terminates, then such facility fee shall continue to accrue on the daily amount
of such Lender’s Revolving Credit Exposure from and including the date on which
its Commitment terminates to but excluding the date on which such Lender ceases
to have any Revolving Credit Exposure. 
Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on
which the Commitments terminate, commencing on the first such date to occur
after the date hereof; provided that any facility fees accruing after
the date on which the Commitments terminate shall be payable on demand.  All facility fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).


 


(b)   The Borrower agrees to pay to the
Administrative Agent for the account of each Lender (subject to Section 2.19
with respect to any Defaulting Lender) a quarterly fee at the rate set forth
below on the amount of the Commitment (whether used or unused) of such Lender
on the corresponding date set forth below:


 


33

















 


	
  Quarterly Fee Payment
  Date

  	
   

  	
  Rate

  	
   

  
	
  12/31/09

  	
   

  	
  0.50

  	
  %

  
	
  3/31/10

  	
   

  	
  0.75

  	
  %

  
	
  6/30/10

  	
   

  	
  1.00

  	
  %

  
	
  9/30/10

  	
   

  	
  1.25

  	
  %

  
	
  12/31/10

  	
   

  	
  1.50

  	
  %

  
	
  3/31/11

  	
   

  	
  1.75

  	
  %

  
	
  6/30/11 and (if unpaid at maturity) the last day of
  each calendar quarter thereafter

  	
   

  	
  2.00

  	
  %

  



 


(c)   The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender (subject to Section 2.19
with respect to any Defaulting Lender) a participation fee with respect to its
participations in Letters of Credit as to which the Borrower is the obligor,
which shall accrue at the same Applicable Rate used to determine the interest
rate applicable to Eurodollar Loans on the average daily amount of such Lender’s
LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates
and the date on which such Lender ceases to have any LC Exposure, and (ii) to
the Issuing Bank a fronting fee, which shall accrue at the rate or rates per
annum separately agreed upon between the Borrower and the Issuing Bank on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Bank’s standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder.  Participation
fees and fronting fees accrued through and including the last day of March,
June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date
to occur after the Effective Date; provided that all such fees shall be
payable on the date on which the Commitments terminate and any such fees
accruing after the date on which the Commitments terminate shall be payable on
demand.  Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand.  All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).


 


(d)   The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.


 


(e)   All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent (or
to the Issuing Bank, in the case of fees payable to it) for distribution, in
the case of facility fees, the fees payable pursuant to Section 2.11(b) and
participation fees, to the Lenders.  Fees
paid shall not be refundable under any circumstances.


 


34

















 


SECTION 2.12. 
Interest.  (a) The
Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear
interest at the Alternate Base Rate plus the Applicable Rate.


 


(b)   The Loans comprising each Eurodollar
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Rate.


 


(c)   Notwithstanding the foregoing, if any Event
of Default has occurred and is continuing, then the Loans shall bear interest,
after as well as before judgment, at a rate per annum equal to (i) in the
case of principal of any Loan, 2% plus the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount outstanding hereunder, 2% plus the rate applicable
to such amount as provided hereunder.


 


(d)   Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion
of any Eurodollar Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.


 


(e)   All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.


 


SECTION 2.13. 
Alternate Rate of Interest. 
If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:


 


(a)           the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period;
or


 


(b)           the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;


 


then the Administrative Agent shall give notice
thereof to the Borrower and the Lenders by telephone, electronic mail or
telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that
requests the conversion of any 


 


35

















 


Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing denominated in such currency shall be ineffective and (ii) such
Borrowing shall be converted to or continued as on the last day of the Interest
Period applicable thereto an ABR Borrowing. 
The Administrative Agent shall promptly advise the Borrower of any such
alternative interest rate.


 


SECTION 2.14. 
Increased Costs.  (a) If
any Change in Law shall:


 


(i)            impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or


 


(ii)           impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;


 


and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.


 


(b)   If any Lender or the Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or the Issuing Bank’s
capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any
such reduction suffered.


 


(c)   A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.


 


(d)   Failure or delay on the part of any Lender or
the Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or the 


 


36

















 


Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.


 


SECTION 2.15. 
Break Funding Payments.  In
the event of (a) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.10(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.18, then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
Eurodollar market.  A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. 
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.


 


SECTION 2.16. 
Taxes.  (a) Any and
all payments by or on account of any obligation of the Borrower hereunder shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.


 


(b)   In addition, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.


 


37
















 


(c)   The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of
a Lender or the Issuing Bank, shall be conclusive absent manifest error.


 


(d)   As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.


 


(e)   Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.


 


(f)    If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section 2.16,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.16 with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent
or such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Administrative Agent or such Lender, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to the Borrower or any other Person.


 


SECTION 2.17. 
Payments Generally; Pro Rata Treatment; Sharing of Set-offs.  (a) The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) prior to 2:00 p.m., New York
City time, on the date when due, in immediately available funds, without set
off or counterclaim.  Any amounts 


 


38

















 


received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.14,
2.15, 2.16 and 9.03 shall be made directly to the Persons
entitled thereto.  The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt
thereof.  If any payment hereunder shall
be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder of (i) principal
or interest in respect of any Loan shall be made in the currency in which such
Loan is denominated, (ii) reimbursement obligations shall be made in the
currency in which the Letter of Credit in respect of which such reimbursement
obligation exists is denominated or (iii) any other amount due hereunder
or under another Loan Document shall be made in Dollars.  Any payment required to be made by the
Administrative Agent hereunder shall be deemed to have been made by the time required
if the Administrative Agent shall at or before such time, have taken the
necessary steps to make such payment in accordance with the regulations or
operating procedures of the clearing or settlement system used by the
Administrative Agent to make such payment.


 


(b)   Any proceeds of Collateral received by the
Administrative Agent (i) not constituting either (A) a specific
payment of principal, interest, fees or other sum payable under the Credit
Documents or (B) a mandatory prepayment (which shall be applied in
accordance with Section 2.10(c)), or (ii) after an Event of
Default has occurred and is continuing and the Administrative Agent so elects
or the Required Lenders so direct, shall be applied ratably first, to pay any fees,
indemnities, or expense reimbursements, including amounts then due to the
Administrative Agent and the Issuing Bank from the Borrower (including in
connection with Bank Products Obligations (other than Swap Obligations)), second,
to pay any fees or expense reimbursements then due to the Lenders from the
Borrower (including in connection with Bank Products Obligations (other than
Swap Obligations)), third, to pay interest then due and payable on the
Loans and any finance charges then due and payable in respect of Bank Products
Obligations (other than Swap Obligations), ratably among the parties
entitled thereto in accordance with the amounts of interest and finance charges
then due to such parties, fourth, to prepay principal on the Loans and unreimbursed LC
Disbursements, and to the payment of any amounts owing with respect to Bank
Products Obligations (other than Swap Obligations), ratably among the
parties entitled thereto in accordance with the amounts of principal,
unreimbursed LC Disbursements and Bank Products Obligations (other than Swap
Obligations) then due to such parties, fifth, to pay an amount to the
Administrative Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, to be held as cash
collateral for such Obligations, sixth, to the payment of any Swap
Obligations, ratably among the parties entitled thereto in accordance with the
amount of Swap Obligations then due to such parties, and seventh, to the
payment of any other Secured Obligation due to the Administrative Agent or any
Lender by the Borrower.  Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
Borrower, or unless an Event of Default is in existence, neither the
Administrative Agent nor any Lender shall apply any payment which it receives
to any Eurodollar Loan of a Class, except (a) on the expiration date of
the Interest 


 


39

















 


Period applicable to any such Eurodollar Loan or (b) in
the event, and only to the extent, that there are no outstanding ABR Loans of
the same Class and, in any event, the Borrower shall pay the break funding
payment required in accordance with Section 2.15.  The Administrative Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Secured
Obligations.


 


(c)   If any Lender shall, by exercising any right
of set off or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Revolving Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of
a greater proportion of the aggregate amount of its Revolving Loans and
participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans and participations in LC Disbursements
and Swingline Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans and participations in LC Disbursements and
Swingline Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered,  such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by
a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.


 


(d)   Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.


 


(e)   If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.04(c), 2.05(d) or
(e), 2.06(b), 2.17(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary provision
hereof), (i) apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to 


 


40

















 


satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid and/or (ii) hold any
such amounts in a segregated account as cash collateral for, and application
to, any future funding obligations of such Lender under such Sections; in the
case of each of (i) and (ii) above, in any order as determined by the
Administrative Agent in its discretion.


 


SECTION 2.18. 
Mitigation Obligations; Replacement of Lenders.  (a) If any Lender requests compensation
under Section 2.14, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.16 or 2.20, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.14, 2.16
or 2.20, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender.  Each
Lender also agrees to use its commercially reasonable efforts to make such
designation or assignment prior to the occurrence of any circumstance described
in Section 2.14, 2.16 or 2.20 in the event it has
knowledge of such circumstance prior to its occurrence or as soon thereafter as
it becomes aware thereof.  The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender
in connection with any such designation or assignment.


 


(b)   If any Lender requests compensation under Section 2.14,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 2.16
or 2.20, or if any Lender becomes a Defaulting Lender, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and
if a Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.14
or payments required to be made pursuant to Section 2.16 or 2.20,
such assignment will result in a reduction in such compensation or
payments.  A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.


 


SECTION 2.19. 
Defaulting Lenders.


 


Notwithstanding any
provision of this Agreement to the contrary, if any Lender becomes a Defaulting
Lender, then the following provisions shall apply for so long as such Lender is
a Defaulting Lender:


 


41

















 


(a)   fees pursuant to Section 2.11(a) and
(b) shall cease to accrue on the unused portion of the Commitment or
the total Commitment of such Defaulting Lender, as applicable;


 


(b)   neither the Commitment nor the Revolving
Credit Exposure of such Defaulting Lender shall be included in determining
whether all Lenders or the Required Lenders have taken or may take any action
hereunder (including any consent to any amendment or waiver pursuant to Section 9.02);
provided that any waiver, amendment or modification requiring the
consent of all Lenders or each affected Lender which affects such Defaulting
Lender differently than other affected Lenders shall require the consent of
such Defaulting Lender;


 


(c)   if any Swingline Exposure or LC Exposure
exists at the time a Lender becomes a Defaulting Lender then:


 


(i)            all or any part of such Swingline Exposure and LC
Exposure shall be reallocated among the non-Defaulting Lenders in accordance
with their respective Applicable Percentages but only to the extent (x) the
sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such
Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the
total of all non-Defaulting Lenders’ Commitments and (y) the conditions
set forth in Section 4.01 are satisfied at such time; and


 


(ii)           if the reallocation described in clause (i) above
cannot, or can only partially, be effected, the Borrower shall within one
Business Day following notice by the Administrative Agent (x) first,
prepay such Swingline Exposure and (y) second, cash collateralize such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation
pursuant to clause (i) above) in accordance with the procedures set forth
in Section 2.05(j) for so long as such LC Exposure is
outstanding;


 


(iii)          if the Borrower cash collateralizes any portion of such
Defaulting Lender’s LC Exposure pursuant to this Section 2.19(c),
the Borrower shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 2.11(c) with respect to such Defaulting
Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is
cash collateralized;


 


(iv)          if the LC Exposure of the non-Defaulting Lenders is
reallocated pursuant to this Section 2.19(c), then the fees payable
to the Lenders pursuant to Section 2.11(a), (b) and (c) shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or


 


(v)           if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to this Section 2.19(c),
then, without prejudice to any rights or remedies of the Issuing Bank or any
Lender hereunder, all fees that otherwise would have been payable pursuant to Section 2.11(b) and
(c) to such Defaulting Lender (solely with respect to the portion
of such Defaulting Lender’s Commitment that was utilized by such LC Exposure)
and letter of credit fees payable under Section 2.11(c) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until such LC Exposure is cash collateralized and/or reallocated; and


 


42

















 


(d)   so long as any Lender is a Defaulting Lender,
the Swingline Lender shall not be required to fund any Swingline Loan and the
Issuing Bank shall not be required to issue, amend or increase any Letter of
Credit, unless it is satisfied that the related exposure will be 100% covered
by the Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 2.19(c), and
participating interests in any such newly issued or increased Letter of Credit
or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in
a manner consistent with Section 2.19(c)(i) (and Defaulting
Lenders shall not participate therein).


 


In the event that the
Administrative Agent, the Borrower, the Issuing Bank and the Swingline Lender
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the Swingline Exposure and
LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such
Lender’s Commitment and on such date such Lender shall purchase at par such of
the Revolving Loans of the other Lenders (other than Swingline Loans) as the
Administrative Agent shall determine may be necessary in order for such Lender
to hold such Loans in accordance with its Applicable Percentage.


 


ARTICLE III


 


Representations
and Warranties


 


The Borrower represents
and warrants to the Administrative Agent and the Lenders that:


 


SECTION 3.01. 
Organization; Powers.  The
Borrower and each of its Subsidiaries is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority to carry on its business as now conducted
and, except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required.


 


SECTION 3.02. 
Authorization; Enforceability. 
The Transactions are within the Borrower’s corporate powers and have
been duly authorized by all necessary corporate and, if required, stockholder
action.  This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.


 


SECTION 3.03. 
Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are
in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, agreement
or other instrument binding upon the Borrower or any of its Subsidiaries or its
assets, or give rise 


 


43

















 


to a right thereunder to require any payment to be made by the Borrower
or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.


 


SECTION 3.04. 
Financial Condition; No Material Adverse Change.  (a) The Borrower has heretofore
furnished to the Lenders its consolidated balance sheet and statements of
income, stockholders equity and cash flows (i) as of and for the fiscal
year ended January 3, 2009, reported on by KPMG LLP, independent public
accountants, and (ii) as of and for the fiscal quarter and the portion of
the fiscal year ended October 3, 2009, certified by its chief financial
officer.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.


 


(b)   Since January 3, 2009, there has been no
material adverse change in the business, assets, operations or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.


 


SECTION 3.05. 
Properties.  (a) Each
of the Borrower and its Subsidiaries has good title to, or valid leasehold
interests in, all its real and personal property material to its business,
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes.


 


(b)   Each of the Borrower and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents
and other intellectual property material to its business, and the use thereof
by the Borrower and its Subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.


 


SECTION 3.06. 
Litigation and Environmental Matters.  (a) There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that
involve this Agreement or the Transactions.


 


(b)   Except for the Disclosed Matters and except
with respect to any other matters that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.


 


44

















 


(c)   Since the date of this Agreement, there has
been no change in the status of the Disclosed Matters that, individually or in
the aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.


 


SECTION 3.07. 
Compliance with Laws and Agreements.  The Borrower and each of its Subsidiaries is
in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.  No
Default has occurred and is continuing.


 


SECTION 3.08. 
Investment and Holding Company Status.  Neither the Borrower nor any of its
Subsidiaries is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 2005.


 


SECTION 3.09. 
Taxes.  The Borrower and
each of its Subsidiaries has timely filed or caused to be filed all Tax returns
and reports required to have been filed and has paid or caused to be paid all
Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower
or such Subsidiary, as applicable, has set aside on its books adequate reserves
or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.


 


SECTION 3.10. 
ERISA.  No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed by
more than $5,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $10,000,000
the fair market value of the assets of all such underfunded Plans.


 


SECTION 3.11. 
Disclosure.  The Borrower
has disclosed to the Agent all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.  None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected or estimated financial information, the
Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.


 


45

















 


SECTION 3.12. 
Subsidiaries.  As of the
Effective Date, the Borrower has no Subsidiaries other than those Subsidiaries
listed on Schedule 3.12.  Schedule
3.12 correctly sets forth, as of the Effective Date, (i) the
percentage ownership (direct or indirect) of the Borrower in each class of
capital stock or other equity of its Subsidiaries and also identifies the
direct owner thereof, and (ii) the jurisdiction of organization of each
such Subsidiary.


 


SECTION 3.13. 
Regulation U.  Margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve
System) constitutes less than 25% of the value of those assets of the Borrower
and its Subsidiaries which are subject to any limitation on sale, pledge, or
other restriction hereunder.  Neither the
making of any Loan or issuance of any Letters of Credit hereunder, the use of
the proceeds thereof, nor any other aspect of the financing of the Acquisition,
will violate or be inconsistent with the provisions of Regulation T, Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System.


 


SECTION 3.14. 
Security Documents.  Except
as permitted under the Security Documents, the security interests created in
favor of the Collateral Agent, as pledgee, for the benefit of the Secured
Creditors, under each Security Document constitute perfected security interests
in the Collateral described in such Security Document under the governing law
of the Agreement, subject to no security interests of any other Person.  Except as permitted under the Security
Documents, no filings or recordings (other than filings or recordings that have
been made or continuation statements that are required to be subsequently made)
are required in order to perfect (or maintain the perfection or priority of)
the security interests created in the Collateral under any Security Document.


 


SECTION 3.15. 
Material Agreements. 
Neither the Borrower nor any Subsidiary is a party to any agreement or
instrument or subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any Subsidiary is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (a) any agreement to which it is a
party, which default could reasonably be expected to have a Material Adverse
Effect or (b) any Material Indebtedness agreement.


 


SECTION 3.16. 
Labor Relations.  Neither the Borrower nor any of
its Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a Material Adverse Effect. 
There is (a) no significant unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of
the Borrower, threatened against any of them before the National Labor
Relations Board or any similar Governmental Authority in any jurisdiction, and
no significant grievance or significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against the Borrower
or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them, (b) no significant strike, labor dispute,
slowdown or stoppage is pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries and (c) to the best knowledge of the
Borrower, no question concerning union representation exists with respect to
the employees of the Borrower or any of its Subsidiaries, except (with respect
to any matter specified in clause (a), (b) or (c) above, either
individually or in the aggregate) such as could not reasonably be expected to
have a Material Adverse Effect.


 


46
















 


SECTION 3.17. 
Related Agreements.  The
Borrower has furnished the Administrative Agent with a true and correct copy of
the Related Agreements pursuant hereto. 
The Borrower and, to the Borrower’s knowledge, each other party to the
Related Agreements, has duly taken all necessary organizational action to
authorize the execution, delivery and performance of the Related Agreements and
the consummation of transactions contemplated thereby.  As of the Effective Date, the Related
Transactions have been consummated (or are being consummated substantially
contemporaneously with the Revolving Loan to be made on the Effective Date) in
accordance with the terms of the Related Agreements and the Settlement
Agreement has been executed and delivered by all of the parties thereto, and
the Borrower has paid the amounts due from it thereunder.  Except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the consummation of the Related Transactions
pursuant to the terms of the Related Agreements complies with all applicable
legal requirements, and all necessary governmental, regulatory, creditor,
shareholder, partner and other material consents, approvals and exemptions
required to be obtained by a Credit Party and, to the Borrower’s knowledge,
each other party to the Related Agreements in connection with the Related
Transactions will be, prior to consummation of the Related Transactions, duly
obtained and will be in full force and effect. 
As of the Effective Date, all applicable waiting periods with respect to
the Related Transactions will have expired without any action being taken by
any competent governmental authority which restrains, prevents or imposes
material adverse conditions upon the consummation of the Related
Transactions.  Except where the failure
to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, the execution and delivery of the Related
Agreements did not, and the consummation of the Related Transactions will not,
violate any statute or regulation of the United States (including any
securities law) or of any state or other applicable jurisdiction, or any order,
judgment or decree of any court or governmental body binding on the Borrower or
any other Credit Party or, to the Borrower’s knowledge, any other party to the
Related Agreements, or result in a breach of, or constitute a default under,
any material agreement, indenture, instrument or other document, or any judgment,
order or decree, to which the Borrower or any other Credit Party is a party or
by which the Borrower or any other Credit Party is bound or, to the Borrower’s
knowledge, to which any other party to the Related Agreements is a party or by
which any such party is bound.


 


ARTICLE IV


 


Conditions


 


SECTION 4.01.  Effective Date.  Neither this Agreement nor the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.02):


 


(a)   The Administrative Agent (or its counsel)
shall have received from each party to any Credit Document either (i) a
counterpart of each Credit Document to which it is a party signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy or electronic mail transmission of a signed
signature page of such Credit Document) that such party has signed a
counterpart of.


 


47

















 


(b)   The Administrative Agent shall have received
a favorable written opinion (addressed to the Administrative Agent and the
Lenders and dated the Effective Date) of Oppenheimer Wolff & Donnelly
LLP, counsel for the Borrower and the Subsidiary Guarantors, covering such
matters relating to the Borrower, the Subsidiary Guarantors, the Credit
Documents or the Transactions as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsel to
deliver such opinion.


 


(c)   The Administrative Agent shall have received
such documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
the Borrower and the Subsidiary Guarantors, the authorization of the
Transactions and any other legal matters relating to the Borrower, the
Subsidiary Guarantors, the Credit Documents or the Transactions, all in form
and substance reasonably satisfactory to the Administrative Agent and its
counsel.


 


(d)   The Administrative Agent shall have received
a certificate, dated the Effective Date and signed by the President, a Vice
President or a Financial Officer of the Borrower, confirming compliance with
the conditions set forth in paragraphs (a) and (b) of Section 4.02.


 


(e)   The Administrative Agent shall have received
evidence that the Related Transactions have been consummated in accordance with
the terms of the Sterling Purchase Agreement, yielding gross proceeds at
closing to the Borrower of at least $10,000,000.


 


(f)    The Administrative Agent shall have received
all fees and other amounts due and payable on or prior to the Effective Date,
including, (i) a closing fee in the amount of $825,000 payable to the
Administrative Agent for the ratable benefit of the Lenders, and (ii) to
the extent invoiced, reimbursement or payment of all out of pocket expenses
required to be reimbursed or paid by the Borrower hereunder.


 


The Administrative Agent shall notify the Borrower and
the Lenders of the Effective Date, and such notice shall be conclusive and
binding.


 


SECTION 4.02. 
Each Credit Event.  The
obligation of each Lender to make a Loan on the occasion of any Borrowing
(other than any Borrowing the proceeds of which are used exclusively to repay a
Borrowing of the same amount), and of the Issuing Bank to issue, amend, renew
or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:


 


(a)           The representations and warranties of the Borrower set forth
in this Agreement shall be true and correct in all material respects on and as
of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable (except any such
representation or warranty that expressly relates to or is made expressly as of
a specific earlier date, in which case such representation or warranty shall be
true and correct in all material respects with respect to or as of such
specific earlier date).


 


(b)           At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.


 


48

















 


Each Borrowing and each issuance, amendment, renewal
or extension of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section.


 


ARTICLE V


 


Affirmative
Covenants


 


Until the Commitments
have expired or been terminated and the principal of and interest on each Loan
and all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:


 


SECTION 5.01. 
Financial Statements; Ratings Change and Other Information.  The Borrower will furnish to the
Administrative Agent for distribution to each Lender:


 


(a)           within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by KPMG LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;


 


(b)           within (i) 45 days after the end of each fiscal
quarter of each fiscal year of the Borrower, its consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes and (ii) as
soon as available, but not later than 30 days after the end of each fiscal
month of the Borrower (other than any fiscal month-end that corresponds to any
of the fiscal quarter-ends of each fiscal year) commencing with the fiscal
month in which the Effective Date occurs, its consolidated balance sheet and
related statements of operations and cash flows as of the end of and for such
fiscal month and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with 


 


49

















 


GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes;


 


(c)           concurrently with any delivery of financial statements
under clause (a) or (b)(i) above, a certificate of a Financial
Officer of the Borrower (A) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (B) setting
forth reasonably detailed calculations demonstrating compliance with Sections
6.09, 6.10, 6.11 and 6.12 and (C) stating whether any change in GAAP
or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;


 


(d)           promptly after Moody’s or S&P shall have announced the
issuance of a corporate credit rating for the Borrower or a change in the
Borrower’s corporate credit rating, written notice of such rating issuance or
change;


 


(e)           at the reasonable request of Administrative Agent, by
12:00 Noon (New York City time) of Wednesday of each week, furnish to the
Administrative Agent consolidated cash flow projections in form reasonably acceptable
to the Administrative Agent showing projected receipts and disbursements and
such other information reasonably requested by the Administrative Agent, which
forecasts shall be based on the Borrower’s good faith estimates of business
conditions, known material expenditures and receipts and typical intramonth
cash movements;


 


(f)            concurrently with any delivery of financial statements
under clause (a) above, a copy of the plan and forecast (including a
projected consolidated balance sheet, income statement and funds flow
statement) of the Borrower for each quarter of the upcoming two fiscal years in
form reasonably satisfactory to the Administrative Agent; and


 


(g)           promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.


 


SECTION 5.02. 
Notices of Material Events. 
The Borrower will furnish to the Administrative Agent for distribution
to each Lender written notice of the following promptly after learning thereof:


 


(a)           the occurrence of any Default;


 


(b)           the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Borrower or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;


 


50

















 


(c)           the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $5,000,000; and


 


(d)           any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.


 


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


 


SECTION 5.03. 
Existence; Conduct of Business. 
The Borrower will, and will cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges
and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.


 


SECTION 5.04. 
Payment of Obligations. 
The Borrower will, and will cause each of its Subsidiaries to, pay its
obligations, including Tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.


 


SECTION 5.05. 
Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its
Subsidiaries to, (a) keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.


 


SECTION 5.06. 
Books and Records; Inspection Rights.  The Borrower will, and will cause each
Subsidiary to, (i) keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities and (ii) permit any representatives
designated by the Administrative Agent or any Lender (including employees of
the Administrative Agent or any Lender, or any consultants, accountants,
lawyers and appraisers retained by the Administrative Agent or any Lender),
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, including environmental
assessment reports and Phase I or Phase II studies, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.  The Borrower and the Subsidiaries acknowledge
that the Administrative Agent or any Lender, as the case may be, after
exercising its rights of inspection, may prepare certain Reports pertaining to
the Borrower’s and its Subsidiaries’ assets for internal use by the
Administrative Agent or such Lender. The Borrower will permit the
Administrative Agent or any Lender to conduct field audit 


 


51

















 


examinations of the Borrower’s and its Subsidiaries’ assets,
liabilities, books and records once per calendar year; provided, that
the Borrower will permit the Administrative Agent or any Lender to conduct such
examinations at any time and with any reasonable frequency after the occurrence
and during the continuation of an Event of Default.  In connection with such field audits, the
Borrower will permit the Administrative Agent or any Lender to make test
verifications of the Accounts with the Loan Party’s customers.


 


SECTION 5.07. 
Compliance with Laws.  The
Borrower will, and will cause each of its Subsidiaries to, comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.


 


SECTION 5.08. 
Use of Proceeds and Letters of Credit.  The proceeds of the Loans will be used only
for the working capital and other general corporate purposes of the Borrower
and its Subsidiaries (including the payment of costs, fees and expenses related
to the Related Transactions).  No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X. 
Letters of Credit will be issued only to support general corporate
purposes of the Borrower and its Subsidiaries.


 


SECTION 5.09. 
Further Assurances.  (a) Effective
upon any Person which is not, as of the date hereof, a Subsidiary becoming a
Subsidiary, the Borrower shall cause such Person to, within five (5) Business
Days, execute and deliver to the Administrative Agent for the benefit of the
Lenders a joinder to the Subsidiary Guaranty. 
The Borrower shall promptly notify the Administrative Agent at any time
at which any Person becomes a Subsidiary.


 


(b)   The Borrower will, and will cause each of its
Subsidiaries to, at the expense of the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports, landlord
waivers, leasehold mortgages, control agreements and other assurances or
instruments and take such further steps relating to the Collateral covered by
any of the Security Documents as the Collateral Agent may reasonably require to
assure the creation and continuation of perfected security interests in the
Collateral and as are generally consistent with the terms of this Agreement and
the Security Documents.  Furthermore, the
Borrower will, and will cause its Subsidiaries to, deliver to the Collateral
Agent such opinions of counsel and other related documents as may be reasonably
requested by the Administrative Agent to assure compliance with this Section 5.09.


 


(c)   The Borrower agrees that each action required
by clause (b) of this Section 5.09 shall be completed as soon
as reasonably practical, but in no event later than 30 days (or such greater
number of days as the Collateral Agent may agree) after such action is
requested to be taken by the Collateral Agent, the Administrative Agent or the
Required Lenders.


 


(d)   If, following a change in the relevant
sections of the Code or the regulations, rules, rulings, notices or other
official pronouncements issued or promulgated thereunder, the Borrower does not
within 30 days after a request from the Administrative Agent deliver evidence,
in form and substance reasonably satisfactory to the Administrative Agent
(which 


 


52

















 


evidence may be in the form of an opinion of counsel),
with respect to any Foreign Subsidiary of the Borrower which has not already
had all of its stock pledged pursuant to the Pledge Agreements that (i) a
pledge of 66-2/3% or more of the total combined voting power of all classes of
capital stock of such Foreign Subsidiary entitled to vote, (ii) the
entering into by such Foreign Subsidiary of a guaranty in substantially the
form of the Subsidiary Guaranty and (iii) the granting by such Foreign
Subsidiary of security interests in all of its Collateral, in any such case
could reasonably be expected to cause (I) any undistributed earnings of
such Foreign Subsidiary or its parent as determined for Federal income tax
purposes to be treated as a deemed dividend to such Foreign Subsidiary’s direct
or indirect United States parent for Federal income tax purposes or (II) other
Federal income tax consequences to the Borrower and its Subsidiaries having an
adverse financial consequence to the Borrower or any Subsidiary in any material
respect, then in the case of a failure to deliver the evidence described in
clause (i) above, that portion of such Foreign Subsidiary’s outstanding
capital stock not theretofore pledged pursuant to the Pledge Agreements shall
be promptly pledged to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Pledge Agreements (or another pledge agreement in
substantially similar form, if needed), and in the case of a failure to deliver
the evidence described in clause (ii) above, such Foreign Subsidiary shall
promptly execute and deliver the Subsidiary Guaranty (or another guaranty in
substantially similar form, if needed), guaranteeing the obligations of the
Borrower under the Credit Documents and under any Bank Products Agreement
entered into with a Secured Creditor or any Affiliate thereof, in each case  to the extent that the entering into of a Pledge Agreement
or Subsidiary Guaranty is permitted by the laws of the respective foreign
jurisdiction and with all documents delivered pursuant to this Section 5.09(d) to
be in form and substance reasonably satisfactory to the Administrative
Agent.  In addition, following the
occurrence and continuation of Default, at the request of the Administrative
Agent, the Borrower and its Subsidiaries shall be required to take any or all
of the steps outlined above without regard to any of the consequences described
above.


 


SECTION 5.10. 
Appraisals.  At any time
that the Administrative Agent requests, the Borrower will provide the
Administrative Agent with appraisals or updates thereof of its Inventory,
equipment, real property, intellectual property and other intangible assets
from an appraiser selected and engaged by the Administrative Agent, and
prepared on a basis satisfactory to the Administrative Agent, such appraisals
and updates to include, without limitation, information required by applicable
law and regulations; provided, however, that if no Event of Default has
occurred and is continuing, only one such appraisal of each type of property
specified above per calendar year shall be at the sole expense of the Borrower;
provided, further, that after the occurrence and during the
continuance of an Event of Default, any additional appraisals requested by the
Administrative Agent shall be at the Borrower’s sole expense.


 


ARTICLE VI


 


Negative Covenants


 


Until the Commitments
have expired or terminated and the principal of and interest on each Loan and
all fees payable hereunder have been paid in full and all Letters of Credit
have expired or terminated and all LC Disbursements shall have been reimbursed,
the Borrower covenants and agrees with the Lenders that:


 


53

















 


SECTION 6.01. 
Indebtedness.  The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or
permit to exist any Indebtedness, except:


 


(a)           Indebtedness created hereunder and under the other Credit
Documents;


 


(b)           Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;


 


(c)           (i) Indebtedness of the Borrower to any Subsidiary
and of any Domestic Subsidiary to the Borrower or any other Subsidiary and (ii) Indebtedness
of any Foreign Subsidiary to the Borrower or any Domestic Subsidiary in an
outstanding principal amount, which together with any Indebtedness incurred
pursuant to clause (d)(iv) below, shall not at any time exceed $2,000,000
in the aggregate;


 


(d)           Guarantees by (i) the Borrower of Indebtedness of any
Domestic Subsidiary, (ii) any Domestic Subsidiary of Indebtedness of the
Borrower or any other Domestic Subsidiary, (iii) any Foreign Subsidiary of
Indebtedness of any other Subsidiary and (iv) the Borrower or any Domestic
Subsidiary of Indebtedness of any Foreign Subsidiary in an outstanding
principal amount, which together with any Indebtedness incurred pursuant to
clause (c)(ii) above, shall not at any time exceed $2,000,000 in the
aggregate;


 


(e)           (i) Indebtedness of the Borrower or any Subsidiary
incurred to finance the acquisition, construction or improvement of any fixed
or capital assets, including Capital Lease Obligations, so long as such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof
(including, in each case, the acquisition of such assets through the purchase
of the capital stock or other equity interests of a Person holding such
assets), and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof; provided,
that the aggregate principal amount of all such Indebtedness incurred pursuant
to clauses (i) and (ii) shall not exceed $5,000,000 at any time
outstanding;


 


(f)            Indebtedness of the Borrower or any Subsidiary as an
account party in respect of trade letters of credit incurred in the ordinary
course of business;


 


(g)           Obligations arising under the Corporate Card Agreement; provided
that (i) the Borrower shall repay any outstanding balance thereunder in
accordance with the terms of such agreement and (ii) the aggregate
principal amount outstanding under the Corporate Card Agreement shall not
exceed $4,000,000;


 


(h)           other Indebtedness; provided that (i) such
incurrence would not cause a Default, as determined in respect of Section 6.09
on a pro forma basis after giving effect thereto, (ii) all such
Indebtedness shall be subordinated to the Indebtedness arising under this
Agreement and the other Credit Documents and shall have subordination and other



 


54

















 


terms acceptable to the Administrative Agent and (iii) any
such Indebtedness shall be unsecured;


 


(i)            Swap Obligations in respect of Swap Agreements permitted
under Section 6.05 hereof; and


 


(j)            other unsecured Indebtedness in an aggregate principal
amount not exceeding $2,500,000 at any time outstanding.


 


SECTION 6.02. 
Liens.  The Borrower will
not, and will not permit any Subsidiary to, create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except:


 


(a)           Permitted Encumbrances;


 


(b)           any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;


 


(c)           any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary; provided that (i) such
Lien is not created in contemplation of or in connection with such acquisition,
(ii) such Lien shall not apply to any other property or assets of the
Borrower or any Subsidiary and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;


 


(d)           Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary (together with proceeds thereof); provided
that (i) such security interests secure Indebtedness permitted by Section 6.01(e),
(ii) such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby
does not exceed 90% of the cost of acquiring, constructing or improving such
fixed or capital assets and (iv) such security interests shall not apply
to any other property or assets of the Borrower or any Subsidiary;


 


(e)           Liens securing Indebtedness owed by any Foreign Subsidiary
to the Borrower or any Subsidiary Guarantor;


 


(f)            Liens created pursuant to the Security Documents; and


 


(g)           other Liens securing Indebtedness at no time exceeding
$500,000 in aggregate principal amount.


 


55
















 


SECTION 6.03. 
Fundamental Changes.  (a) 
The Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (i) any Subsidiary may merge into the Borrower
in a transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge with and into another Subsidiary (and, if any such
Subsidiary is a Subsidiary Guarantor, the survivor of such merger shall be a
Subsidiary Guarantor), provided that any such merger involving a Subsidiary
that is now a wholly owned Subsidiary shall not be permitted unless otherwise
permitted under Section 6.04, and (iii) any Subsidiary which (x) does
not have a material amount of assets and (b) is not conducting any
material business, may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders.


 


(b)   The Borrower will not, nor will it permit any
Subsidiary to, make any Asset Disposition of the type described in clause (a) of
Asset Disposition except for (i) Asset Dispositions among the Borrower and
one or more Domestic Subsidiaries or Subsidiary Guarantors or among any
Domestic Subsidiaries or Subsidiary Guarantors, (ii) Asset Dispositions by
Foreign Subsidiaries to the Borrower or any Subsidiary, (iii) Asset
Dispositions expressly permitted by Sections 6.02, 6.04, 6.06 or 6.07,
and (iv) other Asset Dispositions of property that, together with all
other property of the Borrower and its Subsidiaries previously leased, sold or
disposed of in Asset Dispositions made pursuant to this Section 6.03(b)(iv) during
the twelve-month period ending with the month in which any such lease, sale or
other disposition occurs, do not constitute a Substantial Portion of the
property of the Borrower and its Subsidiaries; provided, that for
calculations which include any period prior to the Effective Date, sales of
property in connection with store closures and the termination of the Borrower’s
SAP software program shall be excluded.


 


(c)   The Borrower will not, and will not permit
any of its Subsidiaries to, engage to any material extent in any business other
than businesses of the type conducted by the Borrower and its Subsidiaries on
the date of execution of this Agreement and businesses reasonably related
thereto.


 


SECTION 6.04. 
Investments, Loans, Advances, Guarantees and Acquisitions.  The Borrower will not, and will not permit
any of its Subsidiaries to, purchase, hold or acquire (including pursuant to
any merger with any Person that was not a Wholly-Owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit, except:


 


(a)   Permitted Investments;


 


(b)   (i) investments by the Borrower in the
capital stock of its Domestic Subsidiaries and (ii) investments by the
Borrower in the capital stock of its Foreign Subsidiaries which shall not at
any time exceed $1,000,000 in the aggregate;


 


56

















 


(c)   Indebtedness permitted pursuant to Section 6.01(c) and
Section 6.01(d);


 


(d)   Guarantees constituting Indebtedness
permitted by Section 6.01;


 


(e)   the Subsidiary Guarantee;


 


(f)    investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers and
customers and in good faith settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;


 


(g)   loans and advancements to officers and
employees of the Borrower and its Subsidiaries for moving, relocation and
travel expenses and other similar expenditures, in each case in the ordinary
course of business, in an aggregate amount not to exceed $500,000 at any time
(determined without regard to any write-downs or write-offs of such loans and
advances);


 


(h)   investments evidenced by Swap Agreements
entered into pursuant to Section 6.05;


 


(i)    investments consisting of credit sale
contracts generated by retail customers of the Borrower or any of its
Subsidiaries in the ordinary course of business in connection with the Credit
Card Program Agreement; and


 


(j)    so long as no Default exists or would occur
after giving effect thereto, other investments not otherwise permitted by
clauses (a) through (i) above in an amount not to exceed $1,000,000
in the aggregate.


 


SECTION 6.05. 
Swap Agreements.  The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any Swap Agreement, except (a) Swap Agreements entered into to hedge or
mitigate risks to which the Borrower or any Subsidiary has actual exposure
(other than those in respect of Equity Interests of the Borrower or any of its
Subsidiaries), and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of the Borrower or any
Subsidiary.


 


SECTION 6.06. 
Restricted Payments.  The
Borrower will not, and will not permit any of its Subsidiaries to, declare, pay
or make, or agree to declare, pay or make, directly or indirectly, any
Restricted Payment, except (a) the Borrower may declare and pay dividends
with respect to its Equity Interests payable solely in additional shares of its
common stock, (b) Subsidiaries may declare and pay dividends ratably with
respect to their Equity Interests, and (c) the Borrower may make
Restricted Payments pursuant to and in accordance with stock plans or other
benefit plans for management or employees of the Borrower and its Subsidiaries,
so long as no Event of Default has occurred and is continuing either before or
after giving effect to any such payment and the aggregate of such payments does
not exceed $2,000,000 in any Fiscal Year.


 


SECTION 6.07. 
Transactions with Affiliates. 
The Borrower will not, and will not permit any of its Subsidiaries to,
sell, lease or otherwise transfer any property or assets to, or 


 


57

















 


purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions
between or among the Borrower and its Wholly-Owned Subsidiaries not involving
any other Affiliate, (c) transactions permitted under Sections 6.01(c),
6.02(e) and 6.04(f) and (g) and (d) the
making of any Restricted Payment permitted by Section 6.06.


 


SECTION 6.08. 
Restrictive Agreements. 
The Borrower will not, and will not permit any of its Subsidiaries to,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or permit to exist
any Lien upon any of its property or assets, or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares
of its capital stock or to make or repay loans or advances to the Borrower or
any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and
other contracts restricting the assignment thereof or limiting Liens securing
indebtedness incurred for purposes of financing the acquired assets to which
such Liens attach.


 


SECTION 6.09. 
Maximum Leverage Ratio. 
The Borrower will not permit the Leverage Ratio as of the last day of
any fiscal quarter to be greater than 2.00 to 1.00, commencing with the fiscal
quarter in which the Effective Date occurs.


 


SECTION 6.10. 
EBITDA.  The Borrower will
not permit EBITDA as of the last day of each fiscal quarter set forth below,
for the three fiscal month period ending on such date, to be less than the
applicable amount set forth below:


 


	
  Period

  	
   

  	
  EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The fiscal quarter ending closest to
  December 31, 2009

  	
   

  	
  $

  	
  4,369,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The fiscal quarter
  ending closest to March 31, 2010

  	
   

  	
  $

  	
  4,332,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  fiscal quarter ending closest to June 30, 2010

  	
   

  	
  $

  	
  448,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  fiscal quarter ending closest to September 30 , 2010

  	
   

  	
  $

  	
  7,038,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  fiscal quarter ending closest to December 31, 2010

  	
   

  	
  $

  	
  4,929,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  fiscal quarter ending closest to March 31, 2011

  	
   

  	
  $

  	
  5,978,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  fiscal quarter ending closest to June 30, 2011

  	
   

  	
  $

  	
  2,665,000

  	
   

  



 


58

















 


SECTION 6.11. 
Interest Coverage.  The Borrower will not permit its
Interest Coverage Ratio as of the last day of any fiscal quarter to be less
than 1.25:1.0, commencing with the fiscal quarter in which the Effective Date
occurs.


 


SECTION 6.12. 
Capital Expenditures.  The
Borrower will not, nor will it permit any Subsidiary to, expend, or be
committed to expend, Capital Expenditures during any Fiscal Year in the
aggregate for the Borrower and its Subsidiaries in excess of the applicable amount
set forth below for such Fiscal Year:


 


	
  Fiscal Year

  	
   

  	
  Maximum Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year 2009

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year 2010

  	
   

  	
  $

  	
  17,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year 2011

  	
   

  	
  $

  	
  18,000,000

  	
   

  



 


SECTION 6.13. 
Fiscal Year.  The Borrower
shall not, nor shall it permit any Subsidiary to, change its fiscal year to end
on any date other than the Saturday closest to December 31 of each year.


 


SECTION 6.14. 
Restriction of Amendments to Certain Documents.  The Borrower will not, nor will it permit any
Subsidiary to, amend or otherwise modify, or waive any rights under (a) any
provisions of any Indebtedness incurred pursuant to Section 6.01(h),
(b) the Sterling Purchase Agreement, (c) the Settlement Agreement, (d) the
Credit Card Program Agreement, or (e) the Corporate Card Agreement, other
than immaterial amendments, modifications and waivers (i) not adverse to
the interests of the Administrative Agent or any Lender or (ii) required
by applicable statute or regulation.


 


SECTION 6.15. 
Cash Usage.  The Company
shall not (i) other than with respect to the Secured Obligations, pay, or
permit any Subsidiary to pay, any principal, interest or other sums on any of
their Indebtedness or other obligations not at the time due and payable, or (ii) at
the close of business on any Business Day when any Revolving Loans are
outstanding, maintain aggregate cash and cash equivalents for itself and its
Subsidiaries in an amount greater than $5,000,000.


 


59

















 


ARTICLE VII


 


Events of Default


 


SECTION 7.01. 
The occurrence of any of the following events shall constitute an “Event
of Default” hereunder:


 


(a)           the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement or any cash
collateral amount due pursuant to Section 2.05(j) when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;


 


(b)           the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement, when and as the same shall become
due and payable, and such failure shall continue unremedied for a period of
five days;


 


(c)           any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any amendment or modification hereof or waiver hereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect in
any material respect when made or deemed made;


 


(d)           the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.01, 5.02, 5.03
(with respect to the Borrower’s existence), 5.06, 5.08, 5.09,
or 5.10 or in Article VI;


 


(e)           the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such
failure shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);


 


(f)            the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest or otherwise and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable (after accounting for any period of grace available
before an event of default would occur thereunder);


 


(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not apply to
secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;


 


60

















 


(h)           an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any Subsidiary or
its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;


 


(i)            the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;


 


(j)            the Borrower or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they become due;


 


(k)           one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to
enforce any such judgment;


 


(l)            an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding (i) $1,000,000
in any year or (ii) $5,000,000 for all periods;


 


(m)          a Change in Control shall occur;


 


(n)           except as otherwise provided in Section 6.03(a),
the Subsidiary Guaranty or any provisions thereof shall cease to be in full
force or effect as to any Subsidiary Guarantor, or any Subsidiary Guarantor or
any Person acting for or on behalf of any Subsidiary Guarantor shall deny or
disaffirm such Subsidiary Guarantor’s obligations under the Subsidiary
Guaranty;


 


(o)           any Security Document shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby or the Borrower or any 


 


61

















 


Subsidiary shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue beyond the period of grace, if any, specifically applicable thereto
pursuant to the terms of such Security Document; or


 


(p)           the Required Equity Issuance shall not have been completed
by March 31, 2010;


 


then, and in every such event (other than an event
with respect to the Borrower described in clause (h) or (i) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times:  (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in case of any event with respect to any of the Borrower described in
clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.


 


ARTICLE VIII


 


The Administrative Agent and the Collateral Agent


 


SECTION 8.01. 
Administrative Agent.


 


Each of the Lenders and
the Issuing Bank hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof, together with such actions and powers as are reasonably
incidental thereto.


 


The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.


 


The Administrative Agent
shall not have any duties or obligations except those expressly set forth
herein.  Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except 


 


62

















 


discretionary
rights and powers expressly contemplated hereby that the Administrative Agent
is required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity.  The Administrative
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct.  The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by
the Borrower or a Lender, and the Administrative Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.


 


The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. 
The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.


 


The Administrative Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.


 


Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying
the Lenders, the Issuing Bank and the Borrower. 
Upon any such resignation, the Required Lenders shall have the right,
subject, at any time at which no Default is outstanding, to the prior written
consent of the Borrower (which shall not be unreasonably withheld or delayed),
to appoint a successor.  If no successor
shall have been so appointed by the Required Lenders and shall have 


 


63

















 


accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of
the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank.  Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.  After the Administrative Agent’s resignation
hereunder, the provisions of this Article and Section 9.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as
Administrative Agent.


 


Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information
as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.


 


The title “Syndication
Agent” is purely honorific, and the Person designated as the “Syndication Agent”
shall not have any duties or responsibilities in such capacity.


 


SECTION 8.02. 
Collateral Agent.  (a) Each
of the Lenders and the Issuing Bank hereby irrevocably appoints the Collateral
Agent as its agent and authorizes the Collateral Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Collateral Agent
by the terms hereof or of the other Credit Documents, together with such
actions and powers as are reasonably incidental thereto.  All provisions of this Article VIII
and of Section 9.03 relating to the Administrative Agent shall be
equally applicable to the Collateral Agent mutatis mutandis.


 


(b)   Without limiting the foregoing, if any
Collateral is sold in a transaction permitted hereunder, such Collateral shall
be sold free and clear of the Liens created by the Security Documents and the
Administrative Agent and the Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.


 


SECTION 8.03. 
Administrative Agent as UK Security Trustee.  (a) In this Agreement, any rights and
remedies exercisable by, any documents to be delivered to, or any other
indemnities or obligations in favor of the Administrative Agent shall be, as
the case may be, exercisable by, delivered to, or be indemnities or other
obligations in favor of, the Administrative Agent (or any other Person acting
in such capacity) in its capacity as the UK Security Trustee to the extent that
the rights, deliveries, indemnities or other obligations relate to the Pledge
Agreement governed by English law or the security thereby created.  Any obligations of the Administrative Agent
(or any other Person acting in such capacity) in this Agreement shall 


 


64

















 


be obligations of the Administrative Agent in its
capacity as UK Security Trustee to the extent that the obligations relate to
the Pledge Agreement governed by English law or the security thereby
created.  Additionally, in its capacity
as UK Security Trustee, the Administrative Agent (or any Person acting in such
capacity) shall have all the rights, remedies, and benefits in favor of the
Administrative Agent contained in the provisions of the whole of this Article VIII
and, subject always to the provisions of the Pledge Agreement governed by
English law, (i) all the powers of an absolute owner of the security
constituted by the Pledge Agreement governed by English law and (ii) all
the rights, remedies and powers granted to it and be subject to all the
obligations and duties owed by it under the Pledge Agreement governed by
English law and/or any of the Credit Documents.


 


(b)   Each Lender and the Administrative Agent
hereby appoint the UK Security Trustee to act as its trustee under and in relation
to the Pledge Agreement governed by English law and to hold the assets subject
to the security thereby created as trustee for the Administrative Agent and
Lenders on the trusts and other terms contained in the Pledge Agreement
governed by English law and the Administrative Agent and each Lender hereby
irrevocably authorize the UK Security Trustee to exercise such rights,
remedies, powers and discretions as are specifically delegated to the UK
Security Trustee by the terms of the Pledge Agreement governed by English law
together with all such rights, remedies, powers and discretions as are
reasonably incidental thereto.


 


(c)   Any reference in this Agreement to Liens
stated to be in favor of the Administrative Agent shall be construed so as to
include a reference to Liens granted in favor of the UK Security Trustee.


 


(d)   The Lenders agree that at any time that the
UK Security Trustee shall be a Person other than the Administrative Agent, such
other Person shall have the rights, remedies, benefits and powers granted to
the Administrative Agent in its capacity as the UK Security Trustee in this
Agreement.


 


(e)   Nothing in this Section 8.03
shall require the UK Security Trustee to act as a trustee at common law or to
be holding any property on trust, in any jurisdiction outside the United States
or the United Kingdom which may not operate under principles of trust or where
such trust would not be recognized or its effects would not be enforceable.


 


ARTICLE IX


 


Miscellaneous


 


SECTION 9.01. 
Notices.  (a) Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy or electronic mail, as follows:


 


(i)            if to the Borrower, to it at 9800 59th Avenue, Minneapolis, Minnesota 55442,
Attention of Treasurer and General Counsel (Telecopy No. (763) 551-6888);


 


65

















 


(ii)           if to the Administrative Agent or the Collateral Agent, to
it at JPMorgan Loan Services, 10 South Dearborn Street, 7th Floor, Chicago,
Illinois 60603, Attention of Yvonne Dixon (Telecopy No. (312) 385-7101);


 


(iii)          if to the Issuing Bank, to it at JPMorgan Chase Bank,
National Association, Global Trade Services, 420 West Van Buren, Floor 2,
Chicago, Illinois 60606, Attention of Victorio De Guzman (Telecopy No. (312)
954-2457);


 


(iv)          if to the Swingline Lender, to it at JPMorgan Loan
Services, 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603,
Attention of Yvonne Dixon (Telecopy No. (312) 385-7101); and


 


(v)           if to any other Lender, to it at its address (or telecopy
number or electronic mail address) set forth in its Administrative
Questionnaire.


 


(b)   Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article II unless
otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.


 


(c)   Any party hereto may change its address or
telecopy number or electronic mail address for notices and other communications
hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.


 


SECTION 9.02. 
Waivers; Amendments.  (a) No
failure or delay by the Administrative Agent, the Issuing Bank or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Bank and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.


 


(b)   Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or
by the Borrower and the Administrative Agent with the consent of


 


66
















 


the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any
Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment,
postpone or waive the scheduled date of either or both of the Commitment
reductions due on December 31, 2009 and January 31, 2010 or postpone
the scheduled date of expiration of any Commitment (except for a postponement
or waiver of a mandatory prepayment and corresponding Commitment reduction
pursuant to Section 2.10(c), other than a mandatory prepayment and
corresponding Commitment reduction arising with respect to the first
$15,000,000 of securities included within the definition of Required Equity
Issuance which are issued during the period commencing on the Effective Date
and ending on January 31, 2010 (measured by reference to gross proceeds)),
without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or
(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change
any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender, (vi) release all or substantially all of the Collateral or,
in connection with a transaction permitted by Section 6.03, release
any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty,
without the written consent of each Lender or (vii) change Article X
in a manner that would materially alter the obligations of the Borrower
thereunder, without the written consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect Section 2.19
or the rights or duties of the Administrative Agent, the Issuing Bank or the
Swingline Lender hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may
be.


 


(c)   If, in connection with any proposed waiver,
amendment or modification of any of the provisions of this Agreement as
contemplated by clauses (i) through (vi) of Section 9.02(b),
the consent of the Required Lenders is obtained but the consent of one or more
of such other Lenders whose consent is required is not obtained, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment) and shall grant its consent to the proposed
waiver, amendment or modification; provided, that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and
if a Commitment is being assigned, each Issuing Bank), which consent shall not
unreasonably be withheld, and (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts).


 


SECTION 9.03. 
Expenses; Indemnity; Damage Waiver.  (a) The Borrower shall pay (i) all
reasonable out of pocket expenses incurred by the Administrative Agent and its 


 


67

















 


Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and negotiation of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated)and the administration of the credit facilities evidenced hereby, (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by the Administrative Agent, the Issuing Bank or any Lender, including
the fees, charges and disbursements of any counsel for the Administrative
Agent, the Issuing Bank or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its
rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit.


 


(b)   The Borrower shall indemnify the
Administrative Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by the Issuing Bank to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.


 


(c)   To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative Agent, the Issuing
Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Issuing Bank or the Swingline Lender, as the case may be, such Lender’s ratable
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought by reference to the aggregate outstanding
Commitments (or if such Commitments have terminated, aggregate Revolving Credit
Exposure)) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
Issuing Bank or the Swingline Lender in its capacity as such.


 


68

















 


(d)   To the extent permitted by applicable law,
the Borrower shall not assert, and hereby waives any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.


 


(e)   All amounts due under this Section shall
be payable promptly after written demand therefor.


 


SECTION 9.04. 
Successors and Assigns.  (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section)
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


 


(b)   (i) Subject to the conditions set forth
in paragraph (b)(ii) below, any Lender may assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld) of:


 


(A)          the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment of any Commitment
to an assignee that is a Lender with a Commitment immediately prior to giving
effect to such assignment;


 


(B)           the Issuing Bank; and


 


(C)           the Borrower, provided, that no consent of the
Borrower shall be required for an assignment of any Commitment to an assignee
that is a Lender with a Commitment immediately prior to giving effect to such
assignment, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other Person.


 


(ii)                                  Assignments
shall be subject to the following additional conditions:


 


(A)          except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment
or Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Assumption with respect to such assignment is
delivered to the 


 


69

















 


Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent, provided that no such consent of the Borrower shall be required
if an Event of Default has occurred and is continuing;


 


(B)           each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause shall not be construed to
prohibit the assignment of a proportionate part of all the assigning Lender’s
rights and obligations in respect of one Class of Commitments or Loans;


 


(C)           the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500 payable by either the assignee or the
assignor; and


 


(D)          the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
affiliates, the Credit Parties and their related parties or their respective
securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.


 


For the purposes of this Section 9.04(b),
the term “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.


 


(iii)          Subject to acceptance and recording thereof pursuant
to paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.15, 2.16, 2.17 and 9.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.


 


(iv)          The Administrative Agent, acting for this purpose as
an agent of the Borrowers, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the 


 


70

















 


“Register”).  The entries in
the Register shall be conclusive, and the Borrowers, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Company, the Issuing Bank and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.


 


(v)           Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the assignee
shall have failed to make any payment required to be made by it pursuant to Section 2.04(c),
2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c),
the Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.


 


(c)    (i) Any
Lender may, without the consent of the Borrower, the Administrative Agent, the
Issuing Bank or the Swingline Lender, sell participations to one or more banks
or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant.  Subject to
paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(c) as
though it were a Lender.


 


(ii)           A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to 


 


71

















 


such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.16 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.16(e) as
though it were a Lender.


 


(d)   Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.


 


SECTION 9.05. 
Survival.  All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments delivered in connection with or pursuant
to this Agreement shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. 
The provisions of Sections 2.14, 2.15, 2.16 and 9.03
and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.


 


SECTION 9.06. 
Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and any separate letter agreements with respect to fees payable to
the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or electronic mail shall be
effective as delivery of a manually executed counterpart of this Agreement.


 


SECTION 9.07. 
Severability.  Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality 


 


72

















 


and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.


 


SECTION 9.08. 
Right of Setoff.  If an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrower against any of and all the obligations of
such Person now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.


 


SECTION 9.09. 
Governing Law; Jurisdiction; Consent to Service of Process.  (a) This Agreement shall be construed in
accordance with and governed by the law of the State of New York.


 


(b)   The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in the
Borough of Manhattan in New York City, New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower or its properties in the courts
of any jurisdiction.


 


(c)   The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


 


(d)   Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.


 


SECTION 9.10. 
WAIVER OF JURY TRIAL.  EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING 


 


73

















 


DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


SECTION 9.11. 
Headings.  Article and
Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.


 


SECTION 9.12.  Confidentiality.  Each of the
Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis from a source other than the Borrower.  For the purposes of this Section, “Information”
means all information received from the Borrower relating to the Borrower or
its business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.


 


EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12(a) FURNISHED
TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-


 


74

















 


PUBLIC
INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND
STATE SECURITIES LAWS.


 


ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS AFFILIATES, THE CREDIT PARTIES AND THEIR
RELATED PARTIES OR THEIR RESPECTIVE SECURITIES) AND
ITS SECURITIES.  ACCORDINGLY, EACH LENDER
REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED
IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE
INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE
WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.


 


SECTION 9.13. 
Interest Rate Limitation. 
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or reserved by
the Lender holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan but were not payable as a result of the operation of this Section shall
be cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Lender.


 


SECTION 9.14. 
USA PATRIOT Act.  Each
Lender that is subject to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies such Person,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.


 


SECTION 9.15.  Amendment and Restatement.


 


(a)   On the Effective Date, the Existing Credit
Agreement shall be amended, restated and superseded in its entirety by this
Agreement.  The parties hereto
acknowledge and agree that (a) this Agreement, the Notes delivered
pursuant to Section 2.09 (the “Restated Notes”) and the
other Credit Documents executed and delivered in connection herewith do not
constitute a novation, payment and reborrowing, or termination of the “Obligations”
(as defined in the Existing Credit Agreement) under the Existing Credit
Agreement as in effect prior to the Effective Date; (b) such “Obligations”
are in all respects continuing with only the terms thereof 


 


75

















 


being modified as provided in this Agreement; and (c) upon
the effectiveness of this Agreement all loans outstanding under the Existing
Credit Agreement immediately before the effectiveness of this Agreement will be
part of the Loans hereunder on the terms and conditions set forth in this Agreement.


 


(b)   Notwithstanding the modifications effected by
this Agreement of the representations, warranties and covenants of Borrower
contained in the Existing Credit Agreement, the Borrower acknowledges and
agrees that any choses in action
or other rights created in favor of any Lender and its respective successors
arising out of the representations and warranties of the Borrower contained in
or delivered (including representations and warranties delivered in connection
with the making of the Loans or other extensions of credit thereunder) in
connection with the Existing Credit Agreement, shall survive the execution and
delivery of this Agreement; provided, however, that it is understood and
agreed that the Borrower’s monetary obligations under the Existing Credit
Agreement in respect of the loans thereunder (including all “Obligations”, as
defined thereunder) are evidenced by this Agreement as provided in Article I
hereof.


 


(c)   All indemnification obligations of the
Borrower pursuant to the Existing Credit Agreement shall survive the amendment
and restatement of the Existing Credit Agreement pursuant to this Agreement.


 


(d)   On and after the Effective Date, each
reference in the Credit Documents to the “Credit Agreement”, “thereunder”, “thereof”
or similar words referring to the Credit Agreement shall mean and be a
reference to this Agreement.


 


SECTION 9.16. 
Restructuring Advisor.           The Borrower
hereby agrees that it shall engage AlixPartners (or such other turnaround
advisory firm as shall be reasonably acceptable to the Administrative Agent and
the Lenders) as its turnaround consultant upon the reasonable request of the
Administrative Agent or the Required Lenders. 
All fees and expenses of such turnaround consultant shall be paid by the
Borrower.


 


76
















 


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


 


	
   

  	
  SELECT COMFORT
  CORPORATION, as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ James C. Raabe

  
	
   

  	
  Name:

  	
  James C. Raabe

  
	
   

  	
  Title:

  	
  CFO

  



 


Signature Page to Credit
Agreement


 

















 


	
   

  	
  JPMORGAN CHASE BANK,
  NATIONAL ASSOCIATION, individually and as Administrative Agent and Collateral
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Patricia S. Carpen

  
	
   

  	
  Name:

  	
  Patricia S. Carpen

  
	
   

  	
  Title:

  	
  Vice President

  



 


Signature Page to Credit
Agreement


 

















 


	
   

  	
  BANK OF AMERICA, N.A.,
  individually and as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Lynn D. Simmons

  
	
   

  	
  Name:

  	
  LYNN D. SIMMONS

  
	
   

  	
  Title:

  	
  SENIOR VICE PRESIDENT

  



 


Signature Page to Credit
Agreement


 

















 


	
   

  	
  CITICORP USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Sugam Mehta

  
	
   

  	
  Name:

  	
  Sugam Mehta

  
	
   

  	
  Title:

  	
  Vice President

  



 


Signature Page to Credit
Agreement


 

















 


	
   

  	
  WELLS FARGO BANK,
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Troy Jefferson

  
	
   

  	
  Name:

  	
  Troy Jefferson

  
	
   

  	
  Title:

  	
  Vice President

  



 


Signature Page to Credit
Agreement


 

















 


	
   

  	
  BRANCH BANKING AND
  TRUST CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Troy R. Weaver

  
	
   

  	
  Name:

  	
  Troy R. Weaver

  
	
   

  	
  Title:

  	
  Senior Vice President

  



 


Signature Page to Credit
Agreement


 

















 


Schedule
2.01


 


A.  Existing Revolving Loan Commitments
(pre-Effective Date)


 


	
   

  	
   

  	
  Existing

  Revolving Loan

  Commitments

  	
   

  
	
  JPMorgan
  Chase Bank, National Association

  	
   

  	
  $

  	
  21,600,000

  	
   

  
	
  Bank
  of America, N.A.

  	
   

  	
  $

  	
  18,400,000

  	
   

  
	
  Citicorp
  USA, Inc.

  	
   

  	
  $

  	
  16,000,000

  	
   

  
	
  Wells
  Fargo Bank, National Association

  	
   

  	
  $

  	
  12,000,000

  	
   

  
	
  Branch
  Banking and Trust Co.

  	
   

  	
  $

  	
  12,000,000

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  80,000,000

  	
   

  



 


B.  Effective Date Commitments


 


	
   

  	
   

  	
  Commitments

  	
   

  
	
  JPMorgan
  Chase Bank, National Association

  	
   

  	
  $

  	
  14,850,000

  	
   

  
	
  Bank
  of America, N.A.

  	
   

  	
  $

  	
  12,650,000

  	
   

  
	
  Citicorp
  USA, Inc.

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
  Wells
  Fargo Bank, National Association

  	
   

  	
  $

  	
  8,250,000

  	
   

  
	
  Branch
  Banking and Trust Co.

  	
   

  	
  $

  	
  8,250,000

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  55,000,000

  	
   

  



 
















 


EXHIBIT
A


 


ASSIGNMENT
AND ASSUMPTION


 


This Assignment and
Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee]
(the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.


 


For an agreed
consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit, guarantees, and
swingline loans included in such facilities) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based
on or related to any of the foregoing, including contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i) above
(the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.


 


1.                          Assignor:


 


2.                          Assignee:


[and is an
Affiliate/Approved Fund of [identify Lender](1)]


 


3.                          Borrower(s):


 


4.                          Administrative Agent:
                                          ,
as the administrative agent under the Credit Agreement


 


5.                          Credit Agreement:       The
Amended and Restated Credit Agreement dated as of November 13, 2009 among
Select Comfort Corporation, the Lenders parties thereto,


 






(1)                                  Select as applicable.


 

















 


JPMorgan Chase Bank,
National Association, as Administrative Agent and Collateral Agent, and the
other agents parties thereto.


 


6.                                       Assigned Interest:


 


	
  Facility

  	
   

  	
  Aggregate Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans(2)

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
										



 


Effective Date: 
                          
      , 20      
[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE
OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]


 


The Assignee agrees to deliver to the Administrative
Agent a completed Administrative Questionnaire in which the Assignee designates
one or more Credit Contacts to whom all syndicate-level information (which may
contain material non-public information about the Credit Parties and their
related parties or their respective securities) will be made available and who
may receive such information in accordance with the Assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.


 


The terms set forth in this Assignment and Assumption
are hereby agreed to:


 


	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  



 






(2)           Set forth, to at
least 9 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.


 


2

















 


	
  [Consented to and](3) Accepted:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN CHASE BANK,
  NATIONAL ASSOCIATION, as

  	
   

  
	
  Administrative Agent
  and Issuing Bank

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to:](4)

  	
   

  
	
   

  	
   

  
	
  SELECT COMFORT
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  



 






(3)           To be added only if
the consent of the Administrative Agent is required by the terms of the Credit
Agreement.


 


(4)           To be added only if
the consent of the Borrower is required by the terms of the Credit Agreement.


 


3

















 


ANNEX
1


 


STANDARD
TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION


 


1.             Representations and Warranties.


 


1.1           Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Credit Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any
Credit Document or (iv) the performance or observance by the Borrower, any
of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Credit Document.


 


1.2.          Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in order
to acquire the Assigned Interest and become a Lender, (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and
to purchase the Assigned Interest on the basis of which it has made such
analysis and decision independently and without reliance on the Administrative
Agent or any other Lender, and (v) if it is a Foreign Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed
by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Documents
are required to be performed by it as a Lender.


 


2.             Payments. 
From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.


 

















 


3.             General Provisions.  This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. 
Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy or electronic mail shall be effective as
delivery of a manually executed counterpart of this Assignment and
Assumption.  This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of
the State of New York.