EX-10.1 FIRST LIEN CREDIT AGREEMENT



 



Exhibit
10.1


EXECUTION
VERSION




FIRST LIEN CREDIT AND GUARANTY AGREEMENT




dated as of March 8, 2007




among




MOVIE GALLERY, INC.,




CERTAIN SUBSIDIARIES OF

MOVIE GALLERY, INC.

as Guarantors,




VARIOUS LENDERS,




GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Lead Arranger and Syndication Agent,




GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Administrative Agent




and




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Collateral Agent and Documentation Agent




 





$725,000,000 Senior Secured First Priority Credit Facilities




 















 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	Page	 
	SECTION 1. DEFINITIONS AND INTERPRETATION
	 	 	1	 
	1.1. Definitions
	 	 	1	 
	1.2. Accounting Terms
	 	 	34	 
	1.3. Interpretation, etc.
	 	 	34	 
	SECTION 2. LOANS AND LETTERS OF CREDIT
	 	 	35	 
	2.1. Term Loans
	 	 	35	 
	2.2. Revolving Loans
	 	 	35	 
	2.3. Swing Line Loans
	 	 	36	 
	2.4. Issuance of Letters of Credit and Purchase of Participations Therein
	 	 	39	 
	2.5. Issuance of Synthetic Letters of Credit and Purchase of
Participations Therein
	 	 	43	 
	2.6. Pro Rata Shares; Availability of Funds
	 	 	52	 
	2.7. Use of Proceeds
	 	 	53	 
	2.8. Evidence of Debt; Register; Lenders’ Books and Records; Notes
	 	 	53	 
	2.9. Interest on Loans
	 	 	54	 
	2.10. Conversion/Continuation
	 	 	57	 
	2.11. Default Interest
	 	 	57	 
	2.12. Fees
	 	 	58	 
	2.13. Scheduled Payments/Commitment Reductions
	 	 	59	 
	2.14. Voluntary Prepayments/Commitment Reductions
	 	 	59	 
	2.15. Mandatory Prepayments
	 	 	61	 
	2.16. Application of Prepayments
	 	 	63	 
	2.17. General Provisions Regarding Payments
	 	 	65	 
	2.18. Ratable Sharing
	 	 	66	 
	2.19. Making or Maintaining Eurodollar Rate Loans
	 	 	67	 
	2.20. Increased Costs; Capital Adequacy
	 	 	68	 
	2.21. Taxes;
Withholding, etc.
	 	 	70	 
	2.22. Obligation to Mitigate
	 	 	72	 
	2.23. Defaulting Lenders
	 	 	72	 
	2.24. Removal or Replacement of a Lender
	 	 	73	 
	SECTION 3. CONDITIONS PRECEDENT
	 	 	74	 
	3.1. Closing Date
	 	 	74	 
	3.2. Conditions to Each Credit Extension
	 	 	79	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES
	 	 	80	 
	4.1. Organization; Requisite Power and Authority; Qualification
	 	 	81	 
	4.2. Equity Interests and Ownership
	 	 	81	 
	4.3. Due Authorization
	 	 	81	 
	4.4. No Conflict
	 	 	81	 
	4.5. Governmental Consents
	 	 	82	 
	4.6. Binding Obligation
	 	 	82	 
	4.7. Historical Financial Statements
	 	 	82	 
	4.8. Projections
	 	 	82	 
	4.9. No Material Adverse Change
	 	 	82	 
	4.10. No Restricted Junior Payments
	 	 	82	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	4.11. Adverse Proceedings, etc.
	 	 	82	 
	4.12. Payment of Taxes
	 	 	83	 
	4.13. Properties
	 	 	83	 
	4.14. Environmental Matters
	 	 	84	 
	4.15. No Defaults
	 	 	84	 
	4.16. Material Contracts
	 	 	84	 
	4.17. Governmental Regulation
	 	 	84	 
	4.18. Margin Stock
	 	 	84	 
	4.19. Employee Matters
	 	 	85	 
	4.20. Employee Benefit Plans
	 	 	85	 
	4.21. Certain Fees
	 	 	86	 
	4.22. Solvency
	 	 	86	 
	4.23. Compliance with Statutes, etc.
	 	 	86	 
	4.24. Disclosure
	 	 	86	 
	4.25. Patriot Act
	 	 	87	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	87	 
	5.1. Financial Statements and Other Reports
	 	 	87	 
	5.2. Existence
	 	 	91	 
	5.3. Payment of Taxes and Claims
	 	 	92	 
	5.4. Maintenance of Properties
	 	 	92	 
	5.5. Insurance
	 	 	92	 
	5.6. Books and Records; Inspections
	 	 	93	 
	5.7. Lenders Meetings
	 	 	93	 
	5.8. Compliance with Laws
	 	 	93	 
	5.9. Environmental
	 	 	93	 
	5.10. Subsidiaries
	 	 	94	 
	5.11. Additional Material Real Estate Assets
	 	 	95	 
	5.12. Interest Rate Protection
	 	 	95	 
	5.13. Further Assurances
	 	 	96	 
	5.14. Miscellaneous Covenants
	 	 	96	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	96	 
	6.1. Indebtedness
	 	 	96	 
	6.2. Liens
	 	 	99	 
	6.3. No Further Negative Pledges
	 	 	101	 
	6.4. Restricted Junior Payments
	 	 	101	 
	6.5. Restrictions on Subsidiary Distributions
	 	 	102	 
	6.6. Investments
	 	 	102	 
	6.7. Financial Covenants
	 	 	103	 
	6.8. Fundamental Changes; Disposition of Assets; Acquisitions
	 	 	106	 
	6.9. Disposal of Subsidiary Interests
	 	 	108	 
	6.10. Sales and Lease-Backs
	 	 	108	 
	6.11. Transactions with Shareholders and Affiliates
	 	 	108	 
	6.12. Conduct of Business
	 	 	109	 
	6.13. Amendments or Waivers of Organizational Documents
	 	 	109	 
	6.14. Amendments or Waivers with respect to Certain Indebtedness
	 	 	109	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	6.15. Limitation on Voluntary Payments and Amendments or Waivers of the
Second Lien Credit Agreement
	 	 	109	 
	6.16. Fiscal Year
	 	 	110	 
	SECTION 7. GUARANTY
	 	 	110	 
	7.1. Guaranty of the Obligations
	 	 	110	 
	7.2. Contribution by Guarantors
	 	 	110	 
	7.3. Payment by Guarantors
	 	 	111	 
	7.4. Liability of Guarantors Absolute
	 	 	111	 
	7.5. Waivers by Guarantors
	 	 	113	 
	7.6. Guarantors’ Rights of Subrogation, Contribution, etc.
	 	 	114	 
	7.7. Subordination of Other Obligations
	 	 	114	 
	7.8. Continuing Guaranty
	 	 	114	 
	7.9. Authority of Guarantors or Borrower
	 	 	115	 
	7.10. Financial Condition of Borrower
	 	 	115	 
	7.11. Bankruptcy, etc.
	 	 	115	 
	7.12. Discharge of Guaranty Upon Sale of Guarantor
	 	 	116	 
	SECTION 8. EVENTS OF DEFAULT
	 	 	116	 
	8.1. Events of Default
	 	 	116	 
	SECTION 9. AGENTS
	 	 	119	 
	9.1. Appointment of Agents
	 	 	119	 
	9.2. Powers and Duties
	 	 	119	 
	9.3. General Immunity
	 	 	120	 
	9.4. Agents Entitled to Act as Lender
	 	 	121	 
	9.5. Lenders’ Representations, Warranties and Acknowledgment
	 	 	121	 
	9.6. Right to Indemnity
	 	 	122	 
	9.7. Successor Administrative Agent, Collateral Agent and Swing Line
Lender
	 	 	122	 
	9.8. Collateral Documents and Guaranty
	 	 	123	 
	9.9. Intercreditor Agreement
	 	 	124	 
	SECTION 10. MISCELLANEOUS
	 	 	124	 
	10.1. Notices
	 	 	124	 
	10.2. Expenses
	 	 	125	 
	10.3. Indemnity
	 	 	126	 
	10.4. Set-Off
	 	 	127	 
	10.5. Amendments and Waivers
	 	 	127	 
	10.6. Successors and Assigns; Participations
	 	 	130	 
	10.7. Independence of Covenants
	 	 	134	 
	10.8. Survival of Representations, Warranties and Agreements
	 	 	134	 
	10.9. No Waiver; Remedies Cumulative
	 	 	134	 
	10.10. Marshalling; Payments Set Aside
	 	 	135	 
	10.11. Severability
	 	 	135	 
	10.12. Obligations Several; Independent Nature of Lenders’ Rights
	 	 	135	 
	10.13. Headings
	 	 	135	 
	10.14. APPLICABLE LAW
	 	 	135	 
	10.15. CONSENT TO JURISDICTION
	 	 	136	 
	10.16. WAIVER OF JURY TRIAL
	 	 	136	 
	10.17. Confidentiality
	 	 	137	 






iv









 






	 	 	 	 	 
	 	 	Page	 
	10.18. Usury Savings Clause
	 	 	137	 
	10.19. Counterparts
	 	 	138	 
	10.20. Effectiveness
	 	 	138	 
	10.21. Patriot Act
	 	 	138	 
	10.22. Electronic Execution of Assignments
	 	 	138	 
	10.23. Post-Closing Actions
	 	 	138	 






v









 






	 	 	 	 	 
	APPENDICES:	 	A-1	 	Term Loan Commitments

	 	 	A-2	 	Revolving Commitments

	 	 	A-3	 	Synthetic LC Commitments

	 	 	B	 	Notice Addresses

	 	 	 	 	 

	SCHEDULES:	 	1	 	Fiscal Years

	 	 	2	 	Fourth Quarter 2006 EBITDA Methodology

	 	 	3	 	Existing Letters of Credit

	 	 	3.1(g)(i)	 	Closing Date Mortgaged Properties

	 	 	3.2	 	Sale-Leaseback Properties

	 	 	4.1	 	Jurisdictions of Organization and Qualification

	 	 	4.2	 	Equity Interests and Ownership

	 	 	4.7	 	Lease Accounting Adjustments

	 	 	4.13	 	Real Estate Assets

	 	 	4.16	 	Material Contracts

	 	 	6.1	 	Certain Indebtedness

	 	 	6.2	 	Certain Liens

	 	 	6.5	 	Certain Restrictions on Subsidiary Distributions

	 	 	6.6	 	Certain Investments

	 	 	6.11	 	Certain Affiliate Transactions

	 	 	10.23	 	Post-Closing Actions

	 	 	 	 	 

	EXHIBITS:	 	A-1	 	Funding Notice

	 	 	A-2	 	Conversion/Continuation Notice

	 	 	A-3	 	Issuance Notice

	 	 	B-1	 	Term Loan Note

	 	 	B-2	 	Revolving Loan Note

	 	 	B-3	 	Swing Line Note

	 	 	C	 	Compliance Certificate

	 	 	D	 	Opinions of Counsel

	 	 	E	 	Assignment Agreement

	 	 	F	 	Certificate Re Non-bank Status

	 	 	G-1	 	Closing Date Certificate

	 	 	G-2	 	Solvency Certificate

	 	 	H	 	Counterpart Agreement

	 	 	I	 	Pledge and Security Agreement

	 	 	J	 	Mortgage

	 	 	K	 	Landlord Waiver and Consent Agreement

	 	 	L	 	Intercompany Note

	 	 	M	 	Senior Notes Refinancing Third Lien Intercreditor Terms

	 	 	N	 	Loan-to-Value Ratio Certificate

	 	 	O	 	Collateral Reporting










vi









 








FIRST LIEN CREDIT AND GUARANTY AGREEMENT




     This FIRST LIEN CREDIT AND GUARANTY AGREEMENT, dated as of March 8, 2007, is entered into by
and among MOVIE GALLERY, INC., a Delaware corporation (“Borrower”), CERTAIN SUBSIDIARIES OF
BORROWER, as Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS
L.P. (“GSCP”), as Syndication Agent (in such capacity, “Syndication Agent”) and as Administrative
Agent (together with its permitted successors in such capacity, “Administrative Agent”), and
WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”) as Collateral Agent (together with its permitted
successors in such capacity, “Collateral Agent”) and as Documentation Agent (in such capacity,
“Documentation Agent”).



RECITALS:




     WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth
for such terms in Section 1.1 hereof;



     WHEREAS, Lenders have agreed to extend certain credit facilities to Borrower, in an aggregate
amount not to exceed $725,000,000, consisting of $600,000,000 aggregate principal amount of Term
Loans, $100,000,000 aggregate principal amount of Revolving Commitments and $25,000,000 aggregate
principal amount of Synthetic LC Commitments, to be used to (a) in the case of the Term Loans,
together with the proceeds of the Second Lien Term Loans, (i) to fund the refinancing of the
Existing Indebtedness and (ii) to pay certain other fees and expenses relating to the credit
facilities established hereunder and (b) in the case of Revolving Loans, Synthetic Letters of
Credit and Letters of Credit, for general corporate purposes of Borrower and its Subsidiaries;



     WHEREAS, Borrower has agreed to secure all of its Obligations by granting to Collateral Agent,
for the benefit of Secured Parties, a First Priority Lien on substantially all of its assets,
including a pledge of all of the Equity Interests of each of its Domestic Subsidiaries and 65% of
all the Equity Interests of each of its Foreign Subsidiaries; and



     WHEREAS, Guarantors have agreed to guarantee the obligations of Borrower hereunder and to
secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured
Parties, a First Priority Lien on substantially all of their respective assets, including a pledge
of all of the Equity Interests of each of their respective Domestic Subsidiaries (including
Borrower) and 65% of all the Equity Interests of each of their respective Foreign Subsidiaries.



     NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:



  SECTION 1. DEFINITIONS AND INTERPRETATION




          1.1 Definitions. The following terms used herein, including in the preamble, recitals, exhibits
and schedules hereto, shall have the following meanings:














 








     “Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an
Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding
upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest
1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which
appears on the page of the Telerate Screen which displays an average British Bankers Association
Interest Settlement Rate (such page currently being page number 3740 or 3750, as applicable) for
deposits (for delivery on the first day of such period) with a term equivalent to such period in
Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not
appear on such page or service or if such page or service shall cease to be available, the rate per
annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to
be the offered rate on such other page or other service which displays an average British Bankers
Association Interest Settlement Rate for deposits (for delivery on the first day of such period)
with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m.
(London, England time) on such Interest Rate Determination Date, or (c) in the event the rates
referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to
the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London
interbank market by JPMorgan Chase Bank for deposits (for delivery on the first day of the relevant
period) in Dollars of amounts in same day funds comparable to the principal amount of the
applicable Loan of Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such period as of
approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii)
an amount equal to (a) one minus (b) the Applicable Reserve Requirement.



     “Administrative Agent” as defined in the preamble hereto.



     “Adverse Proceeding” means any action, suit, proceeding, hearing (whether administrative,
judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on
behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any
Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending
or, to the knowledge of Borrower or any of its Subsidiaries, threatened against or adversely
affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its
Subsidiaries.



     “Affected Lender” as defined in Section 2.17(b).



     “Affected Loans” as defined in Section 2.17(b).



     “Affiliate” means, as applied to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the purposes of this
definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled
by” and “under common control with”), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 5% or more of the Securities having ordinary voting power for
the election of directors of such Person or (ii) to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities or by contract or
otherwise.



2









 





     “Agent” means each of Administrative Agent, Syndication Agent, Collateral Agent and
Documentation Agent.



     “Agent Affiliates” as defined in Section 10.1(b).



     “Aggregate Amounts Due” as defined in Section 2.18.



     “Aggregate Payments” as defined in Section 7.2.



     “Agreement” means this First Lien Credit and Guaranty Agreement, dated as of March 8, 2007, as
it may be amended, supplemented or otherwise modified from time to time.



     “Applicable Loan to Value Ratio” means a Loan to Value Ratio of 3.00:1.00 provided,
that, (a) if there is an Event of Default as a result of the failure of Borrower to comply with any
of the covenants set forth in Section 6.7 hereof as in effect on the date hereof (or as amended
with the written consent of the Lenders having or holding more than 50% of the aggregate Revolving
Exposure of all Lenders) (unless such Event of Default is waived or is the basis for any amendment
or modification to such covenants, with the written consent of the Lenders having or holding more
than 50% of the aggregate Revolving Exposure of all Lenders), then on and after the date of such
Event of Default, the Applicable Loan to Value Ratio means a Loan to Value Ratio of 3.50:1.00 and
(b) if at any time during which the Applicable Loan to Value Ratio is 3.50:1.00, upon the sooner to
occur of (x) Borrower being in compliance with the covenants set forth in Section 6.7 as in effect
on the date hereof (or as amended with the written consent of the Lenders having or holding more
than 50% of the aggregate Revolving Exposure of all Lenders) on or after the date of the receipt by
Collateral Agent of the financial statements in accordance with Section 5.1(a) or Section 5.1(b)
for the applicable period, (y) Borrower demonstrating compliance with the covenants set forth in
Section 6.7 as in effect on the date hereof (or as amended with the written consent of the Lenders
having or holding more than 50% of the aggregate Revolving Exposure of all Lenders) as calculated
in month-end financial statements delivered to Collateral Agent prepared in accordance with the
financial statements delivered pursuant to Section 5.1(a) or (z) the date Lenders having or holding
Revolving Exposure and representing more than 50% of the aggregate Revolving Exposure of all
Lenders consent to the waiver of such Event of Default as described in clause (a) of this
definition above, then, in each case, the Applicable Loan to Value Ratio shall mean 3.00:1.00,
until such time as there may be any other Event of Default as described in clause (a) of this
definition above (unless such Event of Default is waived or is the basis for any amendment or
modification to such covenants, with the written consent of the Lenders having or holding more than
50% of the aggregate Revolving Exposure of all Lenders).



     “Applicable Margin’’ and “Applicable Revolving Commitment Fee Percentage’’ mean (i) with
respect to Revolving Loans that are Eurodollar Rate Loans and the Applicable Revolving Commitment
Fee Percentage, (a) from the Closing Date until the date of delivery of the Compliance Certificate
and the financial statements for the period ending the second full Fiscal Quarter after the Closing
Date, a percentage, per annum, determined by reference to the following table as if the Secured
Leverage Ratio then in effect were 2.50:1.00; and (b) thereafter, a percentage, per annum,
determined by reference to the Secured Leverage Ratio in effect from time to time as set forth
below:



3









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable Revolving	 
	 	 	Applicable Margin for	 	 	Commitment Fee	 
	Secured Leverage Ratio	 	Revolving Loans	 	 	Percentage	 
	3 2.50:1.00
	 	2.50%		 	0.50%	
	< 2.50:1.00
	 	2.25%		 	0.375%	






     and (ii) with respect to Swing Line Loans and Revolving Loans that are Base Rate Loans, an
amount equal to (a) the Applicable Margin for Eurodollar Rate Loans as set forth in clause (i)(a)
or (i)(b) above, as applicable, minus (b) 1.00% per annum. No change in the Applicable Margin or
the Applicable Revolving Commitment Fee Percentage shall be effective until three Business Days
after the date on which Administrative Agent shall have received the applicable financial
statements and a Compliance Certificate pursuant to Section 5.1(c) calculating the Secured Leverage
Ratio. At any time Borrower has not submitted to Administrative Agent the applicable information
as and when required under Section 5.1(c), the Applicable Margin and the Applicable Revolving
Commitment Fee Percentage shall be determined as if the Secured Leverage Ratio were in excess of
2.50:1.00. Within one Business Day of receipt of the applicable information under Section 5.1(c),
Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in
writing) of the Applicable Margin and the Applicable Revolving Commitment Fee Percentage in effect
from such date.



     In the event that any financial statement or Compliance Certificate delivered pursuant to
Section 5.1 or otherwise is shown to be inaccurate (regardless of whether this Agreement or the
Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected,
would have led to the application of a higher Applicable Margin for any period (an “Applicable
Period”) then the Applicable Margin applied for such Applicable Period, then (i) the Borrower shall
immediately deliver to Administrative Agent and Collateral Agent a correct Compliance Certificate
for such Applicable Period, (ii) the Applicable Margin shall be adjusted to reflect the correct
Secured Leverage Ratio, and (iii) Borrower shall immediately pay to Collateral Agent the accrued
additional interest owing as a result of such increased Applicable Margin for such Applicable
Period, which payment shall be promptly applied by the Agent in accordance with Section 7.2 of the
Pledge and Security Agreement. This Section shall not limit the rights of Agents and Lenders with
respect to Section 2.11 or Section 8.1.



     “Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum
rate, expressed as a decimal, at which reserves (including any basic marginal, special,
supplemental, emergency or other reserves) are required to be maintained with respect thereto
against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations
issued from time to time by the Board of Governors or other applicable banking regulator. Without
limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate
or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed
to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements
without benefits of credit for proration, exceptions or offsets that may be available from time to
time to the applicable Lender. The rate of interest on



4









 







Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any
change in the Applicable Reserve Requirement.



     “Approved Electronic Communications” means any notice, demand, communication, information,
document or other material that any Credit Party provides to Administrative Agent pursuant to any
Credit Document or the transactions contemplated therein which is distributed to the Agents or to
the lenders by means of electronic communications pursuant to Section 10.1(b).



     “Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback,
assignment, conveyance, exclusive license (as licensor or sublicensor), transfer or other
disposition to, or any exchange of property with, any Person (other than Borrower or any Guarantor
Subsidiary), in one transaction or a series of transactions, of all or any part of Borrower’s or
any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or
mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or
licensed, including the Equity Interests of any of Borrower’s Subsidiaries, other than (i)
inventory (or other assets) sold, leased or licensed out in the ordinary course of business
(excluding any such sales, leases or licenses out by operations or divisions discontinued or to be
discontinued), and (ii) sales, leases or licenses out of other assets for aggregate consideration
of less than $2,000,000 in the aggregate during any Fiscal Year.



     “Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form
of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent.



     “Assignment Effective Date” as defined in Section 10.6(b).



     “Authorized Officer” means, as applied to any Person, any individual holding the position of
chairman of the board (if an officer), chief executive officer, president or one of its vice
presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer.



     “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.



     “Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in
effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.



     “Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base
Rate.



     “Benchmark LIBOR Rate” as defined in Section 2.5(m).



     “Beneficiary” means each Agent, Issuing Bank, Synthetic LC Issuing Bank, Lender and Lender
Counterparty.



5









 





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



     “Boards Transaction” means the acquisition by the Borrower or a Subsidiary thereof of video
and game stores from Boards, Inc. pursuant to, and on the terms and conditions of, that certain
License Agreement, dated January 25, 2001, by and between Boards, Inc. and Hollywood Entertainment
Corporation, a wholly-owned Subsidiary of the Borrower.



     “Borrower” as defined in the preamble hereto.



     “Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking institutions located
in such state are authorized or required by law or other governmental action to close and (ii) with
respect to all notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day which is a
Business Day described in clause (i) and which is also a day for trading by and between banks in
Dollar deposits in the London interbank market.



     “Capital Lease” means, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.



     “Cash” means money, currency or a credit balance in any demand or Deposit Account.



     “Cash Equivalents” means, as at any date of determination, (i) marketable securities (a)
issued or directly and unconditionally guaranteed as to interest and principal by the United States
Government or (b) issued by any agency of the United States the obligations of which are backed by
the full faith and credit of the United States, in each case maturing within one year after such
date; (ii) marketable direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof, in each case
maturing within one year after such date and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of
deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by
any Lender or by any commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as
defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as
defined in such regulations) of not less than $100,000,000; (v) shares of any money market mutual
fund that (a) has substantially all of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and
(c) has the highest rating obtainable from either S&P or Moody’s and (vi) solely in respect of the
cash management activities of Subsidiaries of the Borrower organized under the laws of Canada or
any province or territory thereof, equivalents to the investments described in clause (i)
above to the extent guaranteed by the full faith and credit of the government of Canada and
equivalents of investments described in clauses (iii) and (iv)



6









 




above issued, accepted or offered by the local office of any commercial bank organized under
the laws of Canada, or any province or territory thereof of such Canadian Subsidiary, which bank
has combined capital and surplus of not less than $1,000,000,000.




     “Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.



     “Change of Control” means, at any time, (i) any Person or “group” (within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act) other than a Permitted Holder (a) shall have acquired
beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest
in the Equity Interests of Borrower (provided, that if such percentage is exceeded as a result of
an exchange of the Borrower’s Equity Interests for Indebtedness, then this subclause (i)(a) shall
not be the basis of an Change of Control unless such Person or “group” (within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act) other than a Permitted Holder shall have beneficial
ownership of 50% or more on a fully diluted basis of the voting and/or economic interest in the
Equity Interests of Borrower outstanding after giving effect to such exchange of the Borrower’s
Equity Interests for Indebtedness) or (b) shall have obtained the power (whether or not exercised)
to elect a majority of the members of the board of directors (or similar governing body) of
Borrower; (ii) the majority of the seats (other than vacant seats) on the board of directors (or
similar governing body) of Borrower cease to be occupied by Persons who either (a) were members of
the board of directors of Borrower on the Closing Date or (b) were nominated for election by the
board of directors of Borrower, a majority of whom were directors on the Closing Date or whose
election or nomination for election was previously approved by a majority of such directors; or
(iii) any “change of control” or similar event under the Senior Notes Indenture.



     “Class” means with respect to Lenders, each of the following classes of Lenders: (i) Lenders
having Term Loan Exposure, (ii) Lenders having Revolving Exposure and (iii) Lenders having
Synthetic LC Deposits.



     “Closing Date” means the date on which the Term Loans are made.



     “Closing Date Certificate” means a Closing Date Certificate substantially in the form of
Exhibit G-1.



     “Closing Date Mortgaged Property” as defined in Section 3.1(g).



     “Collateral” means, collectively, all of the real, personal and mixed property (including
Equity Interests) in which Liens are purported to be granted pursuant to the Collateral Documents
as security for the Obligations.



     “Collateral Agent” as defined in the preamble hereto.



     “Collateral Documents” means the Pledge and Security Agreement, the Mortgages, the
Intellectual Property Security Agreements, the Landlord Personal Property Collateral Access
Agreements, if any, and all other instruments, documents and agreements delivered by any Credit
Party pursuant to this Agreement or any of the other Credit Documents



7









 







in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real,
personal or mixed property of that Credit Party as security for the Obligations.



     “Collateral Questionnaire” means a certificate in form satisfactory to Collateral Agent that
provides information with respect to the personal or mixed property of each Credit Party.



     “Commitment” means any Revolving Commitment, Synthetic LC Commitment or Term Loan Commitment.



     “Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit
C.



     “Consolidated Adjusted EBITDA” means, for any period, an amount determined for Borrower and
its Subsidiaries on a consolidated basis equal to (x) Consolidated Net Income, plus, to the
extent reducing Consolidated Net Income, the sum, without duplication, of amounts for (a)
consolidated interest expense (determined in accordance with GAAP), (b) provisions for taxes based
on income, (c) total depreciation expense, (d) total amortization expense (excluding Rental Items
amortization, except for one time and incremental charges resulting from changes in accounting
principals), (e) losses from Hedge Agreements, (f) losses from discontinued operations, (g) losses
from changes in accounting principles, (h) fees and costs associated with the early extinguishment
of debt, (i) fees and other expenses made or incurred in connection with the transactions
contemplated hereby that are paid or accounted for (without duplication) within 180 days of the
Closing Date, (j) reasonable fees or expenses relating to any issuance of Equity Interests,
permitted Investments, Permitted Acquisitions or Indebtedness, whether or not such transaction is
consummated, to the extent deducted in computing Consolidated Net Income, and (k) other non-Cash
charges reducing Consolidated Net Income (excluding any such non-Cash charge to the extent that it
represents an accrual or reserve for potential Cash charge in any future period or amortization of
a prepaid Cash charge that was paid in a prior period), minus (y) to the extent increasing
Consolidated Net Income, the sum, without duplication, of amounts for (a) gains from Hedge
Agreements, (b) income from discontinued operations, (c) income from changes in accounting
principals and (d) other non-Cash gains increasing Consolidated Net Income for such period
(excluding any such non-Cash gain to the extent it represents the reversal of an accrual or reserve
for potential Cash gain in any prior period). For all purposes of this Agreement, Consolidated
Adjusted EBITDA shall equal $105,900,000 for the first Fiscal Quarter of 2006; $48,200,000 for the
second Fiscal Quarter of 2006; $37,500,000 for the third Fiscal Quarter of 2006; and, for the
fourth Fiscal Quarter of 2006, Consolidated Adjusted EBITDA shall be calculated using the actual
results of operations but calculated using the same methodology as employed when determining “Bank
EBITDA” as used in the February 2007 Presentation to Lenders prepared by the Borrower as set forth
on Schedule 2 hereto; provided that in the event any fact related to a component of
Consolidated Adjusted EBITDA used to calculate the foregoing amounts changes, then the foregoing
amounts shall be recalculated to give effect to such changes using the same methodology as employed
when determining “Bank EBITDA” as used in the February 2007 Presentation to Lenders prepared by the
Borrower as set forth on Schedule 2 hereto.



8









 





     “Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures
of Borrower and its Subsidiaries during such period determined on a consolidated basis that, in
accordance with GAAP, are or should be included in “purchase of property and equipment” or similar
items reflected in the consolidated statement of cash flows of Borrower and its Subsidiaries (but
shall in any event exclude (i) the purchase or acquisition of assets pursuant to a Permitted
Acquisition and (ii) the Boards Transaction).



     “Consolidated Current Assets” means, as at any date of determination, the total assets of
Borrower and its Subsidiaries on a consolidated basis that may properly be classified as current
assets in conformity with GAAP, excluding Cash and Cash Equivalents.



     “Consolidated Current Liabilities” means, as at any date of determination, the total
liabilities of Borrower and its Subsidiaries on a consolidated basis that may properly be
classified as current liabilities in conformity with GAAP, excluding the current portion of long
term debt.



     “Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i)
the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA,
(b) the Consolidated Working Capital Adjustment, (c) the amount by which amortization of Rental
Items exceeds cash purchases of Rental Items and (d) extraordinary and non-recurring gains of the
type described in clause (e)(A) and (e)(B) of the definition of “Consolidated Net Income” (not to
exceed the aggregate amounts referred to in such clauses) to the extent such gains are received in
cash during such period, minus (ii) the sum, without duplication, of the amounts for such
period paid in cash from operating cash flow of (a) scheduled repayments of Indebtedness for
borrowed money (excluding repayments of Revolving Loans or Swing Line Loans except to the extent
the Revolving Commitments are permanently reduced in connection with such repayments, but including
the principal component of Capital Leases), (b) Consolidated Capital Expenditures (net of any
proceeds of (y) any related financings with respect to such expenditures and (z) any sales of
assets used to finance such expenditures), (c) Consolidated Interest Expense, (d) provisions for
current taxes based on income of Borrower and its Subsidiaries and payable in cash with respect to
such period, (e) the amount by which cash purchases of Rental Items exceeds amortization of Rental
Items, and (f) extraordinary and non-recurring costs, losses and restructuring charges of the type
described in clauses (e)(D), (e)(E) and (e)(F) of the definition of “Consolidated Net Income” (not
to exceed the aggregate amounts referred to in such clauses) or in clauses (x)(i) and (x)(j) of the
definition of “Consolidated Adjusted EBITDA” to the extent such charges are actually paid in cash
during such period.



     “Consolidated Interest Expense” means, for any period, total interest expense (including that
portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of
Borrower and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness
of Borrower and its Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and net costs under Interest Rate Agreements (and including
Restricted Junior Payments made pursuant to Section 6.4(f)), but excluding, however, any amount not
payable in Cash and any amounts referred to in Section 2.12(e)(i) payable on or before the Closing
Date.



9









 





     “Consolidated Net Income” means, for any period, (i) the net income (or loss) of Borrower and
its Subsidiaries on a consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, but excluding the effects of any of the following, (ii) (a) the
income (or loss) of any Person (other than a Subsidiary of Borrower) in which any other Person
(other than Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to Borrower or any of its Subsidiaries by
such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its
Subsidiaries or that Person’s assets are acquired by Borrower or any of its Subsidiaries, (c) the
income of any Subsidiary of Borrower to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent
not included in clauses (a) through (d) above) any (A) net extraordinary gains, (B) non-recurring
gains not to exceed $10,000,0000 in the aggregate from and after the Closing Date, (C) net
extraordinary losses, (D) non-recurring losses not to exceed $10,000,0000 in the aggregate from and
after the Closing Date or (E) non-recurring costs, losses and restructuring charges, in each case
associated with general and administrative costs (but in no event including costs associated with
store openings, closings and relocations) in connection with consolidating the operations of the
Movie Gallery division and the Hollywood division not to exceed $10,000,000 in the aggregate.



     “Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance
sheet amount of all Indebtedness of Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.



     “Consolidated Working Capital” means, as at any date of determination, the excess of
Consolidated Current Assets over Consolidated Current Liabilities (which may be a negative number).



     “Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the
amount (which may be a negative number) by which Consolidated Working Capital as of the beginning
of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.



     “Contractual Obligation” means, as applied to any Person, any provision of any Security issued
by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of its properties is bound
or to which it or any of its properties is subject.



     “Contributing Guarantors” as defined in Section 7.2.



     “Conversion/Continuation Date” means the effective date of a continuation or conversion, as
the case may be, as set forth in the applicable Conversion/Continuation Notice.



10









 





     “Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the
form of Exhibit A-2.



     “Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H
delivered by a Credit Party pursuant to Section 5.10.



     “Credit Date” means the date of a Credit Extension.



     “Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents,
the Intercreditor Agreement, any documents or certificates executed by Borrower in favor of Issuing
Bank relating to Letters of Credit, any documents or certificates executed by Borrower in favor of
Synthetic LC Issuing Bank relating to Synthetic Letters of Credit, and all other documents,
instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent,
Issuing Bank, Synthetic LC Issuing Bank or any Lender in connection herewith.



     “Credit Extension” means the making of a Loan, the issuing of a Letter of Credit or a
Synthetic Letter of Credit, or the making of a Synthetic LC Deposit.



     “Credit Party” means Borrower and each Guarantor.



     “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or arrangement, each of which
is for the purpose of hedging the foreign currency risk associated with Borrower’s and its
Subsidiaries’ operations and not for speculative purposes.



     “Default” means a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.



     “Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such
Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all
Lenders (calculated as if all Defaulting Lenders (including such Defaulting Lender) had funded all
of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans
of such Defaulting Lender.



     “Default Period” means, with respect to any Defaulting Lender, the period commencing on the
date of the applicable Funding Default and ending on the earliest of the following dates: (i) the
date on which all Commitments are cancelled or terminated and/or the Obligations are declared or
become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to
such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting
Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any
voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.14 or
Section 2.15 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to
Borrower and Administrative Agent a written reaffirmation of its intention to honor its obligations
hereunder with respect to its Commitments, and (iii) the date on which Borrower, Administrative
Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing.



11









 





     “Defaulted Loan” as defined in Section 2.23.



     “Defaulting Lender” as defined in Section 2.23.



     “Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.



     “Disclosed Matter” means the existence or occurrence of any matter which has been disclosed by
Borrower in any filing made by Borrower with the Securities and Exchange Commission prior to the
Closing Date and after December 31, 2005 (including disclosures regarding financial performance or
condition as set forth in any Form 10-K or Form 10-Q during such period); provided, that no
matter shall constitute a “Disclosed Matter” to the extent it shall prove to be, or shall become,
materially more adverse to Borrower and its Subsidiaries taken as a whole or to the Lenders than it
would have reasonably appeared to be on the basis of the disclosure contained in any of the
documents referred to above in this definition.



     “Disqualified Equity Interests” means any Equity Interest which, by its terms (or by the terms
of any security or other Equity Interests into which it is convertible or for which it is
exchangeable), or upon the happening of any event or condition (i) matures or is mandatorily
redeemable (other than solely for Equity Interests which are not otherwise Disqualified Equity
Interests), pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the option of
the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified
Equity Interests), in whole or in part, (iii) provides for the scheduled payments or dividends in
cash, or (iv) is or becomes convertible into or exchangeable for Indebtedness or any other Equity
Interests that would constitute Disqualified Equity Interests, in each case, prior to (A) the date
that is 91 days after the Term Loan Maturity Date or (B) in the case of Equity Interests issued in
connection with any prepayment, redemption, retirement or purchase of, or in exchange for, any
Senior Notes (and/or any Senior Note Refinancing indebtedness), the six year anniversary of the
Closing Date.



     “Documentation Agent” as defined in the preamble hereto.



     “Dollars” and the sign “$” mean the lawful money of the United States of America.



     “Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of
America, any State thereof or the District of Columbia.



     “Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund
(any two or more Related Funds being treated as a single Eligible Assignee for all purposes
hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity
that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which
extends credit or buys loans; provided, no Affiliate of Borrower shall be an Eligible
Assignee.



12









 





     “Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA
which is or was sponsored, maintained or contributed to by, or required to be contributed by,
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.



     “Environmental Claim” means any investigation, notice, notice of violation, claim, action,
suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with
any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any
actual or alleged damage, injury, threat or harm to health, safety, natural resources or the
environment.



     “Environmental Laws” means any and all current or future foreign or domestic, federal or state
(or any subdivision of either of them), statutes, ordinances, orders, rules, regulations,
judgments, Governmental Authorizations, or any other requirements of Governmental Authorities
relating to (i) environmental matters, including those relating to any Hazardous Materials
Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or
(iii) occupational safety and health, industrial hygiene, land use or the protection of human,
plant or animal health or welfare, in any manner applicable to Borrower or any of its Subsidiaries
or any Facility.



     “Equity Interests” means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation), including partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or rights to acquire
any of the foregoing.



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



     “ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is
a member of a group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of Borrower or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower or any such Subsidiary
within the meaning of this definition with respect to the period such entity was an ERISA Affiliate
of Borrower or such Subsidiary and with respect to liabilities arising after such period for which
Borrower or such Subsidiary could be liable under the Internal Revenue Code or ERISA.



     “ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by



13









 







regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the
Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with
Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from
any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan
resulting in liability to Borrower, any of its Subsidiaries or any of their respective Affiliates
pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which might constitute
grounds under ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries
or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning
of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefore, or the receipt by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under
Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise
to the imposition on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or
under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee
Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with
any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure
of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section
401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code,
or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.



     “Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the
Adjusted Eurodollar Rate.



     “Event of Default” means each of the conditions or events set forth in Section 8.1.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.



     “Existing Indebtedness” means Indebtedness and other obligations outstanding under that
certain Credit Agreement, dated as of April 27, 2005 (as amended, supplemented or



14









 







otherwise modified), among the Borrower, Movie Gallery Canada, Inc., the banks, financial
institutions and other lenders named therein, Wachovia Bank, National Association, as U.S.
administrative agent, Congress Financial Corporation (Canada), as Canadian administrative agent,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent, and Bank of America,
N.A., Calyon New York Branch and Canadian Imperial Bank of Commerce, as co-documentation agents.



     “Facility” means any real property (including all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used by Borrower or any of
its Subsidiaries or any of their respective predecessors or Affiliates.



     “Fair Share” as defined in Section 7.2.



     “Fair Share Contribution Amount” as defined in Section 7.2.



     “Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal,
rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided, (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its capacity as a Lender, on such day on such
transactions as determined by Administrative Agent.



     “Financial Officer Certification” means, with respect to the financial statements for which
such certification is required, the certification of the chief financial officer or (if such
officer has been duly appointed in accordance with the Organizational Documents of Borrower) the
chief accounting officer of Borrower that such financial statements fairly present, in all material
respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments.



     “Financial Plan” as defined in Section 5.1(h).



     “First Priority” means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is
subject, other than any Permitted Lien.



     “Fiscal Quarter” means each 13 week period after the end of the Fiscal Year except the last
period in Fiscal Year 2007 and in Fiscal Year 2012, which shall be a 14 week period.



     “Fiscal Year” means any 52 week period ending on the first Sunday following December 30,
except for 2007 and 2012, respectively, which shall be a 53 week period ending January 6, 2008 and
January 6, 2013, respectively (as set forth in Schedule 1 hereto); references



15









 







to a Fiscal Year with a number corresponding to any calendar year (e.g., the “2007
Fiscal Year”) refer to the Fiscal Year ending on the first Sunday following December 30 of such
calendar year.



     “Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of
Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide hazards.



     “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.



     “Funding Default” as defined in Section 2.23.



     “Funding Guarantors” as defined in Section 7.2.



     “Funding Notice” means a notice substantially in the form of Exhibit A-1.



     “GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2,
United States generally accepted accounting principles in effect as of the date of determination
thereof.



     “Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.



     “Governmental Authority” means any federal, state, municipal, national or other government,
governmental department, commission, board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity, officer or examiner exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the United States, or a foreign entity
or government.



     “Governmental Authorization” means any permit, license, authorization, plan, directive,
consent order or consent decree of or from any Governmental Authority.



     “Grantor” as defined in the Pledge and Security Agreement.



     “GSCP” as defined in the preamble.



     “Guaranteed Obligations” as defined in Section 7.1.



     “Guarantor” means each of Borrower and each Domestic Subsidiary of Borrower and, at the
election of Borrower and upon compliance with Section 5.10, Movie Gallery Canada.



     “Guarantor Subsidiary” means each Guarantor other than Borrower.



     “Guaranty” means the guaranty of each Guarantor set forth in Section 7.



     “Hazardous Materials” means any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority or which may or could



16









 







pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity
of any Facility or to the indoor or outdoor environment.



     “Hazardous Materials Activity” means any past, current, proposed or threatened activity, event
or occurrence involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement, removal, remediation,
disposal, disposition or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.



     “Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement entered into with a
Lender Counterparty and satisfactory to Administrative Agent.



     “Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from
time to time may be contracted for, charged, or received under the laws applicable to any Lender
which are presently in effect or, to the extent allowed by law, under such applicable laws which
may hereafter be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.



     “Historical Financial Statements” means as of the Closing Date, (i) the audited financial
statements of Borrower and its Subsidiaries, for the Fiscal Years ended January 4, 2004, January 2,
2005 and January 1, 2006, consisting of balance sheets and the related consolidated statements of
operations, stockholders’ equity and cash flows for such Fiscal Years, and (ii) the unaudited
financial statements of Borrower and its Subsidiaries as at the most recent Fiscal Quarter ending
45 days or more prior to the Closing Date, consisting of a balance sheet and the related
consolidated statements of operations, stockholders’ equity and cash flows for the three-, six-or
nine-month period, as applicable, ending on such date, and, in the case of clauses (i) and (ii),
certified by the chief financial officer of Borrower that they fairly present, in all material
respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments.



     “Inactive Entities” means (a) the following entities in which Movie Gallery US, LLC, a
Guarantor, has an ownership interest as of the Closing Date: CINEvents, Inc., DVDStation, Inc. and
Echo, LLC; and (b) the following entity in which Borrower and Movie Gallery US, LLC, a Guarantor,
have an ownership interest as of the Closing Date: Movie Gallery Mexico Inc., S. de R.L. de C.V.



     “Increased-Cost Lenders” as defined in Section 2.24.



     “Indebtedness”, as applied to any Person, means, without duplication, (i) all indebtedness for
borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing obligations for
borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the



17









 







obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v)
all indebtedness secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for
the account of that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (vii) Disqualified Equity Interests, (viii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation of another; (ix)
any obligation of such Person the primary purpose or intent of which is to provide assurance to an
obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement
relating thereto will be complied with, or the holders thereof will be protected (in whole or in
part) against loss in respect thereof; (x) any liability of such Person for an obligation of
another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the payment or discharge
of such obligation (whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under subclauses (a) or
(b) of this clause (x), the primary purpose or intent thereof is as described in clause (ix) above;
and (xi) all obligations of such Person in respect of any exchange traded or over the counter
derivative transaction, including any Interest Rate Agreement and Currency Agreement, whether
entered into for hedging or speculative purposes; provided, in no event shall obligations
under any Interest Rate Agreement and any Currency Agreement be deemed “Indebtedness” for any
purpose under Section 6.7.



     “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses,
damages (including natural resource damages), penalties, claims (including Environmental Claims),
actions, judgments, suits, costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing
commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a
party or a potential party thereto (it being agreed that, such counsel fees and expenses shall be
limited to one primary counsel, and any additional special and local counsel in each appropriate
jurisdiction, for the Indemnitees, except in the case of actual or potential conflicts of interest
between or among the Indemnitees), and any fees or expenses incurred by Indemnitees in enforcing
this indemnity), whether direct, indirect or consequential and whether based on any federal, state
or foreign laws, statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit
Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to
make Credit Extensions, Issuing Bank’s agreement to issue Letters of Credit, Synthetic LC Issuing
Bank’s agreement to issue Synthetic Letters of Credit or the use or intended use of the proceeds
thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from,
or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the
statements contained in the commitment letter



18









 







delivered by any Lender to Borrower with respect to the transactions contemplated by this
Agreement; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation, land ownership, or
practice of Borrower or any of its Subsidiaries.



     “Indemnitee” as defined in Section 10.3.



     “Installment” as defined in Section 2.13.



     “Intellectual Property” as defined in the Pledge and Security Agreement.



     “Intellectual Property Asset” means, at the time of determination, any interest (fee, license
or otherwise) then owned by any Credit Party in any Intellectual Property.



     “Intellectual Property Security Agreements” has the meaning assigned to that term in the
Pledge and Security Agreement.



     “Intercompany Note” means a promissory note substantially in the form of Exhibit L evidencing
Indebtedness owed among the Credit Parties and their Subsidiaries.



     “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Closing
Date among the Collateral Agent, Borrower, and the Second Lien Collateral Agent.



     “Interest Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i)
Consolidated Adjusted EBITDA for the four Fiscal Quarter period then ended to (ii) Consolidated
Interest Expense for such four Fiscal Quarter period.



     “Interest Payment Date” means with respect to (i) any Loan that is a Base Rate Loan, each
March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to
occur after the Closing Date and the final maturity date of such Loan; and (ii) any Loan that is a
Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan;
provided, in the case of each Interest Period of longer than three months “Interest Payment
Date” shall also include each date that is three months, or an integral multiple thereof, after the
commencement of such Interest Period.



     “Interest Period” means, in connection with a Eurodollar Rate Loan, an interest period of
one-, two-, three- or six-months, as selected by Borrower in the applicable Funding Notice or
Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or
Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the
day on which the immediately preceding Interest Period expires; provided, (a) if an
Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day unless no further Business Day occurs in such
month, in which case such Interest Period shall expire on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of
a calendar month; (c) no Interest Period with respect to any portion of the Term Loans



19









 







shall extend beyond the Term Loan Maturity Date; and (d) no Interest Period with respect to
any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date.



     “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedging agreement or other similar agreement or
arrangement, each of which is for the purpose of hedging the interest rate exposure associated with
Borrower’s and its Subsidiaries’ operations and not for speculative purposes.



     “Interest Rate Determination Date” means, with respect to any Interest Period, the date that
is two Business Days prior to the first day of such Interest Period.



     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof
and from time to time hereafter, and any successor statute.



     “Inventory” means all “inventory” as such term is defined in the UCC as in effect on the
Closing Date in the State of new York, wherever located, in which any Person now or hereafter has
rights.



     “Investment” means (i) any direct or indirect purchase or other acquisition by Borrower or any
of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person
(other than a Guarantor Subsidiary); (ii) any direct or indirect redemption, retirement, purchase
or other acquisition for value, by any Subsidiary of Borrower from any Person (other than Borrower
or any Guarantor Subsidiary), of any Equity Interests of such Person; and (iii) any direct or
indirect loan, advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital
contributions by Borrower or any of its Subsidiaries to any other Person (other than Borrower or
any Guarantor Subsidiary), including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other Person in the ordinary
course of business. The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.



     “Issuance Notice” means an Issuance Notice substantially in the form of Exhibit A-3.



     “Issuing Bank” means Wachovia as Issuing Bank hereunder with respect to Letters of Credit,
together with its permitted successors and assigns in such capacity.



     “Joint Venture” means a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided, in no event shall any corporate
Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.



     “Kiosk Program” means the installation of movie rental kiosks in various retail and other
locations.



20









 





     “Landlord Personal Property Collateral Access Agreement” means a Landlord Waiver and Consent
Agreement substantially in the form of Exhibit K with such amendments or modifications as may be
approved by Collateral Agent.



     “Leasehold Property” means any leasehold interest of any Credit Party as lessee under any
lease of real property, other than any such leasehold interest designated from time to time by
Collateral Agent in its sole discretion as not being required to be included in the Collateral.



     “Lender” means each financial institution listed on the signature pages hereto as a Lender,
and any other Person that becomes a party hereto pursuant to an Assignment Agreement.



     “Lender Counterparty” means each Lender or any Affiliate of a Lender counterparty to a Hedge
Agreement (including any Person who is a Lender (and any Affiliate thereof) as of the Closing Date
but subsequently, whether before or after entering into a Hedge Agreement, ceases to be a Lender
and any Person who enters into a Hedge Agreement in connection with the transactions contemplated
by the Credit Documents prior to the Closing Date and is a Lender as of the Closing Date),
including each such Affiliate that enters into a joinder agreement with Collateral Agent.



     “Letter of Credit” means a commercial or standby letter of credit issued or to be issued by
Issuing Bank under the Revolving Commitment pursuant to this Agreement.



     “Letter of Credit Sublimit” means the lesser of (i) $15,000,000 and (ii) the aggregate unused
amount of the Revolving Commitments then in effect.



     “Letter of Credit Usage” means, as at any date of determination, the sum of (i) the maximum
aggregate amount which is, or at any time thereafter may become, available for drawing under all
Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Borrower.



     “Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated
Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period
ending on such date.



     “Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, and any lease or license in the nature thereof) and any option,
trust or other preferential arrangement having the practical effect of any of the foregoing and
(ii) in the case of Securities, any purchase option, call or similar right of a third party with
respect to such Securities.



     “Loan” means a Term Loan and a Revolving Loan.



     “Loan to Value Ratio” means, at any time, the ratio of (i) Value (as determined by reference
to the most recent calculation of Value delivered to Collateral Agent and



21









 







Administrative Agent pursuant to Section 5.1(p)) to (ii) Total Utilization of Revolving
Commitments.



     “Loan to Value Ratio Certificate” as defined in Section 5.1(p).



     “Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to
time.



     “Material Adverse Effect” means a material adverse effect on and/or material adverse
developments with respect to (i) the business, operations, properties, assets or condition
(financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole; (ii) the
ability of any Credit Party to fully and timely perform its Obligations; (iii) the legality,
validity, binding effect or enforceability against a Credit Party of a Credit Document to which it
is a party; or (iv) the rights, remedies and benefits available to, or conferred upon, any Agent
and any Lender or any Secured Party under any Credit Document; provided, that no Disclosed
Matter shall constitute a Material Adverse Effect.



     “Material Contract” means any contract or other arrangement to which Borrower or any of its
Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.



     “Material Real Estate Asset’’ means (i) (a) any fee-owned Real Estate Asset having a fair
market value in excess of $250,000 as of the date of the acquisition thereof and (b) all Leasehold
Properties other than those with respect to which the aggregate payments under the remaining term
of the lease are less than $750,000 or (ii) any Real Estate Asset that the Requisite Lenders have
determined is material to the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Borrower or any Subsidiary of the Borrower.



     “Moody’s” means Moody’s Investor Services, Inc.



     “Mortgage” means a Mortgage substantially in the form of Exhibit J, as it may be amended,
supplemented or otherwise modified from time to time.



     “Movie Gallery Canada” means Movie Gallery Canada, Inc., a wholly-owned Subsidiary of Borrower
organized under the laws of the Province of New Brunswick.



     “Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as
defined in Section 3(37) of ERISA.



     “NAIC” means The National Association of Insurance Commissioners, and any successor thereto.



     “Narrative Report” means, with respect to the financial statements for which such narrative
report is required, a narrative report describing the operations of Borrower and its Subsidiaries
which report meets the requirements of Item 303 of Regulation S-K promulgated under the Securities
Act for the applicable Fiscal Quarter or Fiscal Year and for the period from



22









 







the beginning of the then current Fiscal Year to the end of such period to which such
financial statements relate.



     “Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash
payments (including any Cash received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) received by Borrower or any
of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in
connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a
result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale and (c) a reasonable reserve for any
indemnification payments (fixed or contingent) attributable to seller’s indemnities and
representations and warranties to purchaser in respect of such Asset Sale undertaken by Borrower or
any of its Subsidiaries in connection with such Asset Sale.



     “Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or
proceeds received by Borrower or any of its Subsidiaries (a) under any casualty insurance policy in
respect of a covered loss thereunder or (b) as a result of the taking of any assets of Borrower or
any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or
otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of
such a taking, minus (ii) (a) any actual and reasonable costs incurred by Borrower or any
of its Subsidiaries in connection with the adjustment or settlement of any claims of Borrower or
such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with
any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes
payable as a result of any gain recognized in connection therewith.



     “Nonpublic Information” means information which has not been disseminated in a manner making
it available to investors generally, within the meaning of Regulation FD.



     “Non-Core Assets” means assets of the Borrower and its Subsidiaries which are not essential or
material to the conduct of the businesses of the Borrower and its Subsidiaries, including without
limitation, (i) the corporate aircraft of the Borrower and its Subsidiaries, (ii) the “Reel.com”
assets, (iii) the “Rack Division” assets, (iv) the iBlast division assets, (v) the assets and/or
Equity Interests of MG Automation, Inc. and MG Digital, Inc. and (vi) owned real estate on the
Closing Date.



     “Non-US Lender” as defined in Section 2.21(c).



     “Note” means a Term Loan Note, a Revolving Loan Note or a Swing Line Note.



     “Notice” means a Funding Notice, an Issuance Notice, or a Conversion/ Continuation Notice.



     “Obligations” means all obligations of every nature of each Credit Party, including
obligations from time to time owed to the Agents (including former Agents), the Lenders or any of
them and Lender Counterparties, under any Credit Document or Hedge



23









 







Agreement, whether for principal, interest (including interest which, but for the filing of a
petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation,
whether or not a claim is allowed against such Credit Party for such interest in the related
bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, reimbursement of
amounts drawn under Synthetic Letters of Credit, payments for early termination of Hedge
Agreements, fees, expenses, indemnification or otherwise.



     “Obligee Guarantor” as defined in Section 7.7.



     “Organizational Documents” means (i) with respect to any corporation, its certificate or
articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with
respect to any limited partnership, its certificate of limited partnership, as amended, and its
partnership agreement, as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability company, its articles of
organization, as amended, and its operating agreement, as amended. In the event any term or
condition of this Agreement or any other Credit Document requires any Organizational Document to be
certified by a secretary of state or similar governmental official, the reference to any such
“Organizational Document” shall only be to a document of a type customarily certified by such
governmental official.



     “Patriot Act” as defined in Section 3.1(v).



     “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.



     “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.



     “Permitted Acquisition” means any acquisition by Borrower or any of its wholly-owned
Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets
of, all of the Equity Interests of, or a business line or unit or a division of, any Person;
provided,




	 	(i)	 	immediately prior to, and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom;
	 
	 	(ii)	 	all transactions in connection therewith shall be consummated,
in all material respects, in accordance with all applicable laws and in
conformity with all applicable Governmental Authorizations;
	 
	 	(iii)	 	in the case of the acquisition of Equity Interests, all of the
Equity Interests (except for any such Securities in the nature of directors’
qualifying shares required pursuant to applicable law) acquired or otherwise
issued by such Person or any newly formed Subsidiary of Borrower in connection
with such acquisition shall be owned 100% by Borrower or a Guarantor Subsidiary
thereof, and Borrower shall have taken, or caused to be taken,
as of the date such Person becomes a




24









 






	 	 	 	Subsidiary of Borrower, each of the
actions set forth in Sections 5.10 and/or 5.11, as applicable;
	 
	 	(iv)	 	Borrower and its Subsidiaries shall be in compliance with the
financial covenants set forth in Section 6.7 on a pro forma basis after giving
effect to such acquisition as of the last day of the Fiscal Quarter most
recently ended (as determined in accordance with Section 6.7(e));
	 
	 	(v)	 	Borrower shall have delivered to Administrative Agent (A) at
least 10 Business Days prior to such proposed acquisition, (i) a Compliance
Certificate evidencing compliance with Section 6.7 as required under clause
(iv) above and (ii) all other relevant financial information with respect to
such acquired assets, including the aggregate consideration for such
acquisition and any other information required to demonstrate compliance with
Section 6.7 and (B) promptly upon request by Administrative Agent, (i) a copy
of the purchase agreement related to the proposed Permitted Acquisition (and
any related documents reasonably requested by Administrative Agent) and (ii)
quarterly and annual financial statements of the Person whose Equity Interests
or assets are being acquired for the twelve month (12) month period immediately
prior to such proposed Permitted Acquisition, including any audited financial
statements that are available;
	 
	 	(vi)	 	any Person or assets or division as acquired in accordance
herewith (y) shall be in same business or lines of business in which Borrower
and/or its Subsidiaries are engaged as of the Closing Date or any business
reasonably related thereto or a reasonable extension thereof and (z) shall have
generated positive cash flow for the four quarter period most recently ended
prior to the date of such acquisition; and
	 
	 	(vii)	 	the aggregate unused portion of the Revolving Commitments at
such time (after giving effect to the consummation of the respective Permitted
Acquisition and any financing thereof) shall equal or exceed $50,000,000.





     “Permitted Holder” means J.T. Malugen, H. Harrison Parrish, any senior executive officer of
the Borrower on the date hereof and their respective estates, spouses, and lineal descendants, and
their legal representatives of any of the foregoing, and the trustees of any bona fide trusts of
which any of the foregoing are the sole beneficiaries and grantors, or any corporation, limited
partnership, limited liability company and similar entity, a majority of the voting Equity
Interests of which is owned by any of the foregoing.



     “Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.



     “Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies,
Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts,



25









 







business trusts or other organizations, whether or not legal entities, and Governmental
Authorities.



     “Platform” as defined in Section 5.1(o).



     “Pledge and Security Agreement” means the Pledge and Security Agreement to be executed by
Borrower and each Guarantor substantially in the form of Exhibit I, as it may be amended,
supplemented or otherwise modified from time to time.



     “Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money Rates Section
as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of
the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate actually charged to any
customer. Agent or any other Lender may make commercial loans or other loans at rates of interest
at, above or below the Prime Rate.



     “Principal Office” means, for each of Administrative Agent, Swing Line Lender, Issuing Bank
and Synthetic LC Issuing Bank, such Person’s “Principal Office” as set forth on Appendix B, or such
other office or office of a third party or sub-agent, as appropriate, as such Person may from time
to time designate in writing to Borrower, Administrative Agent and each Lender.



     “Projections” as defined in Section 4.8.



     “Pro Rata Share” means (i) with respect to all payments, computations and other matters
relating to the Term Loan of any Lender, the percentage obtained by dividing (a) the Term Loan
Exposure of that Lender by (b) the aggregate Term Loan Exposure of all Lenders; (ii) with respect
to all payments, computations and other matters relating to the participations in Synthetic Letters
of Credit, the Synthetic LC Deposits or the Synthetic LC Disbursements, the percentage obtained by
dividing (a) the Synthetic LC Deposit of that Lender by (b) the aggregate Synthetic LC Deposits of
all Lenders; and (iii) with respect to all payments, computations and other matters relating to the
Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or
participations purchased therein by any Lender or any participations in Swing Line Loans purchased
therein by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that
Lender by (b) the aggregate Revolving Exposure of all Lenders. For all other purposes with respect
to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to
the sum of the Term Loan Exposure, the Synthetic LC Exposure and the Revolving Exposure of that
Lender, by (B) an amount equal to the sum of the aggregate Term Loan Exposure, the aggregate
Synthetic LC Exposure and the aggregate Revolving Exposure of all Lenders.



     “Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or
otherwise) then owned by any Credit Party in any real property.



     “Refunded Swing Line Loans” as defined in Section 2.3(b)(iv).



     “Register” as defined in Section 2.8(b).



26









 





     “Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.



     “Regulation FD” means Regulation FD as promulgated by the US Securities and Exchange
Commission under the Securities Act and Exchange Act as in effect from time to time.



     “Reimbursement Date” as defined in Section 2.4(d).



     “Related Fund” means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.



     “Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material
into the indoor or outdoor environment (including the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Material), including the movement
of any Hazardous Material through the air, soil, surface water or groundwater.



     “Rental Items” means video cassette tapes, digital versatile disc (DVD) or video discs
(regardless of format), video games, audiotapes and related equipment to the extent that such items
were acquired by the Borrower or any of its Subsidiaries for sale or rental to their customers or
are held by the Borrower or such Subsidiary for sale or rental to their customers.



     “Replacement Lender” as defined in Section 2.24.



     “Requisite Lenders” means one or more Lenders having or holding Term Loan Exposure, Synthetic
LC Exposure and/or Revolving Exposure and representing more than 50% of the sum of (i) the
aggregate Term Loan Exposure of all Lenders, (ii) the aggregate Synthetic LC Exposure of all
Lenders and (iii) the aggregate Revolving Exposure of all Lenders.



     “Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect,
on account of any shares of any class of stock of Borrower now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that class; (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of Borrower now or hereafter outstanding;
(iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of Borrower now or hereafter outstanding;
and (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or
similar payment, or any other payment (other than principal or interest), with respect to the
Indebtedness outstanding under the Second Lien Credit Agreement, the Senior Notes and any
Indebtedness under the Senior Notes Indenture.



     “Revolving Commitment” means the commitment of a Lender to make or otherwise fund any
Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder
and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of
each Lender’s Revolving Commitment, if any, is set forth on



27









 







Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction
pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as
of the Closing Date is $100,000,000.



     “Revolving Commitment Period” means the period from the Closing Date to but excluding the
Revolving Commitment Termination Date.



     “Revolving Commitment Termination Date” means the earliest to occur of (i) March 31, 2007, if
the Term Loans are not made on or before that date; (ii) the fifth anniversary of the Closing Date,
(iii) January 15, 2012, if the Senior Notes Refinancing (including such refinancing accomplished
pursuant to the Senior Note Refinancing Third Lien Facility) has not occurred on or prior to
October 31, 2011, (iv) the date the Revolving Commitments are permanently reduced to zero pursuant
to Section 2.14(b) or 2.15, (v) the date of the termination of the Revolving Commitments pursuant
to Section 8.1.



     “Revolving Exposure” means, with respect to any Lender as of any date of determination, (i)
prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment; and (ii)
after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding
principal amount of the Revolving Loans of that Lender, (b) in the case of Issuing Bank, the
aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of
any participations by Lenders in such Letters of Credit), (c) the aggregate amount of all
participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing
under any Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and
(c) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line
Loans.



     “Revolving Loan” means a Loan made by a Lender to Borrower pursuant to Section 2.2(a).



     “Revolving Loan Note” means a promissory note in the form of Exhibit B-2, as it may be
amended, supplemented or otherwise modified from time to time.



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



     “Scheduled Sale-Leaseback Properties” means the owned Real Estate Assets identified on
Schedule 3.2.



     “Second Lien Collateral Agent” means the “Collateral Agent” as defined in the Second Lien
Credit Agreement.



     “Second Lien Credit Agreement” means the Second Lien Term Loan and Guaranty Agreement dated as
of the Closing Date among Borrower, certain Subsidiaries of Borrower, GSCP as sole lead arranger,
sole book runner and sole syndication agent and the other agents and lenders party thereto, as such
may be amended, supplemented or otherwise modified from time to time in accordance with this
Agreement.



28









 





     “Second Lien Credit Documents” shall mean the “Credit Documents” as defined in the Second Lien
Credit Agreement.



     “Second Lien Term Loans” means term loans in an aggregate principal amount of $175,000,000
made on the Closing Date under the Second Lien Credit Agreement.



     “Secured Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Total
Secured Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period
ending on such date.



     “Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.



     “Securities” means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.



     “Securities Act” means the Securities Act of 1933, as amended from time to time, and any
successor statute.



     “Senior Notes” means Borrowers’ 11% Senior Notes due 2012.



     “Senior Notes Indenture” means that certain Indenture, dated as April 27, 2005, among
Borrower, the guarantors party thereto, and SunTrust Bank, as trustee, as such may be amended,
supplemented or otherwise modified from time to time in accordance with this Agreement.



     “Senior Notes Refinancing” means a refinancing, renewal or extension of the Senior Notes
issued pursuant to the Senior Notes Indenture on the following terms: (A) the Indebtedness subject
to any such refinancing, renewal or extension is in an aggregate principal amount not greater than
the aggregate principal amount of the Senior Notes being renewed, refinanced or extended, plus the
amount of any premiums required to be paid thereon in accordance with the terms of the Senior Notes
Indenture (as in effect on the Closing Date) and the Senior Notes (as in effect on the Closing
Date) and reasonable fees and expenses associated therewith (but not any consent fees or similar
fees), (B) the Indebtedness subject to such refinancing, renewal or extension shall be unsecured
and shall have a final maturity which is later than, and does not require any scheduled
amortization or other scheduled payments of principal prior to, the six year anniversary of the
Closing Date, (C) the cash yield or cash interest on the Indebtedness subject to such refinancing,
renewal or extension shall not exceed the lesser of (x) the Adjusted Eurodollar Rate plus 9% or (y)
15%, (D) the covenants, events of default, subordination and other provisions thereof (including
any guarantees thereof) shall be, in the aggregate, no less favorable to the Borrower and to the
Lenders than those contained in the Second Lien Credit Documents (provided that such provisions
shall not include financial covenants, and shall be subject to automatic amendment to conform to
any amendments made to



29









 







the Second Lien Credit Documents) and (E) no Default or Event of Default shall have occurred
and be continuing or result therefrom.



     “Senior Notes Refinancing Third Lien Facility” means an exchange of the Senior Notes issued
pursuant to the Senior Notes Indenture on the following terms: (A) the Senior Notes tendered in
such exchange, and the Indebtedness issued in exchanged for such Senior Notes, in each case is in
an aggregate principal amount not to exceed $325,000,00, (B) the Indebtedness exchanged for such
Senior Notes shall be secured by the Collateral (which Lien shall be subject to the intercreditor
provisions set forth on Exhibit M hereto) and shall have a final maturity which is no earlier than,
and does not require any scheduled amortization or other scheduled payments of principal prior to,
the six year anniversary of the Closing Date, (C) the cash yield or cash interest on the
Indebtedness exchanged for such Senior Notes shall not exceed the lesser of (x) the Adjusted
Eurodollar Rate plus 7.50% or (y) 13%, (D) the covenants, events of default, subordination and
other provisions thereof (including any guarantees thereof) shall be reasonably satisfactory to the
Administrative Agent and the Collateral Agent and shall be, in the aggregate, no less favorable to
the Borrower and to the Lenders than those contained in the Second Lien Credit Documents (provided
that such provisions shall not include financial covenants, and shall be subject to automatic
amendment to conform to any amendments made to the Second Lien Credit Documents) and (E) no Default
or Event of Default shall have occurred and be continuing or result therefrom.



     “Solvency Certificate” means a Solvency Certificate of the chief financial officer of Borrower
substantially in the form of Exhibit G-2.



     “Solvent” means, with respect to any Credit Party, that as of the date of determination, both
(i) (a) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the
present fair saleable value of such Credit Party’s present assets; (b) such Credit Party’s capital
is not unreasonably small in relation to its business as contemplated on the Closing Date and
reflected in the Projections or with respect to any transaction contemplated or undertaken after
the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe
(nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts
as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the
meaning given that term and similar terms under the Bankruptcy Code and applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).



     “Sub-Account” as defined in Section 2.5(i).



     “Subject Transaction” as defined in Section 6.7(f).



     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, association, joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled (without



30









 







regard to the occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of
that Person or a combination thereof; provided, in determining the percentage of ownership
interests of any Person controlled by another Person, no ownership interest in the nature of a
“qualifying share” of the former Person shall be deemed to be outstanding.



     “Swing Line Lender” means Wachovia in its capacity as Swing Line Lender hereunder, together
with its permitted successors and assigns in such capacity.



     “Swing Line Loan” means a Loan made by Swing Line Lender to Borrower pursuant to Section 2.3.



     “Swing Line Note” means a promissory note in the form of Exhibit B-3, as it may be amended,
supplemented or otherwise modified from time to time.



     “Swing Line Sublimit” means the lesser of (i) $40,000,000, and (ii) the aggregate unused
amount of Revolving Commitments then in effect.



     “Syndication Agent” as defined in the preamble hereto.



     “Synthetic LC Commitment” means the commitment of a Lender to acquire participations in
Synthetic Letters of Credit hereunder and “Synthetic LC Commitments” means such commitments of all
Lenders. The amount of each Lender’s Synthetic LC Commitment, if any, is set forth on Appendix A-3
or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the
terms and conditions hereof. The aggregate amount of the Synthetic LC Commitments as of the
Closing Date is $25,000,000.



     “Synthetic LC Commitment Period” means the period from the Closing Date to but excluding the
Synthetic LC Commitment Termination Date.



     “Synthetic LC Commitment Termination Date” means the earliest to occur of (i) March 31, 2007,
if the Term Loans are not made on or before that date, (ii) the fifth anniversary of the Closing
Date, (iii) January 15, 2012, if the Senior Notes Refinancing (including such refinancing
accomplished pursuant to the Senior Note Refinancing Third Lien Facility) has not occurred on or
prior to October 31, 2011, (iv) the date the Synthetic LC Commitments are permanently reduced to
zero pursuant to Section 2.14(b), and (v) the date of the termination of the Synthetic LC
Commitments pursuant to Section 8.1.



     “Synthetic LC Deposit” means, with respect to each Synthetic LC Lender, the amount of such
Synthetic LC Lender’s Synthetic LC Commitment that such Synthetic LC Lender shall deposit in such
Synthetic LC Lender’s Sub-Account with Administrative Agent on or after the Closing Date, and that
amount shall in turn be deposited by Administrative Agent in the Synthetic LC Deposit Account, as
such amount may be (a) reduced or reinstated from time to time as a result of withdrawals from the
Synthetic LC Deposit Account debited by Administrative Agent from and payments to the Synthetic LC
Deposit Account credited by Administrative Agent to the Sub-Account of such Synthetic LC Lender
pursuant to Section 2.5,



31









 







and (b) reduced or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.6 and, “Synthetic LC Deposits” mean such deposits of all Synthetic LC
Lenders.



     “Synthetic LC Deposit Account” as defined in Section 2.5(i).



     “Synthetic LC Deposit Return” as defined in Section 2.5(m).



     “Synthetic LC Depositary Bank” shall mean Wachovia.



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



     “Synthetic LC Exposure” means, with respect to any Lender, as of any date of determination,
such Lender’s Pro Rata Share of the aggregate Synthetic LC Deposits and Synthetic LC Usage (other
than the portion of such Synthetic LC Usage represented by amounts available for drawing, but not
yet drawn, under Synthetic Letters of Credit).



     “Synthetic LC Issuing Bank” means Wachovia as Synthetic LC Issuing Bank hereunder with respect
to Synthetic Letters of Credit, together with its permitted successors and assigns in such
capacity.



     “Synthetic LC Lender” means a Lender having an interest in the Synthetic LC Deposit Account or
the Synthetic LC Commitment.



     “Synthetic LC Reimbursement Date” as defined in Section 2.5(d).



     “Synthetic LC Usage” means, as of any date of determination, the sum of (i) the maximum
aggregate amount which is, or at any time thereafter may become, available for drawing under all
Synthetic Letters of Credit then outstanding, and (ii) the aggregate amount of all Synthetic LC
Disbursements not theretofore reimbursed by or on behalf of Borrower.



     “Synthetic Letter of Credit” means a commercial or standby letter of credit issued or to be
issued by Synthetic LC Issuing Bank under the Synthetic LC Commitment pursuant to this Agreement,
and shall include, without limitation, those letters of credit identified on Schedule 3 hereto.



     “Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction
or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed; provided, “Tax on the overall net income”
of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person’s applicable principal office (and/or, in the case of a
Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender,
its lending office) is deemed to be doing business on all or part of the net income, profits or
gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise
in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of
a Lender, its applicable lending office).



32









 





     “Term Loan” means a Term Loan made by a Lender to Borrower pursuant to Section 2.1(a).



     “Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Term Loan
and “Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of
each Lender’s Term Loan Commitment, if any, is set forth on Appendix A-1 or in the applicable
Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions
hereof. The aggregate amount of the Term Loan Commitments as of the Closing Date is $600,000,000.



     “Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the
outstanding principal amount of the Term Loans of such Lender; provided, at any time prior
to the making of the Term Loans, the Term Loan Exposure of any Lender shall be equal to such
Lender’s Term Loan Commitment.



     “Term Loan Maturity Date” means the earliest to occur of (i) March 31, 2007, if the Term Loans
are not made on or before that date, (ii) the fifth anniversary of the Closing Date, (iii) January
15, 2012, if the Senior Notes Refinancing (including such refinancing accomplished pursuant to the
Senior Note Refinancing Third Lien Facility) has not occurred on or prior to October 31, 2011, and
(iv) the date that all Term Loans become due in payable in full hereunder, whether by acceleration
or otherwise.



     “Term Loan Note” means a promissory note in the form of Exhibit B-1, as it may be amended,
supplemented or otherwise modified from time to time.



     “Terminated Lender” as defined in Section 2.24.



     “Title Policy” as defined in Section 3.1(h).



     “Total Secured Debt” means, as at any date of determination, Indebtedness with respect to
Loans plus Letter of Credit Usage (only to the extent drawn and not reimbursed) and
Synthetic LC Usage (only to the extent drawn and not reimbursed) plus Indebtedness with
respect to Second Lien Term Loans plus any other Indebtedness of the Borrower and any of
its Subsidiaries secured by a Lien (other than Indebtedness incurred pursuant to the Senior Notes
Refinancing Third Lien Facility).



     “Total Utilization of Revolving Commitments” means, as at any date of determination, the sum
of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving
Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank
for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate
principal amount of all outstanding Swing Line Loans and (iii) the Letter of Credit Usage.



     “Type of Loan” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate
Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base Rate Loan.



33









 





     “UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in
effect in any applicable jurisdiction.



     “U.S. Lender” as defined in Section 2.21(c).



     “Value” means, with respect to Inventory of the Credit Parties in which Collateral Agent has a
perfected first priority (subject only to Permitted Liens which arise by operation of law) security
interest, the lower of cost or market for such Inventory, or in the case of rental Inventory, the
net book value of rental Inventory (excluding the value of net rental Inventory subject to leases,
revenue sharing agreements or not otherwise owned by Borrower or any Guarantor), in each case
determined in a manner consistent with the current methodology and practices of Borrower and the
Guarantors, regardless of any changes in GAAP or other changes, except as the Collateral Agent
otherwise agrees.



     “Wachovia” as defined in the preamble.



     1.2. Accounting Terms Except as otherwise expressly provided herein, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered by Borrower to Lenders pursuant
to Section 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of
such preparation (and delivered together with the reconciliation statements provided for in Section
5.1(d), if applicable). Subject to the foregoing, calculations in connection with the definitions,
covenants and other provisions hereof shall utilize accounting principles and policies in
conformity with those used to prepare the Historical Financial Statements. If at any time any
change in GAAP (or a change in the application of the policies thereof) would affect the
computation of any financial ratio or requirement set forth in any Credit Document, and Borrower or
Requisite Lenders shall so request, Administrative Agent, Requisite Lenders and Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of Requisite Lenders), provided that,
until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and Borrower shall provide to Administrative Agent and Lenders
reconciliation statements provided for in Section 5.1(d).



     1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. References herein to
any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an
Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the
word “include” or “including”, when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not non-limiting
language (such as “without limitation” or “but not limited to” or words of similar import) is used
with reference thereto, but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter. The terms lease and
license shall include sub-lease and sub-license, as applicable.



34









 





  SECTION 2. LOANS AND LETTERS OF CREDIT



     2.1. Term Loans.



          (a) Loan Commitments. Subject to the terms and conditions hereof, each Lender
severally agrees to make, on the Closing Date, a Loan to Borrower in an amount equal to such
Lender’s Term Loan Commitment. Borrower may make only one borrowing under the Term Loan Commitment
which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a) and subsequently
repaid or prepaid may not be reborrowed. Subject to Sections 2.14(a) and 2.15, all amounts owed
hereunder with respect to the Term Loans shall be paid in full no later than the Term Loan Maturity
Date. Each Lender’s Term Loan Commitment shall terminate immediately and without further action on
the Closing Date after giving effect to the funding of such Lender’s Term Loan Commitment.




          (b) Borrowing Mechanics for Term Loans.





          (i) Borrower shall deliver to Administrative Agent a fully executed Funding Notice
no later than (i) one day prior to the Closing Date for Base Rate Loans, and (ii) three
days prior to the Closing Date for Eurodollar Rate Loans. Promptly upon receipt by
Administrative Agent of such Funding Notice, Administrative Agent shall notify each
Lender of the proposed borrowing.




          (ii) Each Lender shall make its Term Loan available to Administrative Agent not
later than 12:00 p.m. (New York City time) on the Closing Date, by wire transfer of same
day funds in Dollars, at the Principal Office designated by Administrative Agent. Upon
satisfaction or waiver of the conditions precedent specified herein, Administrative
Agent shall make the proceeds of the Term Loans available to Borrower on the Closing
Date by causing an amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Administrative Agent from Lenders to be credited to the account of
Borrower at the Principal Office designated by Administrative Agent or to such other
account as may be designated in writing to Administrative Agent by Borrower.



     2.2.
Revolving Loans.



          (a) Revolving Commitments. During the Revolving Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make Revolving Loans to Borrower in an
aggregate amount up to but not exceeding such Lender’s Revolving Commitment; provided, that
after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of
Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant
to this Section 2.2(a) may be repaid and reborrowed during the Revolving Commitment Period. Each
Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the
Revolving Commitments shall be paid in full no later than such date.




          (b) Borrowing Mechanics for Revolving Loans.




35









 










          (i) Except pursuant to Section 2.4(d) or 2.5(d), Revolving Loans that are Base Rate
Loans shall be made in an aggregate minimum amount of $1,000,000 and integral multiples
of $1,000,000 in excess of that amount, and Revolving Loans that are Eurodollar Rate
Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount.




          (ii) Whenever Borrower desires that Lenders make Revolving Loans, Borrower shall
deliver to Administrative Agent (with a copy to Collateral Agent) a fully executed and
delivered Funding Notice no later than 10:00 a.m. (New York City time) at least three
Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate
Loan, and at least one Business Day in advance of the proposed Credit Date in the case
of a Revolving Loan that is a Base Rate Loan. Except as otherwise provided herein, a
Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable
on and after the related Interest Rate Determination Date, and Borrower shall be bound
to make a borrowing in accordance therewith.




          (iii) Notice of receipt of each Funding Notice in respect of Revolving Loans,
together with the amount of each Lender’s Pro Rata Share thereof, if any, together with
the applicable interest rate, shall be provided by Administrative Agent to Collateral
Agent and each applicable Lender by telefacsimile with reasonable promptness, but
(provided Administrative Agent shall have received such notice by 10:00 a.m. (New York
City time)) not later than 2:00 p.m. (New York City time) on the same day as
Administrative Agent’s receipt of such Notice from Borrower.




          (iv) Each Lender shall make the amount of its Revolving Loan available to
Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable
Credit Date by wire transfer of same day funds in Dollars, at the Principal Office
designated by Administrative Agent. Except as provided herein, upon satisfaction or
waiver of the conditions precedent specified herein, Administrative Agent shall make the
proceeds of such Revolving Loans available to Borrower on the applicable Credit Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Revolving Loans received by Administrative Agent from Lenders to be credited to the
account of Borrower at the Principal Office designated by Administrative Agent or such
other account as may be designated in writing to Administrative Agent (with a copy to
the Collateral Agent) by Borrower.



     2.3.
Swing Line Loans.



          (a) Swing Line Loans Commitments. During the Revolving Commitment Period, subject
to the terms and conditions hereof, Swing Line Lender hereby agrees to make Swing Line Loans to
Borrower in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided,
that after giving effect to the making of any Swing Line Loan, in no event
shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in
effect. Amounts borrowed pursuant to this Section 2.3 may be repaid and reborrowed during the
Revolving Commitment Period. Swing Line Lender’s Revolving Commitment shall expire




36









 







on the
Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder
with respect to the Swing Line Loans and the Revolving Commitments shall be paid in full no later
than such date.




          (b) Borrowing Mechanics for Swing Line Loans.





          (i) Swing Line Loans shall be made in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount.




          (ii) Whenever Borrower desires that Swing Line Lender make a Swing Line Loan,
Borrower shall deliver to Administrative Agent (with a copy to Collateral Agent) a
Funding Notice no later than 1:00 p.m. (New York City time) on the proposed Credit Date.
Unless Swing Line Lender has received notice from the Administrative Agent to the
contrary, Swing Line Lender shall be entitled to rely on any certification from Borrower
contained in any Funding Notice to the effect that the conditions precedent to the
issuance of any requested Swing Line Loan have been satisfied in full.




          (iii) Unless Swing Line Lender has received notice from the Administrative Agent
that the conditions precedent to the issuance of any requested Swing Line Loan have not
been satisfied in full, then the Swing Line Lender shall make the amount of its Swing
Line Loan available to Administrative Agent not later than 2:00 p.m.(New York City time)
on the applicable Credit Date by wire transfer of same day funds in Dollars, at
Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction
or waiver of the conditions precedent specified herein, Administrative Agent shall make
the proceeds of such Swing Line Loans available to Borrower on the applicable Credit
Date by causing an amount of same day funds in Dollars equal to the proceeds of all such
Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited
to the account of Borrower at Administrative Agent’s Principal Office, or to such other
account as may be designated in writing to Administrative Agent (with a copy to
Collateral Agent) by Borrower.




          (iv) With respect to any Swing Line Loans which have not been voluntarily prepaid
by Borrower pursuant to Section 2.14, Swing Line Lender may at any time in its sole and
absolute discretion, deliver to Administrative Agent (with a copy to Borrower and
Collateral Agent), no later than 11:00 a.m. (New York City time) at least one Business
Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a
Funding Notice given by Borrower, but Borrower shall not be deemed to have made any
representations and warranties in connection with such deemed Funding Notice) requesting
that each Lender holding a Revolving Commitment make Revolving Loans that are Base Rate
Loans to Borrower on such Credit Date in an amount equal to the amount of such Swing
Line Loans (the “Refunded Swing Line Loans”) outstanding on the date such notice is
given which
Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement
to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the
Lenders other than Swing Line Lender shall be immediately delivered by



37









 






Administrative
Agent to Swing Line Lender (and not to Borrower) and applied to repay a corresponding
portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are
made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to
Borrower, and such portion of the Swing Line Loans deemed to be so paid shall no longer
be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note
of Swing Line Lender but shall instead constitute part of Swing Line Lender’s
outstanding Revolving Loans to Borrower and shall be due under the Revolving Loan Note
issued by Borrower to Swing Line Lender. Borrower hereby authorizes Administrative
Agent and Swing Line Lender to charge Borrower’s accounts with Administrative Agent and
Swing Line Lender (up to the amount available in each such account) in order to
immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the
extent the proceeds of such Revolving Loans made by Lenders, including the Revolving
Loans deemed to be made by Swing Line Lender, are not sufficient to repay in full the
Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be
paid) to Swing Line Lender should be recovered by or on behalf of Borrower from Swing
Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the
loss of the amount so recovered shall be ratably shared among all Lenders in the manner
contemplated by Section 2.18.




          (v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv)
in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any
outstanding Swing Line Loans on or before the third Business Day after demand for
payment thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall
be deemed to, and hereby agrees to, have purchased a participation in such outstanding
Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid
amount together with accrued interest thereon. Upon one Business Day’s notice from
Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing
Line Lender an amount equal to its respective participation in the applicable unpaid
amount in same day funds at the Principal Office of Swing Line Lender. In order to
evidence such participation each Lender holding a Revolving Commitment agrees to enter
into a participation agreement at the request of Swing Line Lender in form and substance
reasonably satisfactory to Swing Line Lender. In the event any Lender holding a
Revolving Commitment fails to make available to Swing Line Lender the amount of such
Lender’s participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with interest
thereon for three Business Days at the rate customarily used by Swing Line Lender for
the correction of errors among banks and thereafter at the Base Rate, as applicable.




          (vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s
obligation to make Revolving Loans for the purpose of repaying
any Refunded Swing Line Loans pursuant to the second preceding paragraph and each
Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant
to the immediately preceding paragraph shall be absolute and unconditional



38









 






and shall not
be affected by any circumstance, including (A) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Swing Line Lender, any Credit
Party or any other Person for any reason whatsoever; (B) the occurrence or continuation
of a Default or Event of Default; (C) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any Credit Party;
(D) any breach of this Agreement or any other Credit Document by any party thereto; or
(E) any other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided that such obligations of each Lender are subject to
the condition that Swing Line Lender believed in good faith that all conditions under
Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid
Swing Line Loans were made, or the satisfaction of any such condition not satisfied had
been waived by the Requisite Lenders prior to or at the time such Refunded Swing Line
Loans or other unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be
obligated to make any Swing Line Loans (A) if it has elected not to do so after the
occurrence and during the continuation of a Default or Event of Default or (B) at a time
when a Funding Default exists unless Swing Line Lender has entered into arrangements
satisfactory to it and Borrower to eliminate Swing Line Lender’s risk with respect to
the Defaulting Lender’s participation in such Swing Ling Loan, including by cash
collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding Swing Line
Loans.




          (vii) Upon the request by Swing Line Lender to have a Revolving Loan made for the
purpose of repaying any Refunded Swing Line Loan pursuant to the immediately preceding
paragraph (iv) or the request by Swing Line Lender to have Lender purchase a
participation in any unpaid Swing Line Loans pursuant to the immediately preceding
paragraph (v), unless Swing Line Lender has received notice from the Administrative
Agent that the conditions precedent under Section 3.2 were not satisfied in full at the
time that the Swing Line Loan was made to Borrower to which such Refunded Swing Line
Loan relates or to which such participation in any unpaid Swing Line Loans relates,
Swing Line Lender shall be deemed to have satisfied the condition of possessing a good
faith belief that all conditions precedent under Section 3.2 have been satisfied for
purposes of the immediately preceding paragraph (vi).



     2.4. Issuance of Letters of Credit and Purchase of Participations Therein.



          (a) Letters of Credit. During the Revolving Commitment Period, subject to the terms
and conditions hereof, Issuing Bank agrees to issue Letters of Credit for the account of Borrower
in the aggregate amount up to but not exceeding the Letter of Credit Sublimit; provided,
(i) each Letter of Credit shall be denominated in Dollars; (ii) the stated amount of each Letter of
Credit shall not be less than $50,000 or such lesser amount as is acceptable to Issuing
Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of
Revolving Commitments exceed the Revolving Commitments then in effect; (iv) after giving effect to
such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit
then in effect; (v) in no event shall any standby Letter of Credit have an expiration date




39









 







later
than the earlier of (1) the Revolving Commitment Termination Date and (2) the date which is one
year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any
commercial Letter of Credit (x) have an expiration date later than the earlier of (1) the Revolving
Loan Commitment Termination Date and (2) the date which is 180 days from the date of issuance of
such commercial Letter of Credit or (b) be issued if such commercial Letter of Credit is otherwise
in a form that is unacceptable to Issuing Bank in its reasonable discretion. Subject to the
foregoing, Issuing Bank may agree that a standby Letter of Credit will automatically be extended
for one or more successive periods not to exceed one year each, unless Issuing Bank elects not to
extend for any such additional period; provided, Issuing Bank shall not extend any such
Letter of Credit if it has received written notice that an Event of Default has occurred and is
continuing at the time Issuing Bank must elect to allow such extension; provided,
further, in the event a Funding Default exists, Issuing Bank shall not be required to issue
any Letter of Credit unless Issuing Bank has entered into arrangements satisfactory to it and
Borrower to eliminate Issuing Bank’s risk with respect to the participation in Letters of Credit of
the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of
the Letter of Credit Usage.




          (b) Notice of Issuance. Whenever Borrower desires the issuance of a Letter of
Credit, it shall deliver to Administrative Agent (with a copy to Collateral Agent and Issuing Bank)
an Issuance Notice no later than 12:00 p.m. (New York City time) at least three Business Days (in
the case of standby letters of credit) or five Business Days (in the case of commercial letters of
credit), or in each case such shorter period as may be agreed to by Issuing Bank in any particular
instance, in advance of the proposed date of issuance. Upon satisfaction or waiver of the
conditions set forth in Section 3.2, Issuing Bank shall issue the requested Letter of Credit only
in accordance with Issuing Bank’s standard operating procedures. Upon the issuance of any Letter
of Credit or amendment or modification to a Letter of Credit, Issuing Bank shall promptly notify
each Lender with a Revolving Commitment of such issuance, which notice shall be accompanied by a
copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of
such Lender’s respective participation in such Letter of Credit pursuant to Section 2.4(e). Unless
the Issuing Bank has received notice from the Administrative Agent to the contrary, the Issuing
Bank shall be entitled to rely on any certification from Borrower contained in any Issuance Notice
to the effect that the conditions precedent to the issuance of any requested Letter of Credit have
been satisfied in full.




          (c) Responsibility of Issuing Bank With Respect to Requests for Drawings and
Payments. In determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Issuing Bank shall be responsible only to examine the documents delivered
under such Letter of Credit with reasonable care so as to ascertain whether they appear on their
face to be in accordance with the terms and conditions of such Letter of Credit. As between
Borrower and Issuing Bank, Borrower assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by Issuing Bank, by the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, Issuing Bank shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and issuance of any
such Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of Credit or the
rights or benefits




40









 







thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of
Credit to comply fully with any conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond
the control of Issuing Bank, including any Governmental Acts; none of the above shall affect or
impair, or prevent the vesting of, any of Issuing Bank’s rights or powers hereunder. Without
limiting the foregoing and in furtherance thereof, any action taken or omitted by Issuing Bank
under or in connection with the Letters of Credit or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not give rise to any liability on the part of
Issuing Bank to Borrower. Notwithstanding anything to the contrary contained in this Section
2.4(c), Borrower shall retain any and all rights it may have against Issuing Bank for any liability
arising solely out of the gross negligence or willful misconduct of Issuing Bank.




          (d) Reimbursement by Borrower of Amounts Drawn or Paid Under Letters of Credit. In
the event Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall
immediately notify Borrower and Administrative Agent (with a copy to Collateral Agent), and
Borrower shall reimburse Issuing Bank on or before the Business Day immediately following the date
on which such drawing is honored (the “Reimbursement Date”) in an amount in Dollars and in same day
funds equal to the amount of such honored drawing; provided, anything contained herein to
the contrary notwithstanding, (i) unless Borrower shall have notified Administrative Agent (with a
copy to Collateral Agent) and Issuing Bank prior to 10:00 a.m. (New York City time) on the date
such drawing is honored that Borrower intends to reimburse Issuing Bank for the amount of such
honored drawing with funds other than the proceeds of Revolving Loans, Borrower shall be deemed to
have given a timely Funding Notice to Administrative Agent requesting Lenders with Revolving
Commitments to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount
in Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver
of the conditions specified in Section 3.2, Lenders with Revolving Commitments shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored
drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse
Issuing Bank for the amount of such honored drawing; and provided further, if for
any reason proceeds of Revolving Loans are not received by Issuing Bank on the Reimbursement Date
in an amount equal to the amount of such honored drawing, Borrower shall reimburse Issuing Bank, on
demand, in an amount in same day funds equal to the excess of the amount of such honored drawing
over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this
Section 2.4(d) shall be deemed to relieve any Lender with a Revolving Commitment from its
obligation to make Revolving Loans on the terms and conditions set forth
herein, and Borrower shall retain any and all rights it may have against any such Lender
resulting from the failure of such Lender to make such Revolving Loans under this Section 2.4(d).




          (e) Lenders’ Purchase of Participations in Letters of Credit. Immediately upon the
issuance of each Letter of Credit, each Lender having a Revolving Commitment shall be




41









 







deemed to
have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a participation in
such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro
Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any
time may become available to be drawn thereunder. In the event that Borrower shall fail for any
reason to reimburse Issuing Bank as provided in Section 2.4(d), Issuing Bank shall promptly notify
each Lender with a Revolving Commitment of the unreimbursed amount of such honored drawing
(including any interest payable in connection therewith) and of such Lender’s respective
participation therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each
Lender with a Revolving Commitment shall make available to Issuing Bank an amount equal to its
respective participation, in Dollars and in same day funds, at the office of Issuing Bank specified
in such notice, not later than 12:00 p.m. (New York City time) on the first business day (under the
laws of the jurisdiction in which such office of Issuing Bank is located) after the date notified
by Issuing Bank. In the event that any Lender with a Revolving Commitment fails to make available
to Issuing Bank on such business day the amount of such Lender’s participation in such Letter of
Credit as provided in this Section 2.4(e), Issuing Bank shall be entitled to recover such amount on
demand from such Lender together with interest thereon for three Business Days at the rate
customarily used by Issuing Bank for the correction of errors among banks and thereafter at the
Base Rate. Nothing in this Section 2.4(e) shall be deemed to prejudice the right of any Lender
with a Revolving Commitment to recover from Issuing Bank any amounts made available by such Lender
to Issuing Bank pursuant to this Section in the event that it is determined that the payment with
respect to a Letter of Credit in respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of Issuing Bank. In the event Issuing Bank shall have
been reimbursed by other Lenders pursuant to this Section 2.4(e) for all or any portion of any
drawing honored by Issuing Bank under a Letter of Credit, such Issuing Bank shall distribute to
each Lender which has paid all amounts payable by it under this Section 2.4(e) with respect to such
honored drawing such Lender’s Pro Rata Share of all payments subsequently received by Issuing Bank
from Borrower in reimbursement of such honored drawing when such payments are received. Any such
distribution shall be made to a Lender at its primary address set forth below its name on Appendix
B or at such other address as such Lender may request.




          (f) Obligations Absolute. The obligation of Borrower to reimburse Issuing Bank for
drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by
Lenders pursuant to Section 2.4(d) and the obligations of Lenders under Section 2.4(e) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under
all circumstances including any of the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other
right which Borrower or any Lender may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank,
Lender or any other Person or, in the case of a Lender, against Borrower, whether in connection
herewith, the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was procured); (iii) any draft or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by
Issuing Bank under any Letter of Credit against presentation of a draft or other document which
does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in




42









 







the business, operations, properties, assets, condition (financial or otherwise) or prospects of
Borrower or any of its Subsidiaries; (vi) any breach hereof or any other Credit Document by any
party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any
of the foregoing; or (viii) the fact that an Event of Default or a Default shall have occurred and
be continuing; provided, in each case, that payment by Issuing Bank under the applicable
Letter of Credit shall not have constituted gross negligence or willful misconduct of Issuing Bank
under the circumstances in question.




          (g) Indemnification. Without duplication of any obligation of Borrower under
Section 10.2 or 10.3, in addition to amounts payable as provided herein, Borrower hereby agrees to
protect, indemnify, pay and save harmless Issuing Bank from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel) which Issuing Bank
may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter
of Credit by Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct
of Issuing Bank or (2) the wrongful dishonor by Issuing Bank of a proper demand for payment made
under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to honor a drawing
under any such Letter of Credit as a result of any Governmental Act.




     2.5. Issuance of Synthetic Letters of Credit and Purchase of Participations Therein.



          (a) Synthetic Letters of Credit. During the Synthetic LC Commitment Period, subject
to the terms and conditions hereof, Synthetic LC Issuing Bank agrees to issue Synthetic Letters of
Credit for the account of Borrower in the aggregate amount up to but not exceeding the aggregate
Synthetic LC Commitments; provided, (i) each Synthetic Letter of Credit shall be
denominated in Dollars; (ii) the stated amount of each Synthetic Letter of Credit shall not be less
than $50,000 or such lesser amount as is acceptable to Synthetic LC Issuing Bank; (iii) after
giving effect to such issuance, in no event shall the Synthetic LC Usage exceed the amount in the
Synthetic LC Deposit Account; (iv) in no event shall any standby Synthetic Letter of Credit have an
expiration date later than the earlier of (1) the second Business Day prior to the Synthetic LC
Commitment Termination Date and (2) the date which is one year from the date of issuance of such
standby Synthetic Letter of Credit; and (v) in no event shall any commercial Synthetic Letter of
Credit (x) have an expiration date later than the earlier of (1) the second Business Day prior to
the Synthetic LC Commitment Termination Date and (2) the date which is 180 days from the date of
issuance of such commercial Synthetic Letter of Credit or (y) be issued if such commercial
Synthetic Letter of Credit is otherwise unacceptable to Synthetic LC Issuing Bank in its reasonable
discretion. Subject to the foregoing, Synthetic LC Issuing Bank may agree that a standby Synthetic
Letter of Credit will automatically be extended for one or more successive periods not to exceed
one year each, unless Synthetic LC Issuing Bank elects not to extend for any such additional
period; provided, Synthetic LC Issuing Bank shall not
extend any such Synthetic Letter of Credit if it has received written notice that an Event of
Default has occurred and is continuing at the time Synthetic LC Issuing Bank must elect to allow
such extension.




          (b) Notice of Issuance. Whenever Borrower desires the issuance of a Synthetic
Letter of Credit, it shall deliver to Administrative Agent (with a copy to Collateral




43









 







Agent and
Synthetic LC Issuing Bank) an Issuance Notice no later than 12:00 p.m. (New York City time) at
least three Business Days (in the case of standby letters of credit) or five Business Days (in the
case of commercial letters of credit), or in each case such shorter period as may be agreed to by
Synthetic LC Issuing Bank in any particular instance, in advance of the proposed date of issuance.
Upon satisfaction or waiver of the conditions set forth in Section 3.2, Synthetic LC Issuing Bank
shall issue the requested Synthetic Letter of Credit only in accordance with Synthetic LC Issuing
Bank’s standard operating procedures. Upon the issuance of any Synthetic Letter of Credit or
amendment or modification to a Synthetic Letter of Credit, Synthetic LC Issuing Bank shall promptly
notify Administrative Agent (with a copy to Collateral Agent) who shall promptly notify each
Synthetic LC Lender of such issuance, which notice shall be accompanied by a copy of such Synthetic
Letter of Credit or amendment or modification to a Synthetic Letter of Credit and the amount of
such Lender’s respective participation in such Synthetic Letter of Credit pursuant to Section
2.5(e). Unless the Synthetic LC Issuing Bank has received notice from the Administrative Agent to
the contrary, the Synthetic LC Issuing Bank shall be entitled to rely on any certification from
Borrower contained in any Issuance Notice to the effect that the conditions precedent to the
issuance of any requested Synthetic Letter of Credit have been satisfied in full.




          (c) Responsibility of Synthetic LC Issuing Bank With Respect to Requests for Drawings
and Payments. In determining whether to honor any drawing under any Synthetic Letter of Credit
by the beneficiary thereof, Synthetic LC Issuing Bank shall be responsible only to examine the
documents delivered under such Synthetic Letter of Credit with reasonable care so as to ascertain
whether they appear on their face to be in accordance with the terms and conditions of such
Synthetic Letter of Credit. As between Borrower and Synthetic LC Issuing Bank, Borrower assumes
all risks of the acts and omissions of, or misuse of the Synthetic Letters of Credit issued by
Synthetic LC Issuing Bank, by the respective beneficiaries of such Synthetic Letters of Credit. In
furtherance and not in limitation of the foregoing, Synthetic LC Issuing Bank shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and issuance of any such
Synthetic Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Synthetic Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Synthetic
Letter of Credit to comply fully with any conditions required in order to draw upon such Synthetic
Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such Synthetic Letter of
Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Synthetic Letter of Credit of the proceeds of any drawing under such
Synthetic Letter of Credit; or (viii) any consequences arising from causes beyond the control
of Synthetic LC Issuing Bank, including any Governmental Acts; none of the above shall affect or
impair, or prevent the vesting of, any of Synthetic LC Issuing Bank’s rights or powers hereunder.
Without limiting the foregoing and in furtherance thereof, any action taken or omitted by Synthetic
LC Issuing Bank under or in connection with the Synthetic Letters of Credit or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not give




44









 







rise to any
liability on the part of Synthetic LC Issuing Bank to Borrower. Notwithstanding anything to the
contrary contained in this Section 2.5(c), Borrower shall retain any and all rights it may have
against Synthetic LC Issuing Bank for any liability arising solely out of the gross negligence or
willful misconduct of Synthetic LC Issuing Bank.




          (d) Reimbursement by Borrower of Amounts Drawn or Paid Under Synthetic Letters of
Credit. In the event Synthetic LC Issuing Bank has determined to honor a drawing under a
Synthetic Letter of Credit, it shall immediately notify Borrower, Administrative Agent and
Collateral Agent, and Borrower shall reimburse such Synthetic LC Disbursement by paying to
Administrative Agent on or before the Business Day immediately following the date of notice to
Borrower, Collateral Agent and Administrative Agent of such Synthetic LC Disbursement (the
“Synthetic LC Reimbursement Date”) an amount in Dollars and in same day funds equal to the amount
of such Synthetic LC Disbursement. Promptly following receipt by Administrative Agent of any
payment from Borrower pursuant to this paragraph in respect of any Synthetic LC Disbursement,
Administrative Agent shall distribute such payment to Synthetic LC Issuing Bank or, to the extent
payments have been made from the Synthetic LC Deposit Account pursuant to paragraph (e) below, to
the Synthetic LC Deposit Account for allocation by Administrative Agent among the Sub-Accounts of
the Synthetic LC Lenders in accordance with their Pro Rata Shares.




          (e) Lenders’ Purchase of Participations in Synthetic Letters of Credit. (i)
Immediately upon the issuance of each Synthetic Letter of Credit, each Synthetic LC Lender shall be
deemed to have purchased, and hereby agrees to irrevocably purchase, from Synthetic LC Issuing Bank
a participation in such Synthetic Letter of Credit and any Synthetic LC Disbursement thereunder in
an amount equal to such Lender’s Pro Rata Share (with respect to the Synthetic LC Commitments) of
the maximum amount which is or at any time may become available to be drawn thereunder. In the
event that Borrower shall fail for any reason to reimburse Synthetic LC Issuing Bank in respect of
a Synthetic LC Disbursement as provided in Section 2.5(d), Synthetic LC Issuing Bank shall promptly
notify Administrative Agent and Collateral Agent, and Administrative Agent shall thereafter
promptly notify each Synthetic LC Lender, of the unreimbursed amount of such Synthetic LC
Disbursement, and Synthetic LC Depositary Bank shall pay to Synthetic LC Issuing Bank, from the
Synthetic LC Deposit Account, for the account of each Synthetic LC Lender, an amount equal to such
Synthetic LC Lender’s Pro Rata Share of such Synthetic LC Disbursement, in Dollars and in same day
funds, at the office of Synthetic LC Issuing Bank specified in such notice, not later than 12:00
p.m. (New York City time) on the first business day (under the laws of the jurisdiction in which
such office of Synthetic LC Issuing Bank is located) after the date notified by Synthetic LC
Issuing Bank. In the event that the Synthetic LC Deposit Account is charged by Synthetic LC
Issuing Bank or Collateral Agent to reimburse Synthetic LC Issuing Bank pursuant to this Section
2.5(e), Borrower shall pay over to Administrative Agent in reimbursement of the applicable
Synthetic LC Disbursement an amount equal to the amount so charged, as provided in paragraph (d)
above,
and such payment shall be remitted by Administrative Agent to Collateral Agent for deposit
into the Synthetic LC Deposit Account. Each Synthetic LC Lender irrevocably authorizes Collateral
Agent and the Synthetic LC Issuing Bank to apply, or to permit the Synthetic LC Depositary Bank to
apply, amounts of its Synthetic LC Deposit held in the Synthetic LC Deposit Account as provided in
this Section 2.5(e). Any payment made from the Synthetic LC Deposit Account, pursuant to this
paragraph to reimburse Synthetic LC Issuing Bank for any Synthetic LC




45









 







Disbursement shall not
constitute a Loan and shall not relieve Borrower of its obligation to reimburse such Synthetic LC
Disbursement. The Synthetic LC Depositary Bank agrees to make available amounts in the Synthetic
LC Deposit Account at the times and for the purposes set forth in this Section 2.5(e), either by
application of such amounts to reimburse Synthetic LC Issuing Bank (if Synthetic LC Issuing Bank
shall be the Synthetic LC Depositary Bank) or by transfer of such amounts to Synthetic LC Issuing
Bank or Collateral Agent, which shall apply the amounts so transferred to reimburse Synthetic LC
Issuing Bank (if Synthetic LC Issuing Bank shall not be the Synthetic LC Depositary Bank).




          (f) Obligations Absolute. The obligation of Borrower to reimburse Synthetic LC
Issuing Bank for Synthetic LC Disbursements made by it and the obligations of Lenders under Section
2.5(e) shall be unconditional and irrevocable and shall be paid strictly in accordance with the
terms hereof under all circumstances including any of the following circumstances: (i) any lack of
validity or enforceability of any Synthetic Letter of Credit; (ii) the existence of any claim,
set-off, defense or other right which Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Synthetic Letter of Credit (or any Persons for whom any such
transferee may be acting), Synthetic LC Issuing Bank, Lender or any other Person or, in the case of
a Lender, against Borrower, whether in connection herewith, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between Borrower or one of its
Subsidiaries and the beneficiary for which any Synthetic Letter of Credit was procured); (iii) any
draft or other document presented under any Synthetic Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by Synthetic LC Issuing Bank to the beneficiary or as
otherwise required by law under any Synthetic Letter of Credit against presentation of a draft or
other document which does not substantially comply with the terms of such Synthetic Letter of
Credit; (v) any adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Borrower or any of its Subsidiaries; (vi) any breach
hereof or any other Credit Document by any party thereto; (vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing; (viii) the fact that an Event of
Default or a Default shall have occurred and be continuing; or (ix) the return of the Synthetic LC
Deposits; provided, in each case, that payment by Synthetic LC Issuing Bank under the
applicable Synthetic Letter of Credit shall not have constituted gross negligence or willful
misconduct of Synthetic LC Issuing Bank under the circumstances in question.




          (g) Indemnification. Without duplication of any obligation of Borrower under
Section 10.2 or 10.3, in addition to amounts payable as provided herein, Borrower hereby agrees to
protect, indemnify, pay and save harmless Synthetic LC Issuing Bank from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and reasonable allocated costs of internal counsel)
which Synthetic LC Issuing Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Synthetic Letter of Credit by Synthetic LC
Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of Synthetic
LC Issuing Bank or (2) the wrongful dishonor by Synthetic LC Issuing Bank of a proper demand for
payment made under any Synthetic Letter of Credit issued by it, or (ii) the failure of Synthetic LC
Issuing Bank to honor a drawing under any such Synthetic Letter of Credit as a result of any
Governmental Act.




46









 








          (h) Synthetic LC Issuing Bank Reports. Unless otherwise agreed by Synthetic LC
Issuing Bank and Administrative Agent, Synthetic LC Issuing Bank shall report in writing to
Administrative Agent (i) on or prior to each Business Day on which Synthetic LC Issuing Bank
issues, amends, renews or extends any Synthetic Letter of Credit, the date of such issuance,
amendment, renewal or extension, and the aggregate face amount of the Synthetic Letters of Credit
issued, amended, renewed or extended by it and outstanding after giving effect to such issuance,
amendment, renewal or extension (and whether the amount thereof has changed), it being understood
that unless Synthetic LC Issuing Bank has received notice from Administrative Agent that such
increase is not then permitted by the terms of this Agreement by 12:00 noon (New York City time),
then Synthetic LC Issuing Bank shall effect the issuance, renewal, extension or amendment resulting
in an increase in the amount of any Synthetic Letter of Credit, (ii) on each Business Day on which
Synthetic LC Issuing Bank makes a Synthetic LC Disbursement, the date and amount of such Synthetic
LC Disbursement, (iii) on any Business Day on which Borrower fails to reimburse a Synthetic LC
Disbursement required to be reimbursed to Synthetic LC Issuing Bank on such day, the date of such
failure and the amount of such Synthetic LC Disbursement and (iv) on any other Business Day, such
other information as Administrative Agent shall reasonably request as to the Synthetic Letters of
Credit issued by Synthetic LC Issuing Bank and outstanding on such Business Day.




          (i) Establishment of Synthetic LC Deposit Account and Sub-Accounts. On or prior to
the Closing Date, Synthetic LC Issuing Bank or Collateral Agent shall establish a deposit account
(the “Synthetic LC Deposit Account”) of Synthetic LC Issuing Bank or Collateral Agent at the
Synthetic LC Depositary Bank with the title “Movie Gallery 2007 Credit Agreement Synthetic LC
Deposit Account”. Administrative Agent shall maintain records enabling it to determine at any time
the amount of the interest of each Synthetic LC Lender in the Synthetic LC Deposit Account (the
interest of each Synthetic LC Lender in the Synthetic LC Deposit Account, as evidenced by such
records, being referred to as such Synthetic LC Lender’s “Sub-Account”). Each Sub-Account shall
not be a separate deposit account at the Synthetic LC Depositary Bank but shall only be a notation
in the records maintained by Administrative Agent. Synthetic LC Issuing Bank, Collateral Agent and
Synthetic LC Depositary Bank shall not be required to maintain any records as to the interests of
each Synthetic LC Lender (which shall be maintained by Administrative Agent) or make any payments
directly to any Synthetic LC Lender (but only to Administrative Agent for payment to any Synthetic
LC Lender). Synthetic LC Issuing Bank, Collateral Agent and Synthetic LC Depositary Bank shall not
be required to maintain any records as to the interests of each Synthetic LC Lender (which shall be
maintained by Administrative Agent) or make any payments directly to any Synthetic LC Lender (but
only to Administrative Agent for payment to any Synthetic LC Lender). Administrative Agent shall
establish such additional Sub-Accounts for assignee Synthetic LC Lenders as Administrative Agent
shall determine pursuant to Section 10.6(g). No Person shall have the right to make any withdrawal
from the Synthetic LC Deposit Account or to exercise any other right or power with
respect thereto except as expressly provided in paragraph (l) below or in Section 10.6(g).
Without limiting the generality of the foregoing, each party hereto acknowledges and agrees that
the amounts on deposit in the Synthetic LC Deposit Account are and will at all times be property of
Collateral Agent or Synthetic LC Issuing Bank, as the case may be, acting for the benefit of the
Synthetic LC Lenders, and that no amount on deposit at any time in the Synthetic LC Deposit Account
shall be the property of any of the Credit Parties, constitute “Collateral” under the Credit
Documents or otherwise be available in any manner to satisfy any Obligations of any of




47









 







the Credit
Parties under the Credit Documents. Each Synthetic LC Lender agrees that its right, title and
interest in and to the Synthetic LC Deposit Account shall be limited to the right, acting through
Collateral Agent or Synthetic LC Issuing Bank, as the case may be, to require amounts in its
Sub-Account to be applied as provided in paragraph (l) below and that it will have no right to
require the return of its portion of the amounts in the Synthetic LC Deposit Account other than as
expressly provided in such paragraph (l) (each Synthetic LC Lender hereby acknowledging (i) that
its portion of the amounts in the Synthetic LC Deposit Account constitutes payment for its
participations in Synthetic Letters of Credit issued or to be issued hereunder, (ii) that its
portion of amounts in the Synthetic LC Deposit Account and any investments made therewith shall be
applied to reimburse Synthetic LC Issuing Bank hereunder in respect of Synthetic Letters of Credit
and (iii) that Synthetic LC Issuing Bank will be issuing, amending, renewing and extending
Synthetic Letters of Credit in reliance on the availability of such Synthetic LC Lender’s portion
of the amounts in the Synthetic LC Deposit Account to discharge such Synthetic LC Lender’s
obligations in accordance with Section 2.5(e) in connection with any Synthetic LC Disbursement
thereunder). The funding of the Synthetic LC Deposits, the establishment and funding of the
Synthetic LC Deposit Account and the agreements with respect thereto set forth in this Agreement
constitute arrangements among Administrative Agent, Collateral Agent, Synthetic LC Issuing Bank and
the Synthetic LC Lenders with respect to the funding obligations of the Synthetic LC Lenders under
this Agreement, and the amounts in the Synthetic LC Deposit Account do not constitute a loan or
extension of credit to any Credit Party. No Credit Party shall have any responsibility or
liability to the Synthetic LC Lenders, the Agents or any other Person in respect of the
establishment, maintenance, administration or misappropriation of the Synthetic LC Deposit Account
(or any Sub-Account) or with respect to the investment of amounts held therein, including pursuant
to paragraph (n) below. Each of Administrative Agent, Collateral Agent, Synthetic LC Issuing Bank
and the Synthetic LC Depositary Bank hereby waives any right of setoff against the Synthetic LC
Deposit Account that it may have under applicable law or otherwise with respect to amounts owed to
it by Synthetic LC Lenders other than in its capacity as Synthetic LC Issuing Bank with respect to
unreimbursed Synthetic LC Disbursements (it being agreed that such waiver shall not reduce the
rights of the Synthetic LC Depositary Bank, in its capacity as Synthetic LC Issuing Bank or
otherwise, to apply or require the application of the amounts in the Synthetic LC Deposit Account
in accordance with the provisions of this Agreement).




          (j) Funding of Synthetic LC Deposits.





          (i) Subject to the terms and conditions hereof, each Synthetic LC Lender severally
agrees to transfer to Administrative Agent for deposit in such Synthetic LC Lender’s
Sub-Account with Administrative Agent in an aggregate amount up to but not exceeding
such Synthetic LC Lender’s Synthetic LC Commitment.




          (ii) Borrower shall deliver to Administrative Agent (with a copy to Collateral
Agent) a fully executed Funding Notice requesting that Synthetic LC Lenders make
Synthetic LC Deposits no later than three Business Days prior to the Closing Date.



48









 






          (iii) Notice of receipt of such Funding Notice in respect of Synthetic LC Deposits,
together with the amount of each Synthetic LC Lender’s Pro Rata Share thereof shall be
provided by Administrative Agent to each Synthetic LC Lender and to Synthetic LC
Depositary Bank.




          (iv) Each Synthetic LC Lender shall make the amount of its Synthetic LC Deposit
available to Administrative Agent not later than 1:00 p.m. (New York City time) on the
Closing Date by wire transfer of same day funds in Dollars, at the Principal Office
designated by Administrative Agent. Upon satisfaction or waiver of the conditions
precedent specified herein, Administrative Agent shall remit to Collateral Agent the
proceeds of such Synthetic LC Deposits for deposit by Collateral Agent into the
Synthetic LC Deposit Account.




          (v) Borrower may only request Synthetic LC Lenders to make Synthetic LC Deposits on
the Closing Date.




          (vi) Synthetic LC Deposits shall be available, on the terms and subject to the
conditions set forth herein, for application pursuant to Section 2.5(e) to reimburse
such Synthetic LC Lender’s Pro Rata Share of Synthetic LC Disbursements that are not
reimbursed by Borrower. The obligations of Synthetic LC Lenders to make the deposits
required by this Section 2.5(j) are several, and no Synthetic LC Lender shall be
responsible for any other Synthetic LC Lender’s failure to make its deposit as so
required.



          (k) Synthetic LC Deposits in Synthetic LC Deposit Account. The following amounts
will be deposited in the Synthetic LC Deposit Account at the following times:





          (i) Each Synthetic LC Lender shall make such Synthetic LC Lender’s Synthetic LC
Deposits available to Administrative Agent in accordance with Section 2.5(j).
Thereafter, the Synthetic LC Deposits shall be available, on the terms and subject to
the conditions set forth herein, for application pursuant to Section 2.5(e) to reimburse
Synthetic LC Issuing Bank for such Synthetic LC Lender’s Pro Rata Share of Synthetic LC
Disbursements that are not reimbursed by Borrower.




          (ii) On any date prior to the Synthetic LC Commitment Termination Date on which
Administrative Agent or Synthetic LC Issuing Bank receives any reimbursement payment
from Borrower in respect of a Synthetic LC Disbursement with respect to which amounts
were withdrawn from the Synthetic LC Deposit Account to reimburse Synthetic LC Issuing
Bank, subject to subparagraph (iii) below, Administrative Agent shall remit to
Collateral Agent, or Synthetic LC Issuing Bank shall transfer to Collateral Agent, which
shall deposit in the Synthetic LC Deposit Account, and Administrative Agent shall credit
to the Sub-Accounts of
the Synthetic LC Lenders, the portion of such reimbursement payment to be deposited
therein, in accordance with Section 2.5(e).




          (iii) If at any time when any amount is required to be deposited in the Synthetic
LC Deposit Account under subparagraph (ii) above the sum of such



49









 






amount and the amount
held in the Synthetic LC Deposit Account at such time would exceed the total Synthetic
LC Deposits, then such excess shall not be deposited in the Synthetic LC Deposit Account
and shall instead be paid to Administrative Agent, which shall pay to each Synthetic LC
Lender its Pro Rata Share of such excess.



          (iv) Concurrently with the effectiveness of any assignment by any Synthetic LC
Lender of all or any portion of its Synthetic LC Deposit, Administrative Agent shall
transfer into the Sub-Account of the assignee the corresponding portion of the amount on
deposit in the assignor’s Sub-Account in accordance with Section 10.6(g).



          (l) Withdrawals From and Closing of Synthetic LC Deposit Account. Amounts on
deposit in the Synthetic LC Deposit Account shall be withdrawn and distributed (or transferred, in
the case of subparagraph (iv) below) as follows:





          (i) On each date on which Synthetic LC Issuing Bank is to be reimbursed by the
Synthetic LC Lenders pursuant to Section 2.5(e) for any Synthetic LC Disbursement made
by Synthetic LC Issuing Bank, Administrative Agent shall instruct Collateral Agent to,
and Collateral Agent shall to the extent funds are available, withdraw from the
Synthetic LC Deposit Account the amount of such unreimbursed Synthetic LC Disbursement
(and Administrative Agent shall debit the Sub-Account of each Synthetic LC Lender in the
amount of such Synthetic LC Lender’s Pro Rata Share of such unreimbursed Synthetic LC
Disbursement) and Collateral Agent shall apply such amount to reimburse Synthetic LC
Issuing Bank for such Synthetic LC Disbursement (if such Synthetic LC Issuing Bank shall
be the Synthetic LC Depositary Bank) or transfer such amount to Administrative Agent,
which shall apply the amount so transferred to reimburse Synthetic LC Issuing Bank (if
Synthetic LC Issuing Bank shall not be the Synthetic LC Depositary Bank), all in
accordance with Section 2.5(e).




          (ii) Concurrently with each voluntary reduction of the total Synthetic LC
Commitments pursuant to and in accordance with Section 2.14 or 2.16, Administrative
Agent shall instruct Collateral Agent to, and Collateral Agent shall to the extent funds
are available, withdraw from the Synthetic LC Deposit Account and Collateral Agent shall
remit such funds to Administrative Agent and Administrative Agent shall pay to each
Synthetic LC Lender such Synthetic LC Lender’s Pro Rata Share of any amount by which the
Synthetic LC Deposits, after giving effect to such reduction of the total Synthetic LC
Commitments, would exceed the greater of the total Synthetic LC Commitments and the
total Synthetic LC Usage (and the Synthetic LC Depositary Bank agrees to pay over such
amounts in the Synthetic LC Deposit Account to Administrative Agent).




          (iii) Concurrently with any reduction of the total Synthetic LC Commitments to zero
pursuant to and in accordance with Section 2.14, 2.15 or Section 8, Administrative Agent
shall instruct Collateral Agent to, and Collateral Agent shall to the extent funds are
available, withdraw from the Synthetic LC Deposit Account and Collateral Agent shall
remit such funds to Administrative Agent and



50









 






Administrative Agent shall pay to each
Synthetic LC Lender such Synthetic LC Lender’s Pro Rata Share of the excess at such time
of the aggregate amount of the Synthetic LC Deposits over the Synthetic LC Usage (and
the Synthetic LC Depositary Bank agrees to pay over such amounts in the Synthetic LC
Deposit Account to Administrative Agent).




          (iv) Concurrently with the effectiveness of any assignment by any Synthetic LC
Lender of all or any portion of its Synthetic LC Deposit, the corresponding portion of
the assignor’s Sub-Account shall be transferred on the records of Administrative Agent
from the assignor’s Sub-Account to the assignee’s Sub-Account in accordance with Section
10.6(g) and, if required by Section 10.6(g), Administrative Agent shall close such
assignor’s Sub-Account.




          (v) Upon the reduction of each of the total Synthetic LC Commitments and the
Synthetic LC Usage to zero, Administrative Agent shall instruct Collateral Agent to, and
Collateral Agent shall to the extent funds are available, withdraw from the Synthetic LC
Deposit Account and Collateral Agent shall remit such funds to Administrative Agent and
Administrative Agent shall pay to each Synthetic LC Lender the entire remaining amount
of such Synthetic LC Lender’s Synthetic LC Deposit, and shall close the Synthetic LC
Deposit Account (and the Synthetic LC Depositary Bank agrees to pay over such amounts in
the Synthetic LC Deposit Account to Administrative Agent).


Each Synthetic LC Lender irrevocably and unconditionally agrees that its Synthetic LC Deposit may
be applied or withdrawn from time to time as set forth in this paragraph (l).




          (m) Investment of Amounts in Synthetic LC Deposit Account. The Synthetic LC
Depositary Bank shall invest, or cause to be invested, the amounts held from time to time in the
Synthetic LC Deposit Account so as to earn for the account of Collateral, acting on behalf of each
Synthetic LC Lender, a return thereon (the “Synthetic LC Deposit Return”) for each day at a rate
per annum equal to (i) the one month LIBOR rate as determined by Synthetic LC Depositary Bank on
such day (or if such day was not a Business Day, the first Business Day immediately preceding such
day) based on rates for deposits in dollars (as set forth by Bloomberg L.P.-page BTMM or any other
comparable publicly available service as may be selected by Synthetic LC Depositary Bank) (the
“Benchmark LIBOR Rate”) minus (ii) 0.15% per annum (based on a 365/366 day year). The Benchmark
LIBOR Rate will be reset on each Business Day. The Synthetic LC Deposit Return accrued through and
including March 31, June 30, September 30 and December 31 of each year shall be paid by the
Synthetic LC Depositary Bank to Administrative Agent, for payment to each Synthetic LC Lender, on
the second Business Day following such last day, commencing on the first such date to occur after
the Closing Date, and on the date on which each of the total Synthetic LC Deposits and the
Synthetic LC Usage shall have been reduced to zero.




          (n) Sufficiency of Synthetic LC Deposits to Provide for Undrawn/ Unreimbursed Synthetic
Letters of Credit. Notwithstanding any other provision of this Agreement, including Sections
2.1 and 2.5, no Synthetic Letter of Credit shall be issued or increased as to its stated amount if,
after giving effect to such issuance or increase, the aggregate




51









 







amount of the Synthetic LC Deposits
would be less than the Synthetic LC Usage. Administrative Agent agrees to provide, at the request
of Synthetic LC Issuing Bank or Collateral Agent, information to such Synthetic LC Issuing Bank or
Collateral Agent, respectively, as to the aggregate amount of the Synthetic LC Deposits and the
Synthetic LC Usage.




          (o) Satisfaction of Synthetic LC Lender Funding Obligations. Borrower and Synthetic
LC Issuing Bank each acknowledge and agree that, notwithstanding any other provision contained in
this Agreement, the deposits by Collateral Agent for Administrative Agent, on behalf of each
Synthetic LC Lender, in the Synthetic LC Deposit Account on and after the Closing Date of funds
equal to such Synthetic LC Lender’s Synthetic LC Commitment will fully discharge the obligation of
such Synthetic LC Lender to reimburse such Synthetic LC Lender’s Pro Rata Share of Synthetic LC
Disbursements that are not reimbursed by Borrower pursuant to Section 2.5(d), and that no other or
further payments shall be required to be made by any Synthetic LC Lender in respect of any such
reimbursement obligations.



     2.6. Pro Rata Shares; Availability of Funds.



          (a) Pro Rata Shares. All Loans and Synthetic LC Deposits shall be made, and all
participations purchased, by Lenders simultaneously and proportionately to their respective Pro
Rata Shares, it being understood that no Lender shall be responsible for any default by any other
Lender in such other Lender’s obligation to make a Loan or Synthetic LC Deposit requested hereunder
or purchase a participation required hereby nor shall any Term Loan Commitment, Synthetic LC
Commitment or any Revolving Commitment of any Lender be increased or decreased as a result of a
default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or
purchase a participation required hereby.




          (b) Availability of Funds. Unless Administrative Agent shall have been notified by
any Lender prior to the applicable Credit Date that such Lender does not intend to make available
to Administrative Agent the amount of such Lender’s Loan or Synthetic LC Deposit requested on such
Credit Date, Administrative Agent may assume that such Lender has made such amount available to
Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but
shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date.
If such corresponding amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Credit Date until the date such
amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the Base Rate. If such
Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand
therefor, (i) in the case of Loans, Administrative Agent shall promptly notify Borrower and
Borrower shall immediately pay such corresponding amount to Administrative Agent together with
interest thereon, for each
day from such Credit Date until the date such amount is paid to Administrative Agent, at the
rate payable hereunder for the applicable Loans and (ii) in the case of Synthetic LC Deposits,
Administrative Agent may withdraw from the Synthetic LC Deposit Account such corresponding amount
together with interest thereon, for each day from such Credit Date until the date of such
withdrawal by Administrative Agent, at the rate for Synthetic LC Deposits provided in Section




52









 







2.5(m). Nothing in this Section 2.6(b) shall be deemed to relieve any Lender from its obligation
to fulfill its Synthetic LC Commitment, Term Loan Commitments and Revolving Commitments hereunder
or to prejudice any rights that Borrower may have against any Lender as a result of any default by
such Lender hereunder.




     2.7. Use of Proceeds. The proceeds of the Term Loans made on the Closing Date shall be applied by
Borrower to fund (i) the refinancing of Existing Indebtedness and (ii) to pay certain other fees
and expenses relating to the credit facilities established hereunder. The proceeds of the
Revolving Loans, Swing Line Loans, Synthetic Letters of Credit and Letters of Credit made after the
Closing Date shall be applied by Borrower for working capital and general corporate purposes of the
Borrower and its Subsidiaries. No portion of the proceeds of any Credit Extension shall be used in
any manner that causes or might cause such Credit Extension or the application of such proceeds to
violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other
regulation thereof or to violate the Exchange Act.



     2.8. Evidence of Debt; Register; Lenders’ Books and Records; Notes.



          (a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records
an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts
of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation
shall be conclusive and binding on Borrower, absent manifest error; provided, that the
failure to make any such recordation, or any error in such recordation, shall not affect any
Lender’s Revolving Commitments or Borrower’s Obligations in respect of any applicable Loans; and
provided further, in the event of any inconsistency between the Register and any
Lender’s records, the recordations in the Register shall govern.



          (b) Register. Administrative Agent (or its agent or sub-agent appointed by it)
shall maintain at the Principal Office a register for the recordation of the names and addresses of
Lenders, the Revolving Commitments and Loans of each Lender and the Synthetic LC Commitments and
Synthetic LC Deposits of each Lender from time to time (the “Register”). The Register shall be
available for inspection by Borrower, Collateral Agent, any Lender (with respect to any entry
relating to such Lender’s Loans or Synthetic LC Deposits), Issuing Bank (with respect to any entry
relating to Letters of Credit), Synthetic LC Issuing Bank (with respect to any entry relating to
Synthetic Letters of Credit or Synthetic LC Deposits) or Synthetic LC Depositary Bank (with respect
to any entry relating to Synthetic Letters of Credit or Synthetic LC Deposits) at any reasonable
time and from time to time upon reasonable prior notice. Administrative Agent shall record, or
shall cause to be recorded, in the Register the Revolving Commitments and the Loans of each Lender
and the Synthetic LC Commitments and the Synthetic LC Deposits of each Lender, each in accordance
with the provisions of Section 10.6, and each repayment or prepayment in respect of the principal
amount of the Loans and each
withdrawal from Synthetic LC Deposit Account, and any such recordation shall be conclusive and
binding on Borrower and each Lender, absent manifest error; provided, failure to make any
such recordation, or any error in such recordation, shall not affect any Lender’s Revolving
Commitments or Synthetic LC Commitments or Borrower’s Obligations in respect of any Loan or
Synthetic LC Deposit. Borrower hereby designates Wachovia to serve as Borrower’s agent solely for
purposes of maintaining the Register as provided in this Section 2.8, and Borrower



53









 




hereby agrees
that, to the extent Wachovia serves in such capacity, Wachovia and its officers, directors,
employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”




          (c) Notes. If so requested by any Lender by written notice to Borrower (with a copy
to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time
thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6)
on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after
Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s Term Loan, Revolving
Loan or Swing Line Loan, as the case may be.




     2.9. Interest on Loans.



          (a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid
principal amount thereof from the date made through repayment (whether by acceleration or
otherwise) thereof as follows:





          (i) in the case of Revolving Loans:




     (1) if a Base Rate Loan, at the Base Rate plus the
Applicable Margin; or




     (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar
Rate plus the Applicable Margin;




          (ii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin;
and




          (iii) in the case of Term Loans:




     (1) if a Base Rate Loan, at the Base Rate plus 2.50% per
annum; or




     (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar
Rate plus 3.50% per annum;



          (b) The basis for determining the rate of interest with respect to any Loan (except a Swing
Line Loan which can be made and maintained as Base Rate Loans only), and the Interest Period with
respect to any Eurodollar Rate Loan, shall be selected by Borrower and notified to Administrative
Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as
the case may be; provided, until the date that Syndication
Agent notifies Borrower that the primary syndication of the Loans, Synthetic LC Commitments
and Revolving Commitments has been completed, as determined by Syndication Agent, the Term Loans
shall be maintained as either (1) Eurodollar Rate Loans having an Interest Period of no longer than
one month or (2) Base Rate Loans. If on any day a Loan is outstanding with respect to which a
Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in
accordance with the terms hereof specifying the applicable basis for determining the rate of
interest, then for that day such Loan shall be a Base Rate Loan.





54









 








          (c) In connection with Eurodollar Rate Loans there shall be no more than five (5) Interest
Periods outstanding at any time. In the event Borrower fails to specify between a Base Rate Loan
or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such
Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate
Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base
Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the
event Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to have selected an
Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each
Interest Rate Determination Date, Administrative Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for
the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower and each Lender.




          (d) Interest payable pursuant to Section 2.9(a) shall be computed (i) in the case of Base
Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of
Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect
to a Term Loan, the last Interest Payment Date with respect to such Term Loan or, with respect to a
Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with
respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided, if a Loan is repaid on the same day on which it is made, one day’s interest shall
be paid on that Loan.




          (e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily
basis and shall be payable in arrears on each Interest Payment Date with respect to interest
accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable
in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued
on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in
arrears at maturity of the Loans, including final maturity of the Loans; provided, however,
with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be
payable on the applicable Interest Payment Date.




          (f) Borrower agrees to pay (x) to Issuing Bank as described in paragraph (g) below, with
respect to drawings honored under any Letter of Credit, interest on the amount paid by Issuing Bank
in respect of each such honored drawing from the date such drawing is honored to but excluding the
date such amount is reimbursed by or on behalf of Borrower at a rate equal to (i) for the period
from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate
of interest otherwise payable hereunder with respect to Revolving
Loans that are Base Rate Loans,
and (ii) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise
payable hereunder with respect to Revolving Loans that are Base Rate





55









 







Loans, and (y) to
Administrative Agent, for the account of Synthetic LC Issuing Bank and the Synthetic LC Lenders as
described in paragraph (g) below, with respect to any Synthetic LC Disbursement, interest on the
amount paid by Synthetic LC Issuing Bank in respect of each such Synthetic LC Disbursement from the
date of such Synthetic LC Disbursement to but excluding the date such amount is reimbursed by or on
behalf of Borrower at a rate equal to (i) for the period from the date of such Synthetic LC
Disbursement to but excluding the applicable Synthetic LC Reimbursement Date, the rate of interest
otherwise payable hereunder with respect to Term Loans that are Base Rate Loans, and (ii)
thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable
hereunder with respect to Term Loans that are Base Rate Loans.




          (g) Interest payable pursuant to Section 2.9(f) shall be computed on the basis of a
365/366-day year for the actual number of days elapsed in the period during which it accrues, and
shall be payable on demand or, if no demand is made, on the date on which the related drawing under
a Letter of Credit or Synthetic LC Disbursement, as applicable, is reimbursed in full by or on
behalf of Borrower. Promptly upon receipt by Administrative Agent of any payment of interest due
in respect of LC Disbursements pursuant to Section 2.9(f), Administrative Agent shall distribute to
each Synthetic LC Lender, out of the interest received by Administrative Agent in respect of the
period from the date of such Synthetic LC Disbursement to but excluding the date on which such
Synthetic LC Disbursement is reimbursed by or on behalf of Borrower, the amount that such Synthetic
LC Lender would have been entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Synthetic Letter of Credit for such period if no Synthetic LC
Disbursement had been made under such Synthetic Letter of Credit; in the event Synthetic LC Issuing
Bank shall have been reimbursed for all or any portion of such Synthetic LC Disbursement pursuant
to Section 2.5(e), Administrative Agent shall distribute to each Synthetic LC Lender (other than a
Defaulting Lender) such Lender’s Pro Rata Share of any interest received by Administrative Agent in
respect of that portion of such Synthetic LC Disbursement so reimbursed by Lenders for the period
from the date on which Lenders made such reimbursement to but excluding the date on which such
portion of such Synthetic LC Disbursement is reimbursed by Borrower, net of any amounts paid to
such Lender pursuant to the immediately preceding sentence in respect of letter of credit fees for
such period in respect of such Letter of Credit. Promptly upon receipt by Issuing Bank of any
payment of interest in respect of drawings under Letters of Credit pursuant to Section 2.9(f),
Issuing Bank shall distribute to each Lender, out of the interest received by Issuing Bank in
respect of the period from the date such drawing is honored to but excluding the date on which
Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of
the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to
receive in respect of the letter of credit fee that would have been payable in respect of such
Letter of Credit for such period if no drawing had been honored under such
Letter of Credit; in the event Issuing Bank shall have been reimbursed by Lenders for all or
any portion of such honored drawing, Issuing Bank shall distribute to each Lender which has paid
all amounts payable by it under Section 2.4(e) with respect to such honored drawing such Lender’s
Pro Rata Share of any interest received by Issuing Bank in respect of that portion of such honored
drawing so reimbursed by Lenders for the period from the date on which Issuing Bank was so
reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is
reimbursed by Borrower. All interest payable pursuant to Section 2.9(f) that is not




56









 







distributed to
Lenders as described in the two preceding sentences shall be for the account of the Issuing Bank or
Synthetic LC Issuing Bank, as applicable.




     2.10. Conversion/Continuation.



          (a) Subject to Section 2.19 and so long as no Default or Event of Default shall have
occurred and then be continuing, Borrower shall have the option:





          (i) to convert at any time all or any part of any Term Loan or Revolving Loan equal
to $5,000,000 and integral multiples of $1,000,000 in excess of that amount from one
Type of Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only be
converted on the expiration of the Interest Period applicable to such Eurodollar Rate
Loan unless Borrower shall pay all amounts due under Section 2.19 in connection with
any such conversion; or




          (ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $5,000,000 and integral
multiples of $1,000,000 in excess of that amount as a Eurodollar Rate Loan.


Borrower shall deliver a Conversion/Continuation Notice to Administrative Agent (with a copy to
Collateral Agent) no later than 10:00 a.m. (New York City time) at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at
least three Business Days in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein,
a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans
(or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrower shall be bound to effect a conversion or continuation in
accordance therewith.




     2.11. Default Interest The principal amount of all Loans outstanding and not paid when due and, to
the extent permitted by applicable law, any interest payments on the Loans or any fees or other
amounts owed hereunder and not paid when due, shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy
laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other
amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable
hereunder for Base Rate Loans that are Revolving Loans); provided, in the case of
Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate
Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance
of the increased rates of interest provided for in this Section 2.11 is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Collateral Agent, Administrative Agent or any Lender.



57









 





     2.12. Fees.



          (a) Borrower agrees to pay to Lenders having Revolving Exposure:





          (i) commitment fees equal to (1) the average of the daily difference between (a) the
Revolving Commitments and (b) the aggregate principal amount of (x) all outstanding
Revolving Loans plus (y) the Letter of Credit Usage plus (z) with respect to the commitment
fees due to the Swing Line Lender under this Section 2.12(a)(i), all outstanding Swing Line
Loans, times (2) the Applicable Revolving Commitment Fee Percentage; and




          (ii) letter of credit fees equal to (1) the Applicable Margin for Revolving Loans that
are Eurodollar Rate Loans, times (2) the average aggregate daily maximum amount available to
be drawn under all such Letters of Credit (regardless of whether any conditions for drawing
could then be met and determined as of the close of business on any date of determination).


All fees referred to in this Section 2.12(a) shall be paid to Administrative Agent at its Principal
Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata
Share thereof.




          (b) Borrower agrees to pay to Lenders having Synthetic LC Deposits letter of credit fees
equal to (i) the Adjusted Eurodollar Rate plus 3.50% per annum times (ii) the average daily amount
of total Synthetic LC Deposits (it being understood that the Synthetic LC Deposit Return paid to
Administrative Agent on behalf of the Synthetic LC Lenders pursuant to Section 2.5(m) during the
applicable period referred to in Section 2.12(d) shall be credited towards payment of the fees
referred to in this Section 2.12(b) for such period). All fees referred to in this Section 2.12(b)
shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative
Agent shall promptly distribute to each Lender its Pro Rata Share thereof.




          (c) Borrower agrees to pay the following fees:





          (i) directly to Issuing Bank, for its own account, a fronting fee equal to 0.25%
per annum, times the average aggregate daily maximum amount available to be drawn under
all Letters of Credit (determined as of the close of business on any date of
determination);




          (ii) directly to Synthetic LC Issuing Bank, for its own account, a fronting fee
equal to 0.25% per annum, times the average aggregate daily maximum amount available to
be drawn under all Synthetic Letters of Credit (determined as of the close of business
on any date of determination);




          (iii) directly to Issuing Bank, for its own account, such documentary and
processing charges for any issuance, amendment, transfer or payment of a Letter of
Credit as are in accordance with Issuing Bank’s standard schedule for such charges and
as in effect at the time of such issuance, amendment, transfer or payment, as the case
may be; and



58









 






          (iv) directly to Synthetic LC Issuing Bank, for its own account, such documentary
and processing charges for any issuance, amendment, transfer or payment of a Synthetic
Letter of Credit as are in accordance with Synthetic LC Issuing Bank’s standard schedule
for such charges and as in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.



          (d) All fees referred to in Section 2.12(a), 2.12(b), 2.12(c)(i) and 2.12(c)(ii) shall be
calculated on the basis of a 360-day year and the actual number of days elapsed and shall be
payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during
the Revolving Commitment Period, commencing on the first such date to occur after the Closing Date,
and on the Revolving Commitment Termination Date (it being understood that the Synthetic LC Deposit
Return paid to Administrative Agent on behalf of the Synthetic LC Lenders pursuant to Section
2.5(m) during the applicable period shall be credited towards payment of the fees referred to in
Section 2.12(b) for such period).




          (e) In addition to any of the foregoing fees, Borrower agrees to pay (i) to Agents such
other fees in the amounts and at the times separately agreed upon and (ii) to Administrative Agent
for the account of each Synthetic LC Lender, the fees set forth in Section 2.5(m) (it being
understood that the Synthetic LC Deposit Return paid to Administrative Agent on behalf of the
Synthetic LC Lenders pursuant to Section 2.5(m) during the applicable period shall be credited
towards payment of the fees referred to in Section 2.12(b) for such period).




     2.13. Scheduled Payments/Commitment Reductions.



  The principal amount of the Term Loans shall be repaid in consecutive quarterly installments
(each, an “Installment”) of 0.25% of the original aggregate principal amount thereof, each on the
last day of each calendar quarter of each year commencing on June 30, 2007.



  Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans, in accordance with Sections 2.14, 2.15 and
2.16, as applicable; and (y) the Term Loans, together with all other amounts owed hereunder with
respect thereto, shall, in any event, be paid in full no later than the Term Loan Maturity Date.



     2.14. Voluntary Prepayments/Commitment Reductions.



          (a) Voluntary Prepayments.





          (i) Subject to the terms of Section 2.14(c) below, any time and from time to time:




     (1) with respect to Base Rate Loans, Borrower may prepay
any such Loans on any Business Day in whole or in part, in an
aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount (or, with respect to
Revolving Loans, $1,000,000 or, if less, the then remaining
outstanding balance thereof);



59









 






     (2) with respect to Eurodollar Rate Loans, Borrower may
prepay any such Loans on any Business Day in whole or in part in
an aggregate minimum amount of $1,000,000 and integral multiples
of $1,000,000 in excess of that amount (or, with respect to
Revolving Loans, $1,000,000 or, if less, the then remaining
outstanding balance thereof); and




     (3) with respect to Swing Line Loans, Borrower may prepay
any such Loans on any Business Day in whole or in part in an
aggregate minimum amount of $500,000, and in integral multiples
of $100,000 in excess of that amount (or, if less than $500,000,
the then remaining outstanding balance thereof).




          (ii) All such prepayments shall be made:




     (1) upon not less than one Business Day’s prior written or
telephonic notice in the case of Base Rate Loans;




     (2) upon not less than three Business Days’ prior written
or telephonic notice in the case of Eurodollar Rate Loans; and




     (3) upon written or telephonic notice on the date of
prepayment, in the case of Swing Line Loans;



in each case given to Administrative Agent or Swing Line Lender (with a copy to Collateral Agent),
as the case may be, by 12:00 p.m. (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent with a copy to Collateral Agent
(and Administrative Agent will promptly transmit such telephonic or original notice for Term Loans
or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) or Swing Line
Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment date specified therein.
Any such voluntary prepayment shall be applied as specified in Section 2.16(a), and shall be
without penalty or premium of any kind, except to the extent of breakage and other costs
specifically provided for under this Agreement.




          (b) Voluntary Commitment Reductions.





          (i) Borrower may, upon not less than three Business Days’ prior written or
telephonic notice confirmed in writing to Administrative Agent with a copy to Collateral
Agent (which original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each applicable Lender), at any time and from
time to time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Commitments in an amount up to the amount by which the Revolving
Commitments exceed the Total Utilization of Revolving Commitments at the time of such
proposed termination or reduction; provided, any such partial reduction of the
Revolving Commitments shall be in an



60









 






aggregate minimum amount of $1,000,000 and integral
multiples of $1,000,000 in excess of that amount.




          (ii) Borrower may, upon not less than three Business Days’ prior written or
telephonic notice confirmed in writing to Administrative Agent with a copy to Collateral
Agent (which original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each applicable Lender and Synthetic LC
Issuing Bank), at any time and from time to time terminate in whole or permanently
reduce in part, without premium or penalty, the Synthetic LC Commitments in an amount up
to the amount by which the Synthetic LC Commitments exceed the Synthetic LC Usage at the
time of such proposed termination or reduction; provided, any such partial
reduction of the Synthetic LC Commitments shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount.




          (iii) Borrower’s notice to Administrative Agent (and copy to Collateral Agent)
shall designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or reduction of
the Revolving Commitments or Synthetic LC Commitments shall be effective on the date
specified in Borrower’s notice and shall reduce the Revolving Commitment or Synthetic LC
Commitments of each Lender proportionately to its Pro Rata Share thereof.



          (c) Call Protection. All voluntary prepayments of all but not less than all of the
Term Loans and Synthetic LC Deposits effected on or prior to the first anniversary of the Closing
Date with the proceeds of a substantially concurrent issuance or incurrence of new bank loans which
(x) are incurred for the primary purpose of refinancing the Term Loans and Synthetic LC Deposits
and decreasing the interest rate margins payable with respect thereto, (y) otherwise have terms and
conditions (and are in an aggregate principal amount) substantially the same as those of the Term
Loans and Synthetic LC Deposits as in effect prior to the prepayment thereof and (z) are not
otherwise in connection with (i) a transaction and any transactions related thereto not permitted
by this Agreement (as determined prior to giving effect to any amendment or waiver of this
Agreement being adopted in connection with such transaction and related transactions) or (ii) a
public offering of Equity Interests or debt securities (other than, for the avoidance of doubt, the
issuance of bank debt) by Borrower or any of its Subsidiaries, shall be
accompanied by a prepayment fee equal to 1.00% of the aggregate principal amount of such
prepayment.




     2.15. Mandatory Prepayments.



          (a) Asset Sales. No later than the first Business Day following the date of receipt
by Borrower or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the
Loans as set forth in Section 2.16(b) in an aggregate amount equal to such Net Asset Sale Proceeds;
provided, (i) so long as no Default or Event of Default shall have occurred and be
continuing, and (ii) to the extent such Net Asset Sale Proceeds do not constitute proceeds of
dispositions permitted pursuant to Section 6.8(c)(ii), Borrower shall have the option, directly or
through one or more of its Subsidiaries, to invest Net Asset Sale Proceeds within three hundred




61









 







sixty five days of receipt thereof (A) in long-term productive assets (including the assets of
another Person (or the Equity Interests of a Person owning such assets) of the general type used in
the business of Borrower and its Subsidiaries and (B) up to $15,000,000 in the aggregate of
proceeds of Non-Core Assets in Rental Items or inventory held for sale at stores; provided
further, pending any such investment all such Net Asset Sale Proceeds shall be applied to
prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments).




          (b) Insurance/Condemnation Proceeds. No later than the first Business Day following
the date of receipt by Borrower or any of its Subsidiaries, or Collateral Agent as loss payee, of
any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans as set forth in Section
2.16(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided,
(i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to
the extent that aggregate Net Insurance/Condemnation Proceeds from the Closing Date through the
applicable date of determination do not exceed $10,000,000, Borrower shall have the option,
directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation
Proceeds within three hundred sixty five days of receipt thereof in long term productive assets of
the general type used in the business of Borrower and its Subsidiaries, which investment may
include the repair, restoration or replacement of the applicable assets thereof; provided
further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the
case may be, shall be applied to prepay Revolving Loans to the extent outstanding (without a
reduction in Revolving Commitments).




          (c) Issuance of Equity Securities. On the date of receipt by Borrower of any Cash
proceeds from a capital contribution to, or the issuance of any Equity Interests of, Borrower or
any of its Subsidiaries (other than (x) pursuant to any employee stock or stock option compensation
plan, (y) up to $75,000,000 in the aggregate of the proceeds of the issuance of Equity Interests
(that are not Disqualified Equity Interests) of the Borrower which are used to prepay, redeem,
retire or purchase the Senior Notes (provided no Default or Event of Default shall have occurred
and be then continuing), or (z) proceeds of the issuance of Equity Interests (that are not
Disqualified Equity Interests) to finance the purchase of a Permitted Acquisition or Permitted
Investment within 180 days of such issuance (provided no Default or Event of Default shall have
occurred and be then continuing)) Borrower shall prepay the Loans as set forth in Section 2.16(b)
in an aggregate amount equal to 50% of such proceeds, net of underwriting discounts and commissions
and other reasonable costs and expenses associated therewith,
including reasonable legal fees and expenses; provided, during any period in which the
Secured Leverage Ratio (determined for any such period by reference to the Compliance Certificate
delivered pursuant to Section 5.1(c) calculating the Secured Leverage Ratio as of the last day of
the most recently ended Fiscal Quarter) (i) shall be 2.50:1.00 or less, Borrower shall only be
required to make the prepayments and/or reductions otherwise required hereby in an amount equal to
25% of such net proceeds and (ii) shall be 2.00:1.00 or less, Borrower shall not be required to
make the prepayments and/or reductions otherwise required hereby. (For the avoidance of doubt, it
is hereby agreed that proceeds of Equity Interests (that are not Disqualified Equity Interests) not
required to prepay Loans pursuant to this clause (c) may be used to prepay, redeem, retire or
purchase Senior Notes in addition to the exclusion described in clause (y) above.)





62









 








          (d) Issuance of Debt. On the date of receipt by Borrower or any of its Subsidiaries
of any Cash proceeds from the incurrence of any Indebtedness of Borrower or any of its Subsidiaries
(other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1),
Borrower shall prepay the Loans as set forth in Section 2.16(b) in an aggregate amount equal to
100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and expenses.




          (e) Consolidated Excess Cash Flow. In the event that there shall be Consolidated
Excess Cash Flow for any Fiscal Year (commencing with the Fiscal Year ending 2007), Borrower shall,
no later than ninety days after the end of such Fiscal Year, prepay the Loans as set forth in
Section 2.16(b) in an aggregate amount equal to (i) 75% of such Consolidated Excess Cash Flow
minus (ii) voluntary repayments of the Loans (excluding repayments of Revolving Loans or
Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in
connection with such repayments); provided, that if, as of the last day of the most
recently ended Fiscal Year, the Secured Leverage Ratio (determined for any such period by reference
to the Compliance Certificate delivered pursuant to Section 5.1(c) calculating the Secured Leverage
Ratio as of the last day of such Fiscal Year) (i)(A) shall be 2.00:1.00 or less, Borrower shall
only be required to make the prepayments and/or reductions otherwise required hereby in an amount
equal to 50% of such Consolidated Excess Cash Flow or (B) shall be 1.50:1.00 or less, Borrower
shall only be required to make the prepayments and/or reductions otherwise required hereby in an
amount equal to 25% of such Consolidated Excess Cash Flow, in each case minus (ii)
voluntary repayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans
except to the extent the Revolving Commitments are permanently reduced in connection with such
repayments).




          (f) Revolving Loans and Swing Loans. In the event that at any time (i) the Total
Utilization of Revolving Commitments shall exceed the Revolving Commitments or (ii) the Loan to
Value Ratio shall be less than the Applicable Loan to Value Ratio, in either case Borrower shall
immediately make a payment to the Administrative Agent in the amount of such excess in the case of
clause (i) or in the amount required so that after giving effect thereto the Loan to Value Ratio is
equal to or greater than the Applicable Loan to Value Ratio under clause (ii), in either case for
application first, to the Swing Line Loans and second, to the Revolving Loans.




          (g) Prepayment Certificate. Concurrently with any prepayment of the Loans and/or
reduction of the Revolving Commitments pursuant to Sections 2.15(a) through 2.15(e), Borrower shall
deliver to Administrative Agent (with a copy to Collateral Agent) a certificate of an Authorized
Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated
Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that
the actual amount received exceeded the amount set forth in such certificate, Borrower shall
promptly make an additional prepayment of the Loans and/or the Revolving Commitments shall be
permanently reduced in an amount equal to such excess, and Borrower shall concurrently therewith
deliver to Administrative Agent (with a copy to Collateral Agent) a certificate of an Authorized
Officer demonstrating the derivation of such excess.




      2.16. Application of Prepayments.



63









 









          (a) Application of Voluntary Prepayments by Type of Loans. Subject to Section
2.17(h), any prepayment of any Loan pursuant to Section 2.14(a) shall be applied as specified by
Borrower in the applicable notice of prepayment; provided, in the event Borrower fails to
specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied
as follows:





          first, to repay outstanding Swing Line Loans to the full extent thereof;




          second, to repay outstanding Revolving Loans to the full extent thereof; and




          third, to prepay the Term Loans on a pro rata basis to reduce the scheduled remaining
Installments of principal of the Term Loans.



          (b) Application of Mandatory Prepayments. Subject to Section 2.17(h), any amount
required to be paid pursuant to Sections 2.15(a) through 2.15(e) shall be applied as follows (so
long as, after giving effect to the transactions pursuant to Sections 2.15(a) through 2.15(e) and
such application of payments below, no Event of Default has occurred and is then continuing,
including without, limitation, compliance with the Applicable Loan to Value Ratio):





          first, to prepay the Terms Loans, applied on a pro rata basis to the remaining
scheduled the Installments of principal of the Term Loans, and thereafter to any remaining
principal amount of the Term Loans;




          second, to prepay Second Lien Term Loans in accordance with the Second Lien Credit
Agreement;




          third, to prepay the Swing Line Loans to the full extent thereof;




          fourth, to prepay the Revolving Loans and pay any outstanding reimbursement obligations
with respect to Letters of Credit and to pay any outstanding reimbursement obligations with
respect to Synthetic Letters of Credit, in each case to the full extent thereof, on a pro
rata basis (in accordance with the outstanding principal amount of the Revolving Loans and
amount of outstanding reimbursement obligations
with respect to Letters of Credit, on the one hand, and the amount of outstanding
reimbursement obligations with respect to Synthetic Letters of Credit, on the other hand,);
and




          fifth, to cash collateralize, on a pro rata basis, outstanding Letters of Credit
(without a reduction in the Revolving Commitments) on the one hand, and outstanding
Synthetic Letters of Credit and reduce the Synthetic LC Commitments by the amount of such
cash collateralization, on the other hand.



          (c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate
Loans. Considering each Class of Loans being prepaid separately, any prepayment thereof shall
be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made
by Borrower pursuant to Section 2.19(c).





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     2.17. General Provisions Regarding Payments.



          (a) All payments by Borrower of principal, interest, fees and other Obligations shall be
made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction
or condition, and delivered to Administrative Agent not later than 12:00 p.m. (New York City time)
on the date due at the Principal Office designated by Administrative Agent for the account of
Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Borrower on the next succeeding
Business Day.




          (b) All payments in respect of the principal amount of any Loan (other than voluntary
prepayments of Revolving Loans) shall be accompanied by payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in
respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be
applied to the payment of interest then due and payable before application to principal.




          (c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly
distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s
applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder,
together with all other amounts due thereto, including all fees payable with respect thereto, to
the extent received by Administrative Agent.




          (d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice
is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of
its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.




          (e) Subject to the provisos set forth in the definition of “Interest Period” as they may
apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall
be stated to be due on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and, with respect to Revolving Loans only, such
extension of time shall be included in the computation of the payment of interest hereunder or
of the Revolving Commitment fees hereunder.




          (f) Borrower hereby authorizes Administrative Agent and Collateral Agent to charge
Borrower’s accounts with Administrative Agent and Collateral Agent in order to cause timely payment
to be made to Administrative Agent and Collateral Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in its accounts for that
purpose).




          (g) Administrative Agent shall deem any payment by or on behalf of Borrower hereunder that
is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming
payment. Any such payment shall not be deemed to have been received by Administrative Agent until
the later of (i) the time such funds become available funds, and (ii) the applicable next Business
Day. Administrative Agent shall give prompt telephonic notice to Borrower, Collateral Agent and
each applicable Lender (confirmed in




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writing) if any payment is non-conforming. Any non-conforming
payment may constitute or become a Default or Event of Default in accordance with the terms of
Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until such funds become available funds (but in no event less than the period from
the date of such payment to the next succeeding applicable Business Day) at the rate determined
pursuant to Section 2.11 from the date such amount was due and payable until the date such amount
is paid in full.




          (h) If an Event of Default shall have occurred and not otherwise been waived and the
maturity of the Obligations shall have been accelerated pursuant to Section 8.1, or any Event of
Default under Section 8.1(f) or (g) shall have occurred, or as to any mandatory prepayments under
Section 2.15 at any time an Event of Default shall have occurred and not otherwise been waived in
accordance with the terms hereof, then, in each case, all payments or proceeds received by Agents
hereunder in respect of any of the Obligations, shall be applied in accordance with the application
arrangements described in Section 7.2 of the Pledge and Security Agreement. In the event of any
mandatory prepayments under Sections 2.15(a) through 2.15(e), Borrower shall provide a certificate
as to the Loan to Value Ratio after giving effect to such mandatory prepayment, prior to making any
such mandatory prepayment, showing that the Applicable Loan to Value Ratio is satisfied. If the
Applicable Loan to Value Ratio shall not be satisfied after giving effect to such mandatory
prepayment, then such mandatory prepayment shall be applied first to the principal of the Swing
Line Loans and second to the Revolving Loans, and thereafter in accordance with Section 2.16(b).




     2.18. Ratable Sharing. Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with
the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim
or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal, interest, amounts
payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender
hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts
Due” to such Lender) which is greater than the proportion received by any other Lender in
respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (a) notify Collateral Agent, Administrative Agent and each
other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all
or part of such proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those
purchases shall be rescinded and the purchase prices paid for such participations shall be returned
to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower
expressly consents to the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to
any and all monies owing by



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Borrower to that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that holder.



     2.19. Making or Maintaining Eurodollar Rate Loans.



          (a) Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto), on any Interest Rate Determination Date with respect to any
Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market
adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on
the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on
such date give notice (by telefacsimile or by telephone confirmed in writing) to Borrower,
Collateral Agent and each Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrower,
Collateral Agent and Lenders that the circumstances giving rise to such notice no longer exist, and
(ii) any Funding Notice or Conversion/Continuation Notice given by Borrower with respect to the
Loans in respect of which such determination was made shall be deemed to be a Funding Notice for or
Conversion/Continuation Notice into Base Rate Loans.




          (b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on
any date any Lender shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after consultation with Borrower and
Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result
of contingencies occurring after the date hereof which materially and adversely affect the London
interbank market or the position of such Lender in that market, then, and in any such event, such
Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to
Borrower, Collateral Agent and Administrative Agent of such
determination (which notice Administrative Agent shall promptly
transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall
be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or
a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such
Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender’s
obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected Loans”) shall be
terminated at the earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and (4) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described above relates to a
Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or a
Conversion/Continuation Notice, Borrower shall have the option, subject to the provisions of
Section 2.19(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders
by giving notice (by telefacsimile or by telephone confirmed in writing) to




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Administrative Agent
(with a copy to Collateral Agent) of such rescission on the date on which the Affected Lender gives
notice of its determination as described above (which notice of rescission Administrative Agent
shall promptly transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this Section 2.19(b) shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms hereof.




          (c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower
shall compensate each Lender, upon written request by such Lender (which request shall set forth
the basis for requesting such amounts), for all reasonable losses, expenses and liabilities
(including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection
with the liquidation or re-employment of such funds but excluding loss of anticipated profits)
which such Lender may sustain: (i) if for any reason (other than a default by such Lender or a
rescission pursuant to Section 2.19(b)) a borrowing of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion
to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any
prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Borrower.




          (d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an
Affiliate of such Lender.




          (e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all
amounts payable to a Lender under this Section 2.19 and under Section 2.20 shall be made as though
such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of
a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of
such Lender in the United States of America; provided, however, each Lender may
fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions
shall be utilized only for the purposes of calculating amounts payable under this Section 2.19 and
under Section 2.20.




     2.20. Increased Costs; Capital Adequacy.



          (a) Compensation For Increased Costs and Taxes. Subject to the provisions of
Section 2.21 (which shall be controlling with respect to the matters covered thereby), in the event
that any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(a)) shall
determine (which determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application




68









 







thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order), or any
determination of a court or Governmental Authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law): (i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the overall net income of such Lender) with
respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder
or thereunder or any payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable
any reserve (including any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or
other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder
or the London interbank market; and the result of any of the foregoing is to increase the cost to
such Lender of agreeing to make, making or maintaining Loans hereunder participating in, issuing or
maintaining Synthetic Letters of Credit or Synthetic LC Deposits hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with respect thereto;
then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement
referred to in the next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such Lender in its sole
discretion shall determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to
Borrower (with a copy to Collateral Agent and Administrative Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed to such Lender
under this Section 2.20(a), which statement shall be conclusive and binding upon all parties hereto
absent manifest error.




          (b) Capital Adequacy Adjustment. In the event that any Lender (which term shall
include Issuing Bank for purposes of this Section 2.20(b)) shall have determined that the adoption,
effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or
any provision thereof) regarding capital adequacy, or any change therein or in the interpretation
or administration thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender (or its applicable
lending office) with any guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans,
Revolving Commitments, Synthetic LC Deposits or Synthetic Letters of Credit, or participations
therein or other obligations hereunder with respect to the Loans or the Synthetic Letters of Credit
to a level below that which such Lender or such controlling corporation could have achieved but for
such adoption, effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with regard to capital
adequacy), then from time to time, within five





69









 







Business Days after receipt by Borrower from such
Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Borrower (with a copy to
Collateral Agent and Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to Lender under this Section 2.20(b), which
statement shall be conclusive and binding upon all parties hereto absent manifest error.




          (c) Notice. Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender’s or the Issuing Bank’s
right to demand such compensation; provided that Borrower shall not be under any obligation
to compensate any Lender or the Issuing Bank under paragraph (a) or (b) of this Section 2.20 with
respect to increased costs or reductions with respect to any period prior to the date that is 180
days prior to the date of the delivery of the statement required pursuant to paragraph (a) or (b);
provided further that the foregoing limitation shall not apply to any increased
costs or reductions arising out of the retroactive application of any change in any law, treaty,
governmental rule, regulation or order within such 180-day period.




     2.21. Taxes; Withholding, etc.



          (a) Payments to Be Free and Clear. All sums payable by any Credit Party hereunder
and under the other Credit Documents shall (except to the extent required by law) be paid free and
clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any
federation or organization of which the United States of America or any such jurisdiction is a
member at the time of payment.




          (b) Withholding of Taxes. If any Credit Party or any other Person is required by
law to make any deduction or withholding on account of any such Tax from any sum paid or payable by
any Credit Party to Administrative Agent or any Lender (which term shall include Issuing Bank for
purposes of this Section 2.21(b)) under any of the Credit Documents: (i) Borrower shall notify
Administrative Agent (with a copy to Collateral Agent) of any such requirement or any change in any
such requirement as soon as Borrower becomes aware of it; (ii) Borrower shall pay any such Tax
before the date on which penalties attach thereto, such payment to be made (if the liability to pay
is imposed on any Credit Party) for its own account or (if that liability is imposed on
Administrative Agent or such Lender, as the case may be) on behalf of and in the name of
Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which
the relevant deduction, withholding or payment is required shall be increased to the extent
necessary to ensure that, after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or payment been required or made;
and (iv) within thirty days after paying any sum from which it is required by law to make any
deduction or withholding, and within thirty days after the due date of payment of any Tax which it
is required by clause (ii) above to pay, Borrower shall deliver to




70









 







Administrative Agent (with a
copy to Collateral Agent) evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or other authority;
provided, no such additional amount shall be required to be paid to any Lender under clause (iii)
above except to the extent that any change after the date hereof (in the case of each Lender listed
on the signature pages hereof on the Closing Date) or after the effective date of the Assignment
Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any
such requirement for a deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in effect at the date
hereof or at the date of such Assignment Agreement, as the case may be, in respect of payments to
such Lender.




          (c) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a
United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code)
for U.S. federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent
(with a copy to Collateral Agent) for transmission to Borrower, on or prior to the Closing Date (in
the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to
the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in the determination of Borrower or
Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies
of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and
duly executed by such Lender, and such other documentation required under the Internal Revenue Code
and reasonably requested by Borrower to establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if
such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form W-8ECI pursuant to clause (i) above, a
Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form
W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and reasonably requested by
Borrower to establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of interest payable under any
of the Credit Documents. Each Lender that is a United States person (as such term is defined in
Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a
“U.S. Lender”) shall deliver to Administrative Agent (with a copy to Collateral Agent) and Borrower
on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes
a party to this Agreement) two original copies of Internal Revenue Service Form W-9 (or any
successor form), properly completed and duly executed by such Lender, certifying that such U.S.
Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove
that it is entitled to such an exemption. Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income tax withholding matters pursuant to
this Section 2.21(c) hereby agrees, from time to time after the initial delivery by such Lender of
such forms, certificates or other evidence, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence obsolete or inaccurate in any material respect,
that such Lender shall promptly deliver to Administrative Agent (with a copy to Collateral Agent)
for transmission to Borrower two new original copies of Internal Revenue Service Form W-8BEN or
W-8ECI , or a Certificate re




71









 







Non-Bank Status and two original copies of Internal Revenue Service
Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue Code and reasonably
requested by Borrower to confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to payments to such Lender under the
Credit Documents, or notify Administrative Agent (with a copy to Collateral Agent) and Borrower of
its inability to deliver any such forms, certificates or other evidence. Borrower shall not be
required to pay any additional amount to any Non-US Lender under Section 2.21(b)(iii) if such
Lender shall have failed (1) to deliver the forms, certificates or other evidence referred to in
the second sentence of this Section 2.21(c), or (2) to notify Administrative Agent (with a copy to
Collateral Agent) and Borrower of its inability to deliver any such forms, certificates or other
evidence, as the case may be; provided, if such Lender shall have satisfied the
requirements of the first sentence of this Section 2.21(c) on the Closing Date or on the date of
the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last
sentence of Section 2.21(c) shall relieve Borrower of its obligation to pay any additional amounts
pursuant this Section 2.21 in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the fact that such Lender is not
subject to withholding as described herein.




     2.22. Obligation to Mitigate. Each Lender (which term shall include Issuing Bank for purposes of
this Section 2.22) agrees that, as promptly as practicable after the officer of such Lender
responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of
the occurrence of an event or the existence of a condition that would cause such Lender to become
an Affected Lender or that would entitle such Lender to receive payments under Section 2.19, 2.20
or 2.21, it will, to the extent not inconsistent with the internal policies of such Lender and any
applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or
maintain its Credit Extensions, including any Affected Loans, through another office of such
Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result
thereof the circumstances which would cause such Lender to be an Affected Lender would cease to
exist or the additional amounts which would otherwise be required to be paid to such Lender
pursuant to Section 2.19, 2.20 or 2.21 would be materially reduced and if, as determined by such
Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving
Commitments, Loans or Letters of Credit through such other office or in accordance with such other
measures, as the case may be, would not otherwise adversely affect such Revolving Commitments,
Loans or Letters of Credit or the interests of such Lender; provided, such Lender will not
be obligated to utilize such other office pursuant to this Section 2.22 unless Borrower agrees to
pay all incremental expenses incurred by such Lender as a result of utilizing such other office as
described above. A certificate as to the amount of any such expenses payable by Borrower pursuant
to this Section 2.22 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to Borrower (with a copy to Collateral Agent and Administrative Agent)
shall be conclusive absent manifest error.



     2.23. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event
that any Lender, other than at the direction or request of any regulatory agency or authority,
defaults (a “Defaulting Lender”) in its obligation to fund (a



72









 







“Funding Default”) any Revolving Loan
or its portion of any unreimbursed payment, or to make a Synthetic LC Deposit, including under
Sections 2.3(b)(iv), 2.4 or 2.5 (in each case, a “Defaulted Loan”), then (a) during any Default
Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a
“Lender” for purposes of voting on any matters (including the granting of any consents or waivers)
with respect to any of the Credit Documents; (b) to the extent permitted by applicable law, until
such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to
zero, (i) any voluntary prepayment of the Revolving Loans shall, if Borrower so directs at the time
of making such voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such
Defaulting Lender had no Revolving Loans outstanding and the Revolving Exposure of such Defaulting
Lender were zero, and (ii) any mandatory prepayment of the Revolving Loans shall, if Borrower so
directs at the time of making such mandatory prepayment, be applied to the Revolving Loans of other
Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had
funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that Borrower
shall be entitled to retain any portion of any mandatory prepayment of the Revolving Loans that is
not paid to such Defaulting Lender solely as a result of the operation of the provisions of this
clause (b); (c) such Defaulting Lender’s Revolving Commitment and outstanding Revolving Loans and
such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage shall be excluded for
purposes of calculating the Revolving Commitment fee payable to Lenders in respect of any day
during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall
not be entitled to receive any Revolving Commitment fee pursuant to Section 2.12 with respect to
such Defaulting Lender’s Revolving Commitment in respect of any Default Period with respect to such
Defaulting Lender; and (d) the Total Utilization of Revolving Commitments and the aggregate
Synthetic LC Exposure of all Lenders as at any date of determination shall be calculated as if such
Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. No Revolving
Commitment or Synthetic LC Commitment of any Lender shall be increased or otherwise affected, and,
except as otherwise expressly provided in this Section 2.23, performance by Borrower of its
obligations hereunder and the other Credit Documents shall not
be excused or otherwise modified as a result of any Funding Default or the operation of this
Section 2.23. The rights and remedies against a Defaulting Lender under this Section 2.23 are in
addition to other rights and remedies which Borrower may have against such Defaulting Lender with
respect to any Funding Default and which Administrative Agent or any Lender may have against such
Defaulting Lender with respect to any Funding Default.



     2.24. Removal or Replacement of a Lender. Anything contained herein to the contrary
notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give
notice to Borrower that such Lender is an Affected Lender or that such Lender is entitled to
receive payments under Section 2.19, 2.20 or 2.21, (ii) the circumstances which have caused such
Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain
in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after
Borrower’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender,
(ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such
Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting
Lender within five Business Days after Borrower’s request that it cure such default; or (c) in
connection with any proposed amendment, modification, termination, waiver or consent with respect
to any of the provisions hereof as contemplated by Section 10.5(b), the



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consent of Requisite
Lenders shall have been obtained but the consent of one or more of such other Lenders (each a
“Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect
to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated
Lender”), Borrower may, by giving written notice to Administrative Agent (with a copy to Collateral
Agent) and any Terminated Lender of its election to do so, elect to cause such Terminated Lender
(and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans, its
Revolving Commitments and its Synthetic LC Commitments and Synthetic LC Deposit, if any, in full to
one or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions of
Section 10.6 and Borrower shall pay or cause to be paid the fees, if any, payable thereunder in
connection with any such assignment from an Increased Cost Lender or a Non-Consenting Lender and
the Defaulting Lender shall pay the fees, if any, payable thereunder in connection with any such
assignment from such Defaulting Lender; provided, (1) on the date of such assignment, the
Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal
to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender,
(B) an amount equal to the Synthetic LC Deposit of such Terminated Lender, together with all
accrued Synthetic LC Deposit Return thereon, (C) an amount equal to all unreimbursed Synthetic LC
Disbursements that have been funded by such Terminated Lender, together with all then unpaid
interest with respect thereto at such time and (D) an amount equal to all accrued, but theretofore
unpaid fees owing to such Terminated Lender pursuant to Section 2.12 and all other amounts owing to
such Terminated Lender pursuant to any other provision of any Credit Document; (2) on the date of
such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to
Section 2.19(c), 2.20 or 2.21; or otherwise as if it were a prepayment and (3) in the event such
Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender; provided, Borrower may not make such election with respect to any Terminated Lender
that is also an Issuing Bank unless, prior to the effectiveness of such election, Borrower shall
have caused each outstanding Letter of Credit issued thereby to be cancelled.
Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such
Terminated Lender’s Revolving Commitments and Synthetic LC Commitments, if any, such Terminated
Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of
such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender.



     SECTION 3. CONDITIONS PRECEDENT



       3.1. Closing Date. The obligation of each Lender to make a Credit Extension on the Closing Date is
subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions
on or before the Closing Date:




          (a) Credit Documents. Administrative Agent shall have received sufficient copies of
each Credit Document originally executed and delivered by each applicable Credit Party for each
Lender.



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          (b) Borrowings of Second Lien Term Loans. On or before the Closing Date,




     (i) Borrower shall have received gross proceeds from the borrowing of Second Lien
Term Loans in an aggregate amount in cash of not less than $175,000,000; and




     (ii) Borrower shall have delivered to Administrative Agent and Syndication Agent
complete, correct and conformed copies of the Second Lien Loan Agreement and the other
Second Lien Credit Documents.



          (c) Organizational Documents; Incumbency. Administrative Agent shall have received
(i) sufficient copies of each Organizational Document executed and delivered by each Credit Party,
as applicable, and, to the extent applicable, certified as of a recent date by the appropriate
governmental official, for each Lender, each dated the Closing Date or a recent date prior thereto;
(ii) signature and incumbency certificates of the officers of such Person executing the Credit
Documents to which it is a party; (iii) resolutions of the Board of Directors or similar governing
body of each Credit Party approving and authorizing the execution, delivery and performance of this
Agreement and the other Credit Documents to which it is a party or by which it or its assets may be
bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant
secretary as being in full force and effect without modification or amendment; (iv) a good standing
certificate from the applicable Governmental Authority of each Credit Party’s jurisdiction of
incorporation, organization or formation and in each jurisdiction in which it is qualified as a
foreign corporation or other entity to do business (other than, in the case of jurisdictions other
than such Credit Party’s jurisdiction of incorporation, organization or formation, where the
failure to be in good standing or so qualified could not be reasonably expected to have a Material
Adverse Effect), each dated a recent date prior to the Closing Date; and (v) such other documents
as Administrative Agent may reasonably request.




          (d) Organizational and Capital Structure. The organizational structure and capital
structure of Borrower and its Subsidiaries shall be as set forth on Schedule 4.1.




          (e) Existing Indebtedness. On the Closing Date, Borrower and its Subsidiaries shall
have (i) repaid in full all Existing Indebtedness, (ii) terminated any commitments to lend or make
other extensions of credit thereunder, (iii) delivered to Administrative Agent and Syndication
Agent all documents or instruments necessary to release all Liens securing Existing Indebtedness or
other obligations of Borrower and its Subsidiaries thereunder being repaid on the Closing Date, and
(iv) made arrangements satisfactory to Administrative Agent and Syndication Agent with respect to
the cancellation of any letters of credit outstanding thereunder or the issuance of Letters of
Credit or Synthetic Letters of Credit to support the obligations of Borrower and its Subsidiaries
with respect thereto.




          (f) Governmental Authorizations and Consents. Each Credit Party shall have obtained
all Governmental Authorizations and all consents of other Persons, in each case that are necessary
or advisable in connection with the transactions contemplated by the Credit Documents and each of
the foregoing shall be in full force and effect and in form and substance reasonably satisfactory
to Administrative Agent and Syndication Agent. All applicable waiting periods shall have expired
without any action being taken or threatened by any competent





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authority which would restrain,
prevent or otherwise impose adverse conditions on the transactions contemplated by the Credit
Documents or the financing thereof and no action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and
the time for any applicable agency to take action to set aside its consent on its own motion shall
have expired.



     (g) Real Estate Assets. In order to create in favor of Collateral Agent, for the
benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein,
perfected First Priority security interest in certain Real Estate Assets, Collateral Agent shall
have received from Borrower and each applicable Guarantor:





          (i) fully executed and notarized Mortgages, in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset
listed in Schedule 3.1(g)(i) (each, a “Closing Date Mortgaged Property”);




          (ii) an opinion of counsel (which counsel shall be reasonably satisfactory to
Collateral Agent) in each state in which a Closing Date Mortgaged Property is located
with respect to the enforceability of the form(s) of Mortgages to be recorded in such
state and such other matters as Collateral Agent may reasonably request, in each case in
form and substance reasonably satisfactory to Collateral Agent;




          (iii) (a) ALTA mortgagee title insurance policies or unconditional commitments
therefor issued by one or more title companies reasonably satisfactory to Collateral
Agent with respect to each Closing Date Mortgaged Property (each, a “Title Policy”), in
amounts not less than the fair market value of each Closing Date Mortgaged Property,
together with a title report issued by a title company with
respect thereto, dated not more than thirty days prior to the Closing Date and
copies of all recorded documents listed as exceptions to title or otherwise referred to
therein, each in form and substance reasonably satisfactory to Collateral Agent and (B)
evidence satisfactory to Collateral Agent that such Credit Party has paid to the title
company or to the appropriate governmental authorities all expenses and premiums of the
title company and all other sums required in connection with the issuance of each Title
Policy and all recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Mortgages for each Closing Date
Mortgaged Property in the appropriate real estate records;




          (iv) flood certifications with respect to all Closing Date Mortgaged Properties and
evidence of flood insurance with respect to each Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program, in each case
in compliance with any applicable regulations of the Board of Governors, in form and
substance reasonably satisfactory to Collateral Agent; and



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          (v) ALTA surveys of all Closing Date Mortgaged Properties, certified to Collateral
Agent and dated not more than thirty days prior to the Closing Date.



          (h) Personal Property Collateral. In order to create in favor of Collateral Agent,
for the benefit of Secured Parties, a valid, perfected First Priority security interest in the
personal property Collateral, the Credit Parties shall have delivered to Collateral Agent:





          (i) evidence satisfactory to Collateral Agent of the compliance by each Credit
Party of their obligations under the Pledge and Security Agreement and the other
Collateral Documents (including their obligations to execute and deliver UCC financing
statements, originals of securities, instruments, chattel paper and certificates of
title and any agreements governing deposit and/or securities accounts as provided
therein);




          (ii) A completed Collateral Questionnaire dated the Closing Date and executed by an
Authorized Officer of each Credit Party, together with all attachments contemplated
thereby;




          (iii) fully executed and notarized Intellectual Property Security Agreements, in
proper form for filing or recording in all appropriate places in all applicable
jurisdictions, memorializing and recording the encumbrance of the Intellectual Property
Assets listed in Schedule 4.7 to the Pledge and Security Agreement;




          (iv) opinions of counsel (which counsel shall be reasonably satisfactory to
Collateral Agent) with respect to the creation and perfection of the security interests
in favor of Collateral Agent in such Collateral and such other matters governed by the
laws of each jurisdiction in which any Credit Party or any
personal property Collateral is located as Collateral Agent may reasonably request,
in each case in form and substance reasonably satisfactory to Collateral Agent;




          (v) evidence that each Credit Party shall have taken or caused to be taken any
other action, executed and delivered or caused to be executed and delivered any other
agreement, document and instrument (including (i) a Landlord Personal Property
Collateral Access Agreement executed by the landlord of any Leasehold Property which is
a warehouse, distribution center or other location at which a material amount of
Collateral is located, and by the applicable Credit Party and (ii) any intercompany
notes evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b)) and
made or caused to be made any other filing and recording (other than as set forth
herein) reasonably required by Collateral Agent; and




          (vi) evidence satisfactory to Collateral Agent that Borrower has retained, at its
sole cost and expense, a service provider acceptable to Collateral Agent for the
tracking of all of UCC financing statements of Borrower and the Guarantors and that will
provide notification to Collateral Agent of, among other things, the upcoming lapse or
expiration thereof.



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          (i) Environmental Reports. Administrative Agent, Collateral Agent and Syndication
Agent shall have received reports and other information, in form, scope and substance reasonably
satisfactory to Administrative Agent and Syndication Agent, regarding environmental matters
relating to the Facilities.




          (j) Financial Statements; Projections. Lenders shall have received from Borrower
(i) the Historical Financial Statements, (ii) pro forma consolidated balance sheets of Borrower and
its Subsidiaries as at the Closing Date, and reflecting the transactions contemplated by the Credit
Documents to occur on or prior to the Closing Date, which pro forma balance sheet shall be in form
and substance satisfactory to Administrative Agent and Syndication Agent, and (iii) the
Projections.




          (k) Evidence of Insurance. Collateral Agent shall have received a certificate from
Borrower’s insurance broker or other evidence reasonably satisfactory to it that all insurance
required to be maintained pursuant to Section 5.5 is in full force and effect, together with
endorsements naming the Collateral Agent, for the benefit of Secured Parties, as additional insured
and loss payee thereunder to the extent required under Section 5.5.




          (l) Opinions of Counsel to Credit Parties. Lenders and their respective counsel
shall have received originally executed copies of the favorable written opinions of Alston & Bird
LLP, counsel for Credit Parties, in the form of Exhibit D, and as to such other matters as
Administrative Agent or Syndication Agent may reasonably request, dated as of the Closing Date and
otherwise in form and substance reasonably satisfactory to Administrative Agent and Syndication
Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and
Lenders).




          (m) Fees. Borrower shall have paid to Agents the fees payable on the Closing Date
referred to in Section 2.12(e).




          (n) Solvency Certificate. On the Closing Date Administrative Agent, Collateral
Agent and Syndication Agent shall have received a Solvency Certificate from Borrower and in form,
scope and substance satisfactory to Administrative Agent and Syndication Agent, and demonstrating
that after giving effect to the consummation of the transactions contemplated by the initial
borrowings hereunder and under the Second Lien Credit Agreement and any rights of contribution,
each of Borrower and its Subsidiaries is and will be Solvent.




          (o) Closing Date Certificate. Borrower shall have delivered to Administrative
Agent, Collateral Agent and Syndication Agent an originally executed Closing Date Certificate,
together with all attachments thereto.




          (p) Credit Rating. The credit facilities provided for under this Agreement shall
have been assigned a credit rating by either S&P and/or Moody’s.




          (q) Closing Date. Lenders shall have made the Term Loans to Borrower on or before
March 31, 2007.




          (r) No Litigation. There shall not exist any action, suit, investigation,
litigation, proceeding, hearing or other legal or regulatory developments, pending or threatened




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in
any court or before any arbitrator or Governmental Authority that, in the reasonable opinion of
Administrative Agent and Syndication Agent, singly or in the aggregate, materially impairs the
transactions contemplated by the Credit Documents, or that could have a Material Adverse Effect.




          (s) Completion of Proceedings. All partnership, corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by Administrative Agent or Syndication Agent and
its counsel shall be satisfactory in form and substance to Administrative Agent and Syndication
Agent and such counsel, and Administrative Agent, Syndication Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents as Administrative
Agent or Syndication Agent may reasonably request.




          (t) Letter of Direction. Administrative Agent and Collateral Agent shall have
received a duly executed letter of direction from Borrower addressed to GSCP, Administrative Agent
and Collateral Agent, on behalf of itself and Lenders, directing the disbursement on the Closing
Date of the proceeds of the Term Loans made on such date (it being understood that there shall be
no Revolving Loans or Swing Line Loans made, or Letters of Credit issued, on the Closing Date).




          (u) Minimum EBITDA. Administrative Agent, Collateral Agent and Syndication Agent
shall have received evidence reasonably satisfactory to Administrative Agent, Collateral Agent and
Syndication Agent that the Consolidated Adjusted EBITDA of Borrower for the twelve-month period
ending on December 31, 2006 was not less than $233,000,000.




          (v) Patriot Act. Prior to the Closing Date, the Arranger shall have received all
documentation and other information required by bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations, including the U.S.A. Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”).




          (w) Loan to Value Ratio Certificate. Collateral Agent and Administrative Agent
shall have received a Loan to Value Ratio Certificate certifying that the Borrower has a Loan to
Value Ratio of not less than 3.00:1.00.




     3.2. Conditions to Each Credit Extension.



          (a) Conditions Precedent. The obligation of each Lender to make any Loan, or
Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Closing Date, are
subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions
precedent:





          (i) Administrative Agent shall have received a fully executed and delivered Funding
Notice or Issuance Notice, as the case may be;




          (ii) after making the Credit Extensions requested on such Credit Date, (x) the
Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments
then in effect and (y) the Loan to Value Ratio shall not be less than the Applicable
Loan to Value Ratio;



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          (iii) after making the Credit Extensions requested on such Credit Date, the total
Synthetic LC Usage shall not exceed the total Synthetic LC Deposits;




          (iv) as of such Credit Date, the representations and warranties contained herein
and in the other Credit Documents (other than, for Credit Extensions involving the
continuation of Eurodollar Rate Loans into a new Interest Periods, those set forth in
Section 4.9 and Section 4.11) shall be true and correct in all material respects on and
as of that Credit Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;




          (v) as of such Credit Date, no event shall have occurred and be continuing or would
result from the consummation of the applicable Credit Extension that would constitute an
Event of Default or a Default;




          (vi) on or before the date of issuance of any Letter of Credit, Administrative
Agent shall have received all other information required by the applicable Issuance
Notice, and such other documents or information as Issuing Bank may reasonably require
in connection with the issuance of such Letter of Credit; and




          (vii) after giving effect to such Credit Extension and the use of proceeds thereof
the aggregate Cash and Cash Equivalents of Borrower and its Subsidiaries will not exceed
$50,000,000.


Any Agent or Requisite Lenders shall be entitled, but not obligated to, request and receive, prior
to the making of any Credit Extension, additional information reasonably satisfactory to the
requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment
of such Agent or Requisite Lender such request is warranted under the circumstances.




          (b) Notices. Any Notice shall be executed by an Authorized Officer in a writing
delivered to Administrative Agent. In lieu of delivering a Notice, Borrower may give
Administrative Agent telephonic notice by the required time of any proposed borrowing,
conversion/continuation or issuance of a Letter of Credit, as the case may be; provided
each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to
Administrative Agent on or before the applicable date of borrowing, continuation/conversion or
issuance. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Administrative Agent believes in good
faith to have been given by a duly authorized officer or other person authorized on behalf of
Borrower or for otherwise acting in good faith.




     SECTION 4. REPRESENTATIONS AND WARRANTIES



       In order to induce Lenders and Issuing Bank to enter into this Agreement and to make each
Credit Extension to be made thereby, each Credit Party represents and warrants to each



80









 




Lender and
Issuing Bank, on the Closing Date and on each Credit Date, that the following statements are true
and correct:




     4.1. Organization; Requisite Power and Authority; Qualification. Each of Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and
authority to own and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry
out the transactions contemplated thereby, and (c) is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be so qualified or in good standing
has not had, and could not be reasonably expected to have, a Material Adverse Effect.



     4.2. Equity Interests and Ownership. The Equity Interests of Subsidiaries of Borrower has been
duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on
Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment
or other agreement to which any of Subsidiary of Borrower is a party requiring, and there is no
membership interest or other Equity Interests of any of Subsidiary of Borrower outstanding which
upon conversion or exchange would require, the issuance by any Subsidiary of Borrower of any
additional membership interests or other Equity Interests of any of Subsidiary of Borrower or other
Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase,
a membership interest or other Equity Interests of any of Subsidiary of Borrower. Schedule 4.2
correctly sets forth the ownership interest of Borrower and each of its Subsidiaries in their
respective Subsidiaries as of the Closing Date.



     4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have been duly authorized
by all necessary action on the part of each Credit Party that is a party thereto.



     4.4. No Conflict. The execution, delivery and performance by Credit Parties of the Credit
Documents to which they are parties and the consummation of the transactions contemplated by the
Credit Documents do not and will not (a) violate (i) any provision of any law or any governmental
rule or regulation applicable to Borrower or any of its Subsidiaries, (ii) any of the
Organizational Documents of Borrower or any of its Subsidiaries, or (iii) any order, judgment or
decree of any court or other agency of government binding on Borrower or any of its Subsidiaries;
(b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of Borrower or any of its Subsidiaries except to the
extent such conflict, breach or default could not reasonably be expected to have a Material Adverse
Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties
or assets of Borrower or any of its Subsidiaries (other than any Liens created under any of the
Credit Documents in favor of Collateral Agent, on behalf of Secured Parties, and Liens securing the
obligations under the Second Lien Credit Agreement); or (d) require any approval of stockholders,
members or partners or any approval or consent of any Person under any Contractual Obligation of
Borrower or any of its Subsidiaries, except for such approvals or consents which will be obtained
on or before the Closing Date and disclosed in writing to Lenders and except for any such approvals
or consents the failure of which to obtain will not have a Material Adverse Effect.



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     4.5. Governmental Consents. The execution, delivery and performance by Credit Parties of the
Credit Documents to which they are parties and the consummation of the transactions contemplated by
the Credit Documents do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any Governmental Authority except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent
for filing and/or recordation, as of the Closing Date.



     4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each Credit
Party that is a party thereto and is the legally valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors’ rights generally or by equitable principles relating to enforceability.



     4.7. Historical Financial Statements. The Historical Financial Statements were prepared in
conformity with GAAP and fairly present, in all material respects, the financial position, on a
consolidated basis, of the Persons described in such financial statements as at the respective
dates thereof and the results of operations and cash flows, on a consolidated basis, of the
entities described therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from (i) audit and normal year-end adjustments
and (ii) the possible adjustment described in Schedule 4.7 hereto. As of the Closing Date, neither
Borrower nor any of its Subsidiaries has any contingent liability or liability for taxes, long-term
lease (other than store
leases entered into in the ordinary course of business) or unusual forward or long-term
commitment that is not reflected in the Historical Financial Statements or the notes thereto and
which in any such case is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Borrower and any of its Subsidiaries taken as a
whole.



     4.8. Projections. On and as of the Closing Date, the projections of Borrower and its Subsidiaries
for the period of Fiscal Year 2007 through and including Fiscal Year 2010 (the “Projections”) are
based on good faith estimates and assumptions made by the management of Borrower; provided,
the Projections are not to be viewed as facts and that actual results during the period or periods
covered by the Projections may differ from such Projections and that the differences may be
material; provided further, as of the Closing Date, management of Borrower believed
that the Projections were reasonable and attainable.



     4.9. No Material Adverse Change. Since January 1, 2006, no event, circumstance or change has
occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect.



     4.10. No Restricted Junior Payments. Since January 1, 2006, neither Borrower nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so except as permitted pursuant to
Section 6.4.



     4.11. Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the aggregate,
that could reasonably be expected to have a Material Adverse Effect.



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Neither Borrower nor any of
its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect,
or (b) is subject to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.



     4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3, all federal, material
state, material provincial and other material tax returns and reports of Borrower and its
Subsidiaries required to be filed by any of them have been timely filed, and all taxes due and
payable and all assessments, fees and other governmental charges upon Borrower and its Subsidiaries
and upon their respective properties, assets, income, businesses and franchises which are due and
payable have been paid when due and payable. Borrower knows of no proposed tax assessment against
Borrower or any of its Subsidiaries which is not being actively contested by Borrower or such
Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made
or provided therefor.



     4.13. Properties.



          (a) Title. Each of Borrower and its Subsidiaries has (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the
case of licensed interests in intellectual property) and (iv) good title to (in the case of all
other personal property), all of their respective properties and assets reflected in their
respective Historical Financial Statements referred to in Section 4.7 and in the most recent
financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business or as otherwise
permitted under Section 6.8 and, with respect to the foregoing clause (ii), except as could not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.




          (b) Real Estate. As of the Closing Date, Schedule 4.13 contains a true, accurate
and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of
leases (together with all amendments, modifications, supplements, renewals or extensions of any
thereof) affecting each Real Estate Asset of any Credit Party, regardless of whether such Credit
Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under
such lease, sublease or assignment. Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each agreement listed in clause (ii)
of the immediately preceding sentence is in full force and effect and Borrower does not have
knowledge of any default that has occurred and is continuing thereunder, and each such agreement
constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable
against such Credit Party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles.





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     4.14. Environmental Matters. Neither Borrower nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written order, consent decree or
settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or
any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries has
received any letter or request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law. There
are and, to each of Borrower’ and its Subsidiaries’ knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis
of an Environmental Claim against Borrower or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor
any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor of Borrower or any of
its Subsidiaries has filed any notice under any Environmental Law indicating past or present
treatment of Hazardous Materials at any Facility, and none of Borrower’s or any of its
Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent. Compliance with
all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws
could not be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. No event or condition has occurred or is occurring with respect to
Borrower or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or
could reasonably be expected to have, a Material Adverse Effect.



     4.15. No Defaults. Neither Borrower nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in any of
its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse
of time or both, could constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected to have a Material
Adverse Effect.



     4.16. Material Contracts. Schedule 4.16 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date, and except as described thereon, all such
Material Contracts are in full force and effect and no defaults currently exist thereunder.



     4.17. Governmental Regulation. Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur Indebtedness or which
may otherwise render all or any portion of the Obligations unenforceable. Neither Borrower nor any
of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered
investment company” or a “principal underwriter” of a “registered investment company” as such terms
are defined in the Investment Company Act of 1940.



     4.18. Margin Stock. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit Party will be
used to purchase or carry any such Margin Stock or to extend credit



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to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent
with, the provisions of Regulation T, U or X of the Board of Governors.



     4.19. Employee Matters. Neither 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
unfair labor practice complaint pending against Borrower or any of its Subsidiaries, or to the best
knowledge of Borrower and Borrower, threatened against any of them before the National Labor
Relations Board and no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against Borrower or any of its Subsidiaries or to the best
knowledge of Borrower and Borrower, threatened against any of them, (b) no strike or work stoppage
in existence or threatened involving Borrower or any of its Subsidiaries, and (c) to the best
knowledge of Borrower and Borrower, no union representation question existing with respect to the
employees of Borrower or any of its Subsidiaries and, to the best knowledge of Borrower and
Borrower, no union organization activity that is taking place, except (with respect
to any matter specified in clause (a), (b) or (c) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.



     4.20. Employee Benefit Plans. Borrower, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of ERISA and the
Internal Revenue Code and the regulations and published interpretations thereunder with respect to
each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit
Plan , except, in each case, where the failure to comply or perform would not reasonably be
expected to result in liabilities of the Borrower and its Subsidiaries in excess of $15,000,000 in
the aggregate or have Material Adverse Effect. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified
and nothing has occurred subsequent to the issuance of such determination letter which would cause
such Employee Benefit Plan to lose its qualified status. No liability to the PBGC (other than
required premium payments), the Internal Revenue Service, any Employee Benefit Plan (other than
routine contributions) or any trust established under Title IV of ERISA (other than routine
contributions) has been or is expected to be incurred by Borrower, any of its Subsidiaries or any
of their ERISA Affiliates, which would, when taken together with all such liabilities, exceed
$15,000,000 in the aggregate for the Borrower and its Subsidiaries or which would reasonably be
expected to have Material Adverse Effect. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all such ERISA Events, would exceed $15,000,000 in the
aggregate for the Borrower and its Subsidiaries or would reasonably be expected to have Material
Adverse Effect. Except to the extent required under Section 4980B of the Internal Revenue Code or
similar state laws and to the extent an employee became entitled to benefits prior to his or her
termination of employment (e.g., severance, long term disability benefits, etc.), no Employee
Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise)
for any retired or former employee of Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates. The present value of the aggregate benefit liabilities under each Pension Plan
sponsored, maintained or contributed to by Borrower, any of its Subsidiaries or any of their ERISA
Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial
assumptions specified for funding purposes in the most recent actuarial valuation for



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such Pension
Plan), did not exceed the aggregate current value of the assets of such Pension Plan. As of the
most recent valuation date for each Multiemployer Plan for which the actuarial report is available,
the potential liability of Borrower, its Subsidiaries and their respective ERISA Affiliates for a
complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA),
when aggregated with such potential liability for a complete withdrawal from all Multiemployer
Plans, based on information available pursuant to Section 4221(e) of ERISA is zero. Borrower, each
of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of
Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.



     4.21. Certain Fees. No broker’s or finder’s fee or commission will be payable with respect to the
transactions contemplated by the Credit Documents, except as payable to the Agents and the Lenders.



     4.22. Solvency. The Credit Parties are and, upon the incurrence of any Obligation by any Credit
Party on any date on which this representation and warranty is made, will be, Solvent.



     4.23. Compliance with Statutes, etc. Each of Borrower and its Subsidiaries is in compliance with
all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities, in respect of the conduct of its business and the ownership of its
property (including compliance with all applicable Environmental Laws with respect to any Real
Estate Asset or governing its business and the requirements of any permits issued under such
Environmental Laws with respect to any such Real Estate Asset or the operations of Borrower or any
of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.



     4.24. Disclosure. No representation or warranty of any Credit Party contained in any Credit
Document or in any other documents, certificates or written statements furnished to any Agent or
Lender by or on behalf of Borrower or any of its Subsidiaries for use in connection with the
transactions contemplated hereby contains any untrue statement of a material fact or omits to state
a material fact (known to Borrower, in the case of any document not furnished by it) necessary in
order to make the statements contained herein or therein not misleading in light of the
circumstances in which the same were made, except for the possible adjustment to the Historical
Financial Statements described in Schedule 4.7 hereto. Any projections and pro forma financial
information contained in such materials are based upon good faith estimates and assumptions
believed by Borrower to be reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ materially and adversely from the
projected results. There are no facts known (or which should upon the reasonable exercise of
diligence be known) to Borrower (other than matters of a general economic nature) that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and that have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions contemplated hereby



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          4.25. Patriot Act. To the extent applicable, each Credit Party is in compliance, in all material
respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the Untied States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating thereto, and (ii) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly
or indirectly, for any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as amended.




     SECTION 5. AFFIRMATIVE COVENANTS



   Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until
payment in full of all Obligations and cancellation or expiration of all Letters of Credit and
Synthetic Letters of Credit, each Credit Party shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 5.



          5.1. Financial Statements and Other Reports. Borrower will deliver to Administrative Agent and
Lenders:




          (a) Quarterly Financial Statements. As soon as available, and in any event within
50 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, commencing
with the Fiscal Quarter in which the Closing Date occurs, the consolidated balance sheets of
Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated
statements of operations, stockholders’ equity and cash flows of Borrower and its Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail,
together with a Financial Officer Certification and a Narrative Report with respect thereto;



          (b) Annual Financial Statements. As soon as available, and in any event within 105
days after the end of each Fiscal Year, commencing with the Fiscal Year in which the Closing Date
occurs, (i) the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such
Fiscal Year and the related consolidated statements of operations, stockholders’ equity and cash
flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year covered by such financial
statements, in reasonable detail, together with a Financial Officer Certification and a Narrative
Report with respect thereto, and (ii) with respect to such consolidated financial statements a
report thereon of Ernst & Young LLP or other independent certified public accountants of recognized
national standing selected by Borrower, and reasonably satisfactory to Administrative Agent (which
report shall be unqualified as to going concern and scope of audit, and shall state that such
consolidated financial statements fairly present, in all material respects, the consolidated
financial position of Borrower and its Subsidiaries as at the dates indicated and



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the results of
their operations and their cash flows for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing standards) together with a
written statement by such independent certified public accountants stating (1) that their audit
examination has included a review of the terms of Section 6.7 of this Agreement and the related
definitions, (2) whether, in connection therewith, any condition or event that constitutes a
Default or an Event of Default under Section 6.7 has come to their attention and, if such a
condition or event has come to their attention, specifying the nature and period of existence
thereof, and (3) if provided by such independent certified public accountants, that nothing has
come to their attention that causes them to believe that the information contained in any
Compliance Certificate is not correct or that the matters set forth in such Compliance Certificate
are not stated in accordance with the terms hereof;




          (c) Compliance Certificate. Together with each delivery of financial statements of
Borrower and its Subsidiaries pursuant to Sections 5.1(a) and 5.1(b), a duly executed and completed
Compliance Certificate;




          (d) Statements of Reconciliation after Change in Accounting Principles. If, as a
result of any change in accounting principles and policies from those used in the preparation of
the Historical Financial Statements, the consolidated financial statements of Borrower and its
Subsidiaries delivered pursuant to Section 5.1(a) or 5.1(b) will differ in any material respect
from the consolidated financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been made, then, together
with the first delivery of such financial statements after such change, one or more statements of
reconciliation for all such prior financial statements in form and substance satisfactory to
Administrative Agent provided, that this Section 5.1(d) shall not apply in the event
Borrower or Requisite Lenders do not make the request referred to in, and the Credit Documents are
not amended in the manner described in, Section 1.2;




          (e) Notice of Default. Promptly upon any officer of Borrower obtaining knowledge
(i) of any condition or event that constitutes a Default or an Event of Default or that notice has
been given to Borrower with respect thereto; (ii) that any Person has given any notice to Borrower
or any of its Subsidiaries or taken any other action with respect to any event or condition set
forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its
Authorized Officer specifying the nature and period of existence of such condition, event or
change, or specifying the notice given and action taken by any such Person and the nature of such
claimed Event of Default, Default, default, event or condition, and what action Borrower has taken,
is taking and proposes to take with respect thereto;




          (f) Notice of Litigation. Promptly upon any officer of Borrower obtaining knowledge
of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not previously
disclosed in writing by Borrower to Lenders, or (ii) any material development in any Adverse
Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be
reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the transactions




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contemplated hereby, written notice thereof together with such other information as may be
reasonably available to Borrower to enable Lenders and their counsel to evaluate such matters;




          (g) ERISA. (i) Promptly upon any officer of Borrower becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature
thereof, what action Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
has taken, is taking or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) filed by Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan;
(2) all notices received by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such
other documents or governmental reports or filings relating to any
Employee Benefit Plan as Administrative Agent shall reasonably request which, in each of (i)
and (ii) relate to matters or liabilities that, when taken together with all such matters and
liabilities, exceed $15,000,000 in the aggregate for the Borrower and its Subsidiaries or which
would reasonably be expected to have Material Adverse Effect;




          (h) Financial Plan. As soon as practicable and in any event no later than forty
five days after the end of each Fiscal Year, a consolidated plan and financial forecast for such
Fiscal Year (a “Financial Plan”), including (i) a forecasted consolidated balance sheet and
forecasted consolidated statements of operations and cash flows of Borrower and its Subsidiaries
for each such Fiscal Years and (ii) forecasted consolidated statements of operations and cash flows
of Borrower and its Subsidiaries for each month of such current Fiscal Year;




          (i) Insurance Report. As soon as practicable and in any event by the last day of
each Fiscal Year, a certificate from Borrower’s insurance broker(s) in form and substance
satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the
date of such certificate by Borrower and its Subsidiaries;




          (j) Notice of Change in Board of Directors. With reasonable promptness, written
notice of any change in the board of directors (or similar governing body) of Borrower;




          (k) Notice Regarding Material Contracts. Promptly, and in any event within ten
Business Days (i) after any Material Contract of Borrower or any of its Subsidiaries is terminated
or amended in a manner that is materially adverse to Borrower or such Subsidiary, as the case may
be, or (ii) any new Material Contract is entered into, a written statement describing such event,
with copies of such material amendments or new contracts, delivered to Administrative Agent (to the
extent such delivery is permitted by the terms of any such Material Contract, provided, no such
prohibition on delivery shall be effective if it were bargained for by Borrower or its applicable
Subsidiary with the intent of avoiding compliance with this Section 5.1(k)), and an explanation of
any actions being taken with respect thereto;




          (l) Information Regarding Collateral. (a) Borrower will furnish to Collateral
Agent prompt written notice of any change (i) in any Credit Party’s corporate name, (ii) in any
Credit Party’s identity or corporate structure, (iii) in any Credit Party’s jurisdiction of




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organization or (iv) in any Credit Party’s Federal Taxpayer Identification Number or state
organizational identification number. Borrower agrees not to effect or permit any change referred
to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for Collateral Agent to continue at all times following such
change to have a valid, legal and perfected security interest in all the Collateral as contemplated
in the Collateral Documents. Borrower also agrees promptly to notify Collateral Agent if any
material portion of the Collateral is damaged or destroyed;



     (m) Annual Collateral Verification. Each year, at the time of delivery of annual
financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(a), Borrower
shall deliver to Collateral Agent a certificate of its Authorized Officer (i) either confirming
that there has been no change in such information since the date of the Collateral Questionnaire
delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this
Section and/or identifying such changes and (ii) certifying that all Uniform
Commercial Code financing statements (including fixtures filings, as applicable) and all
supplemental intellectual property security agreements or other appropriate filings, recordings or
registrations, have been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (i) above (or in such Collateral
Questionnaire) to the extent necessary to effect, protect and perfect the security interests under
the Collateral Documents for a period of not less than 18 months after the date of such certificate
(except as noted therein with respect to any continuation statements to be filed within such
period);



     (n) Other Information. (A) Promptly upon their becoming available, copies of (i)
all financial statements, reports, notices and proxy statements sent or made available generally by
Borrower to its security holders acting in such capacity or by any Subsidiary of Borrower to its
security holders other than Borrower or another Subsidiary of Borrower, (ii) all regular and
periodic reports and all registration statements and prospectuses, if any, filed by Borrower or any
of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority, (iii) all press releases and other statements
made available generally by Borrower or any of its Subsidiaries to the public concerning material
developments in the business of Borrower or any of its Subsidiaries, and (B) such other information
and data with respect to Borrower or any of its Subsidiaries as from time to time may be reasonably
requested by Administrative Agent (for itself or any Lender, Issuing Bank or Synthetic LC Issuing
Bank);



     (o) Certification of Public Information. Concurrently with the delivery of any
document or notice required to be delivered pursuant to this Section 5.1, Borrower shall indicate
in writing whether such document or notice contains Nonpublic Information. Borrower and each
Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders that do not
wish to receive material non-public information with respect to Borrower, its Subsidiaries or their
securities) and, if documents or notices required to be delivered pursuant to this Section 5.1 or
otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant
website or other information platform (the “Platform”), any document or notice that Borrower has
indicated contains Nonpublic Information shall not be posted on that portion of the Platform
designated for such public-side Lenders. If Borrower has not indicated whether a document or
notice delivered pursuant to this Section 5.1 contains solely Nonpublic Information,




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Administrative
Agent reserves the right to post such document or notice solely on that portion of the Platform
designated for Lenders who wish to receive material nonpublic information with respect to Borrower,
its Subsidiaries and their securities;




          (p) Loan to Value; Collateral Reporting. No less frequently than with the delivery
of financial statements of Borrower and its Subsidiaries pursuant to Sections 5.1(a) and 5.1(b),
Borrower shall provide to Collateral Agent and Administrative Agent (i) a certificate substantially
similar in form and substance to the certificate attached hereto as Exhibit N (the “Loan to Value
Ratio Certificate”) certifying as to the calculation of the correct Value as of the end of such
period and setting forth the correct Loan to Value Ratio as of such date based on closing book
values of Borrower and its Subsidiaries and (ii) a Collateral report with the reports identified on
Exhibit O hereto (and, in the case of clause (i) above, at any time that the Total Utilization of
Revolving Commitments is greater than or equal to $50,000,000 for any five (5) Business Days in any
calendar month, Borrower shall provide to Collateral Agent and
Administrative Agent a Loan to Value Ratio Certificate certifying as to the calculation of the
correct Value as of the end of such period and setting forth the correct Loan to Value Ratio as of
such date within 25 days after the end of each such calendar month, which Value shall not be based
on closing book values but shall be based on Borrower’s best estimates of data).



Documents required to be delivered pursuant to Section 5.1(a), (b), (j), (k) or (n) (to the extent
any such documents are included in materials otherwise filed with the Securities and Exchange
Commission) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower posts such documents with the Securities and Exchange
Commission; or (ii) on which such documents are posted on Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender, Issuing Bank, Synthetic LC Issuing Bank and each
Administrative Agent have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) Borrower shall deliver paper copies of such
documents to either Administrative Agent or any Lender that requests Borrower to deliver such paper
copies until a written request to cease delivering paper copies is given by such Administrative
Agent or such Lender and (ii) Borrower shall notify each Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrower shall be required to
provide paper copies of the Compliance Certificates required by Section 5.1(c) to the
Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have
no obligation to request the delivery or to maintain copies of the documents referred to above, and
in any event shall have no responsibility to monitor compliance by Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.




     5.2. Existence. Except as otherwise permitted under Section 6.8, each Credit Party will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its
existence and all rights and franchises, licenses and permits material to its business;
provided, no Credit Party (other than Borrower with respect to existence) or any of its
Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and
permits if the failure to do so, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.



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     5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause each of its Subsidiaries
to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises before any penalty or fine accrues thereon, and all claims
(including claims for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or assets, prior to
the time when any penalty or fine shall be incurred with respect thereto; provided, no such
Tax or claim need be paid if (i) such Tax or claim does not, together with all other Taxes then
remaining unpaid, exceed $250,000 in the aggregate or (ii) it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate
reserve or other appropriate provision, as shall be required in conformity with GAAP shall have
been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien against
any of the
Collateral, such contest proceedings conclusively operate to stay the sale of any portion of
the Collateral to satisfy such Tax or claim. No Credit Party will, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax return with any
Person (other than Borrower or any of its Subsidiaries).



     5.4. Maintenance of Properties. Each Credit Party will, and will cause each of its Subsidiaries
to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear
and tear excepted, all material properties used or useful in the business of Borrower and its
Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals
and replacements thereof.



     5.5. Insurance. Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, such public liability insurance, third party property damage insurance,
business interruption insurance and casualty insurance with respect to liabilities, losses or
damage in respect of the assets, properties and businesses of Borrower and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of established
reputation engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on such terms and
conditions as shall be customary for such Persons. Without limiting the generality of the
foregoing, Borrower will maintain or cause to be maintained (a) flood insurance with respect to
each Flood Hazard Property that is located in a community that participates in the National Flood
Insurance Program, in each case in compliance with any applicable regulations of the Board of
Governors of the Federal Reserve System, and (b) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times carried or maintained under similar
circumstances by Persons of established reputation engaged in similar business (it being understood
and agreed that Borrower’s hazard self-insurance program of $250,000 per store consistent with past
prudent business practice and currently in effect as of the Closing Date is acceptable). Each such
policy of insurance shall (i) name Collateral Agent, on behalf of Secured Parties, as an additional
insured thereunder as its interests may appear, (ii) in the case of each casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance to Collateral
Agent, that names Collateral Agent, on behalf of the Secured Parties, as the loss payee thereunder
and provide for at least thirty days’ prior written notice to Collateral Agent of any modification
or cancellation of such policy.



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     5.6. Books and Records; Inspections. Each Credit Party will, and will cause each of its
Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries
in conformity in all material respects with GAAP shall be made of all dealings and transactions in
relation to its business and activities. Each Credit Party will, and will cause each of its
Subsidiaries to, permit any authorized representatives designated by Collateral Agent,
Administrative Agent or any Lender to visit and inspect any of the properties of any Credit Party
and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances and accounts with
its and their officers and independent public accountants, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may reasonably be requested;
provided, however, that so
long as no Event of Default has occurred and is continuing, the Collateral Agent may visit
Borrower only once during any Fiscal Year at Borrower’s expense, and no Lender or Administrative
Agent may visit the Borrower more than once per Fiscal Year and such visit shall be at the expense
of such Lender or Administrative Agent, as applicable.



     5.7. Lenders Meetings. Borrower will, upon the request of Administrative Agent or Requisite
Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year
to be held at Borrower’s corporate offices (or at such other location as may be agreed to by
Borrower and Administrative Agent) at such time as may be agreed to by Borrower and Administrative
Agent.



     5.8. Compliance with Laws. Each Credit Party will comply, and shall cause each of its Subsidiaries
and all other Persons, if any, on or occupying any Facilities to comply, with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority (including all
Environmental Laws), noncompliance with which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.



     5.9. Environmental.



          (a) Environmental Disclosure. Borrower will deliver to Administrative Agent and
Lenders:





          (i) as soon as practicable following receipt thereof, copies of all environmental
audits, investigations, analyses and reports of any kind or character, whether prepared
by personnel of Borrower or any of its Subsidiaries or by independent consultants,
governmental authorities or any other Persons, with respect to significant environmental
matters at any Facility or with respect to any material Environmental Claims;




          (ii) promptly upon an officer of Borrower obtaining knowledge of the occurrence
thereof, written notice describing in reasonable detail (1) any Release required to be
reported to any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (2) any remedial action taken by Borrower or any other
Person in response to (A) any Hazardous Materials Activities the existence of which has
a reasonable possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental
Claims that, individually or in the aggregate, have a



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reasonable possibility of
resulting in a Material Adverse Effect, and (3) Borrower’s discovery of any occurrence
or condition on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any material restrictions
on the ownership, occupancy, transferability or use thereof under any Environmental
Laws;




          (iii) as soon as practicable following the sending or receipt thereof by Borrower
or any of its Subsidiaries, a copy of any and all written communications with respect to
(1) any Environmental Claims that, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect, (2) any Release required to be
reported to any federal, state or local governmental or regulatory agency, and (3) any
request for information from any governmental agency that suggests such agency is
investigating whether Borrower or any of its Subsidiaries may be potentially responsible
for any Hazardous Materials Activity that, individually or in the aggregate, has a
reasonable possibility of resulting in a Material Adverse Effect;




          (iv) prompt written notice describing in reasonable detail (1) any proposed
acquisition of stock, assets, or property by Borrower or any of its Subsidiaries that
could reasonably be expected to (A) expose Borrower or any of its Subsidiaries to, or
result in, Environmental Claims that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect or (B) affect the ability of Borrower or
any of its Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective operations and
(2) any proposed action to be taken by Borrower or any of its Subsidiaries to modify
current operations in a manner that could reasonably be expected to subject Borrower or
any of its Subsidiaries to any additional material obligations or requirements under any
Environmental Laws; and




          (v) with reasonable promptness, such other documents and information as from time
to time may be reasonably requested by Administrative Agent in relation to any matters
disclosed pursuant to this Section 5.9(a).



          (b) Hazardous Materials Activities, Etc. Each Credit Party shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure
any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and
(ii) make an appropriate response to any Environmental Claim against such Credit Party or any of
its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure
to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.




     5.10.
Subsidiaries. In the event that any Person becomes a Domestic Subsidiary of Borrower (or
Borrower elects to have Movie Gallery Canada become a Guarantor), Borrower shall (a) promptly cause
such Domestic Subsidiary (or Movie Gallery Canada, as the case may be) to become a Guarantor
hereunder and a Grantor under the Pledge and Security Agreement by executing and delivering to
Administrative Agent and Collateral Agent a Counterpart




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Agreement, and (b) take all such actions
and execute and deliver, or cause to be executed and delivered, all such documents, instruments,
agreements, and certificates as are similar to those described in Sections 3.1(c), 3.1(g), 3.1(h),
3.1(i) and 3.1(l). In the event that any Person becomes a Foreign Subsidiary of Borrower, and the
ownership interests of such Foreign Subsidiary are owned by Borrower or by any Domestic Subsidiary
thereof, Borrower shall, or shall cause such Domestic Subsidiary to,
deliver, all such documents, instruments, agreements, and certificates as are similar to those
described in Sections 3.1(c), and Borrower shall take, or shall cause such Domestic Subsidiary to
take, all of the actions referred to in Section 3.1(h)(i) necessary to grant and to perfect a First
Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge
and Security Agreement in 65% of such Equity Interests. In the event that any Inactive Entity
shall have total revenues exceeding $1,000,000 for any four consecutive Fiscal Quarters after the
Closing Date or at any time after the Closing Date shall have total assets exceeding $1,000,000,
Borrower shall, or shall cause any Domestic Subsidiary holding the Equity Interests in such
Inactive Entity to, take, all of the actions referred to in Section 3.1(h)(i) necessary to grant
and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of Secured
Parties, under the Pledge and Security Agreement in such Equity Interests (to the extent required
pursuant to the terms of the Pledge and Security Agreement). With respect to each such Subsidiary,
Borrower shall promptly send to Administrative Agent written notice setting forth with respect to
such Person (i) the date on which such Person became a Subsidiary of Borrower, and (ii) all of the
data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of
Borrower; and such written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all
purposes hereof.




          5.11. Additional Material Real Estate Assets. In the event that (i) any Credit Party acquires a
Material Real Estate Asset, (ii) a Real Estate Asset owned or leased on the Closing Date becomes a
Material Real Estate Asset or (iii) the Scheduled Sale-Leaseback Properties (or any of them) that
constitutes a Material Real Estate Asset are not disposed of pursuant to a sale and leaseback
transaction described in Section 6.10 which shall close on or before May 15, 2007, and, in each
case, such interest has not otherwise been made subject to the Lien of the Collateral Documents in
favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party shall
promptly (and, in respect of the Scheduled Sale-Leaseback Properties, no later than June 15, 2007)
take all such actions and execute and deliver, or cause to be executed and delivered, all such
mortgages, documents, instruments, agreements, opinions and certificates similar to those described
in Sections 3.1(g), 3.1(h) and 3.1(i) with respect to each such Material Real Estate Asset that
Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit
of Secured Parties, a valid and, subject to any filing and/or recording referred to herein,
perfected First Priority security interest in such Material Real Estate Assets. In addition to the
foregoing, Borrower shall, at the request of Collateral Agent, deliver, from time to time, to
Collateral Agent such appraisals as are required by law or regulation of Real Estate Assets with
respect to which Collateral Agent has been granted a Lien.




          5.12. Interest Rate Protection. No later than ninety (90) days following the Closing Date and at
all times thereafter until the third anniversary of the Closing Date, Borrower shall obtain and
cause to be maintained protection against fluctuations in interest rates pursuant to one or more
Interest Rate Agreements in form and substance reasonably satisfactory to Administrative Agent and
Syndication Agent, in order to ensure that no less than 50% of the aggregate principal amount of
the total Indebtedness for borrowed money of Borrower and its




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Subsidiaries then outstanding is
either (i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears interest at a
fixed rate.




          5.13. Further Assurances. At any time or from time to time upon the request of Administrative
Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as Administrative Agent or Collateral Agent may
reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance
and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative
Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations
are guarantied by the Guarantors and are secured by substantially all of the assets of Borrower,
and its Subsidiaries and all of the outstanding Equity Interests of Borrower and its Subsidiaries
(subject to limitations contained in the Credit Documents with respect to Foreign Subsidiaries).




          5.14. Miscellaneous Covenants. Unless otherwise consented to by Agents or Requisite Lenders:




               (a) Maintenance of Ratings. At all times, Borrower shall use commercially reasonable
efforts to maintain ratings issued by Moody’s and S&P with respect to its senior secured debt.



               (b) Cash Management Systems. Borrower and its Subsidiaries shall establish and
maintain cash management systems in accordance with the terms of the Collateral Documents.



               (c) Total Utilization of Revolving Commitments. Borrower and its Subsidiaries (i)
shall cause the Total Utilization of Revolving Commitments to not exceed the Revolving Commitments
then in effect and (y) shall cause the Loan to Value Ratio not to be less than the Applicable Loan
to Value Ratio.



  SECTION 6. NEGATIVE COVENANTS



     Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until
payment in full of all Obligations and cancellation or expiration of all Letters of Credit and
Synthetic Letters of Credit, such Credit Party shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.



          6.1. Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or
indirectly liable with respect to any Indebtedness, except:




               (a) the Obligations;



               (b) Indebtedness of any Guarantor Subsidiary to Borrower or to any other Guarantor
Subsidiary, or of Borrower to any Guarantor Subsidiary; provided, (i) all such Indebtedness
shall be evidenced by the Intercompany Note, which shall be subject to a First



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Priority Lien
pursuant to the Pledge and Security Agreement, (ii) all such Indebtedness shall be
unsecured and subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the Intercompany Note, and (iii) any payment by any such Guarantor
Subsidiary under any guaranty of the Obligations shall result in a pro tanto reduction of the
amount of any Indebtedness owed by such Subsidiary to Borrower or to any of its Subsidiaries for
whose benefit such payment is made;



               (c) Indebtedness (i) under the Second Lien Credit Agreement in an aggregate principal amount
at any time outstanding not to exceed $175,000,000 plus (x) the principal amount of “New
Term Loans” (under and as defined in the Second Lien Credit Agreement) added to the principal
amount thereunder in accordance with the terms of the Second Lien Credit Agreement as in effect on
the Closing Date in an aggregate amount not to exceed $25,000,000 plus (y) the amount of
any “PIK Interest” (under and as defined in the Second Lien Credit Agreement) added to the
principal amount thereunder in accordance with the terms of the Second Lien Credit Agreement as in
effect on the Closing Date (provided that the aggregate additional principal amount of secured
Indebtedness incurred under this clause (i) is permitted pursuant to the terms of the Senior Notes
Indenture), and (ii) subject to the terms of the Intercreditor Agreement, Indebtedness incurred to
refinance, renew or replace the Indebtedness referred to in the foregoing clause (i) in whole or in
part;



               (d) Indebtedness incurred by Borrower or any of its Subsidiaries arising from agreements
providing for indemnification, adjustment of purchase price or similar obligations, or from
guaranties or letters of credit, surety bonds or performance bonds securing the performance of
Borrower or any such Subsidiary pursuant to such agreements, in connection with Permitted
Acquisitions or permitted dispositions of any business, assets or Subsidiary of Borrower or any of
its Subsidiaries;



               (e) Indebtedness which may be deemed to exist pursuant to any guaranties, performance,
surety, statutory, appeal or similar obligations incurred in the ordinary course of business;



               (f) Indebtedness in respect of netting services, overdraft protections and otherwise in
connection with deposit accounts;



               (g) guaranties in the ordinary course of business of the obligations of suppliers,
customers, franchisees and licensees of Company and its Subsidiaries;



               (h) guaranties by Borrower of Indebtedness of a Guarantor Subsidiary or guaranties by a
Guarantor Subsidiary of Indebtedness of Borrower or another Guarantor Subsidiary with respect, in
each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1;
provided, that if the Indebtedness that is being guarantied is unsecured and/or
subordinated to the Obligations, the guaranty shall also be unsecured and/or subordinated to the
Obligations;



               (i) (A) Indebtedness existing on the Closing Date and described in Schedule 6.1, but not any
extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions
expressly provided for in the agreements evidencing any such



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Indebtedness as the same are in effect
on the date of this Agreement and (ii) refinancings, renewals and extensions of any
such Indebtedness if the terms and conditions thereof are not
less favorable to the obligor thereon or to the Lenders than the Indebtedness being refinanced,
renewed or extended, and the average life to maturity thereof is greater than or equal to that of
the Indebtedness being refinanced, renewed or extended; provided, such Indebtedness
permitted under the immediately preceding clause (i) or (ii) above shall not (A) include
Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended,
renewed or refinanced, (B) exceed in a principal amount the Indebtedness being renewed, extended or
refinanced plus the amount of any interest, premium, or penalties required to be paid thereon plus
fees and expenses associated therewith or (C) be incurred, created or assumed if any Default or
Event of Default has occurred and is continuing or would result therefrom, and (B) the Senior
Notes, but not any extensions, renewals or replacements of such Indebtedness except pursuant to a
Senior Notes Refinancing and/or the Senior Note Refinancing Third Lien Facility;



               (j) Indebtedness in respect of Hedge Agreements entered into in the ordinary course of
business and not for speculative purposes;



               (k) Indebtedness with respect to Capital Leases (i) in an aggregate amount (together with
the aggregate amount of Indebtedness incurred pursuant to Section 6.1(l)(i)) not to exceed at any
time $10,000,000 outstanding and (ii) in connection with the Kiosk Program in an aggregate amount
not to exceed at any time $15,000,000 outstanding;



               (l) purchase money Indebtedness (i) in an aggregate amount (together with the aggregate
amount of Indebtedness incurred pursuant to Section 6.1(k)(i)) not to exceed at any time
$10,000,000 outstanding and (ii) in connection store shell construction in the ordinary course of
business in an aggregate amount not to exceed at any time $10,000,000 outstanding;
provided, any such Indebtedness (A) shall be secured only by the asset acquired,
constructed or improved in connection with the incurrence of such Indebtedness, and (B) shall
constitute not less than 90% of the aggregate consideration paid with respect to such asset;



               (m) (i) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in
either case, becomes a Subsidiary or Indebtedness attaching to assets that are acquired by Borrower
or any of its Subsidiaries, in each case after the Closing Date as the result of a Permitted
Acquisition, in an aggregate amount not to exceed $10,000,000 at any one time outstanding, provided
that (x) such Indebtedness existed at the time such Person became a Subsidiary or at the time such
assets were acquired and, in each case, was not created in anticipation thereof and (y) such
Indebtedness is not guaranteed in any respect by Borrower or any Subsidiary (other than by any such
Person that so becomes a Subsidiary), and (ii) any refinancing, refunding, renewal or extension of
any Indebtedness specified in subclause (i) above, provided, that (1) the principal amount of any
such Indebtedness is not increased above the principal amount thereof outstanding immediately prior
to such refinancing, refunding, renewal or extension plus the amount of any interest, premium or
penalties required to be paid thereon plus fees and expenses associated therewith, (2) the direct
and contingent obligors with respect to such Indebtedness are not changed and (3) such Indebtedness
shall not be secured by any assets other than the assets securing the Indebtedness being renewed,
extended or refinanced;



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               (n) Indebtedness of any Foreign Subsidiary (i) to any other wholly owned Foreign Subsidiary,
(ii) to any other Subsidiary to extent permitted as an Investment pursuant to Section 6.6(i) or
(iii) in an aggregate amount not to exceed at any time $15,000,000;



               (o) other Indebtedness of Borrower and its Subsidiaries in an aggregate amount not to exceed
at any time $40,000,000, provided that (i) such Indebtedness is unsecured (except to the extent
permitted to be secured under Section 6.2(q)), (ii) no more than $20,000,000 in principal amount of
such Indebtedness shall be payable prior to the earlier of the Term Loan Maturity Date and the
payment in full of the Obligations and (iii) no such Indebtedness may be incurred and owing by a
Foreign Subsidiary or an Inactive Entity.



          6.2. Liens. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or
asset of any kind (including any document or instrument in respect of goods or accounts receivable)
of Borrower or any of its Subsidiaries, whether now owned or hereafter acquired or licensed, or any
income, profits or royalties therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien with respect to any such
property, asset, income, profits or royalties under the UCC of any State or under any similar
recording or notice statute or under the intellectual property laws, rules or procedures, except:




               (a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant
to any Credit Document;



               (b) Liens for Taxes not yet delinquent or are being contested, in each case in accordance
with Section 5.3;



               (c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such
Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA),
in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii)
for amounts that are overdue and that (in the case of any such amounts overdue for a period in
excess of five days) are being contested in good faith by appropriate proceedings, so long as such
reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made
for any such contested amounts;



               (d) Liens incurred in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no
foreclosure, sale or similar proceedings have been commenced with respect to any portion of the
Collateral on account thereof;



               (e) easements, rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in any material respect
with the ordinary conduct of the business of Borrower or any of its Subsidiaries;



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               (f) any interest or title of a lessor or sublessor under any lease of real estate permitted
hereunder;



               (g) Liens solely on any cash earnest money deposits made by Borrower or any of its
Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;



               (h) purported Liens evidenced by the filing of precautionary UCC financing statements
relating solely to operating leases of personal property entered into in the ordinary course of
business;



               (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;



               (j) any zoning or similar law or right reserved to or vested in any governmental office or
agency to control or regulate the use of any real property;



               (k) non-exclusive outbound licenses of patents, copyrights, trademarks and other
intellectual property rights granted by Borrower or any of its Subsidiaries in the ordinary course
of business and not interfering in any respect with the ordinary conduct of or materially
detracting from the value of the business of Borrower or such Subsidiary;



               (l) (x) Liens on the collateral securing obligations under the Second Lien Credit Agreement;
provided that such Liens are subordinated to the Liens securing the Obligations in
accordance with the terms of the Intercreditor Agreement; and (y) Liens on the collateral securing
obligations under the Senior Notes Refinancing Third Lien Facility; provided that such
Liens are subordinated to the Liens securing the Obligations pursuant to an intercreditor agreement
satisfactory to the Administrative Agent and the Collateral Agent and otherwise on the terms set
forth on Exhibit M hereto;



               (m) Liens described in Schedule 6.2 or on a title report delivered pursuant to Section
3.1(g)(iii);



               (n) Liens securing Indebtedness (i) permitted pursuant to Section 6.1(k) or 6.1(l), provided
any such Lien shall encumber only the asset acquired, constructed or improved with the proceeds of
such Indebtedness and (ii) permitted pursuant to Section 6.1(m), to the extent described in Section
6.1(m);



               (o) Liens on the assets of Foreign Subsidiaries (other than the Collateral) securing
Indebtedness permitted to be incurred pursuant to Section 6.1(n);



               (p) Liens arising out of judgments or awards in connection with court proceedings which do
not constitute an Event of Default; and



               (q) Liens securing other Indebtedness and obligations in an aggregate amount not to exceed
at any time $5,000,000.



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          6.3. No Further Negative Pledges. Except with respect to (a) specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset
Sale, (b) restrictions by reason of customary provisions restricting assignments, subletting or
other transfers contained in leases, licenses and similar agreements entered into in the ordinary
course of business (provided that such restrictions are limited to the property or assets secured
by such Liens or the property or assets subject to such leases, licenses or similar agreements, as
the case may be) and (c) the Second Lien Credit Documents, no Credit Party nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon
any of its properties or assets, whether now owned or hereafter acquired, to secure the
Obligations.




          6.4. Restricted Junior Payments. No Credit Party shall, nor shall it permit any of its
Subsidiaries or Affiliates through any manner or means or through any other Person to, directly or
indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set
apart, any sum for any Restricted Junior Payment except that:




               (a) Borrower may (i) make regularly scheduled payments of interest or required prepayments
of principal and interest in respect of the Second Lien Term Loans in accordance with the terms of
the Second Lien Credit Agreement and the Intercreditor Agreement and (ii) refinance the Second Lien
Term Loan in accordance with Section 6.1(c);



               (b) Borrower may (i) make regularly scheduled payments of interest or required prepayments
of principal and interest in respect of the Senior Notes in accordance with the terms of the Senior
Notes and the Senior Notes Indenture and (ii) prepay, redeem, retire or purchase the Senior Notes
(A) pursuant to the Senior Notes Refinancing and/or the Senior Note Refinancing Third Lien
Facility, (B) pursuant to an exchange of Equity Interests (that are not Disqualified Equity
Interests) for such Senior Notes directly with the holders of such Senior Notes (provided that the
principal amount of the Senior Notes exchanged shall be considered proceeds for purposes of the
$75,000,000 threshold in Section 2.15(c)(y)) or (C) with the proceeds from the issuance of Equity
Interests (that are not Disqualified Equity Interests) of the Borrower not required to prepay the
Loans pursuant to Section 2.15(c));



               (c) Borrower may pay dividends in the form of its common Equity Interests;



               (d) any Subsidiary may make Restricted Junior Payments to a Credit Party;



               (e) any Credit Party may make Restricted Junior Payments of the type described in clauses
(i), (ii) and (iii) of the definition thereof in an amount equal to the proceeds of Equity
Interests not required to prepay the Loans pursuant to Section 2.15(c);



               (f) Borrower may make Restricted Junior Payments in respect of Equity Interests (that are
not Disqualified Equity Interests), the proceeds of which are used to prepay, redeem, retire or
purchase the Senior Notes (and/or any Senior Note Refinancing indebtedness) in an amount equal to
the Consolidated Interest Expense that would have accrued and been payable on the amount of Senior
Notes (and/or any Senior Note Refinancing indebtedness) so prepaid, redeemed, retired or purchased
(such Consolidated Interest Expense not to exceed 8%



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per annum on the principal amount of the Senior Notes (and/or any Senior Note Refinancing
indebtedness) so prepaid, redeemed, retired or purchased); and



               (g) the Credit Parties may make Restricted Junior Payments of the type described in clauses
(i), (ii) and (iii) of the definition thereof in an amount not to exceed (A) $1,000,000 in the
aggregate in any Fiscal Year and (B) $3,000,000 in the aggregate from the Closing Date to the date
of determination.



          6.5. Restrictions on Subsidiary Distributions. Except as provided herein, no Credit Party shall,
nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the ability of any
Subsidiary of Borrower to (a) pay dividends or make any other distributions on any of such
Subsidiary’s Equity Interests owned by Borrower or any other Subsidiary of Borrower, (b) repay or
prepay any Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of Borrower,
(c) make loans or advances to Borrower or any other Subsidiary of Borrower, or (d) transfer, lease
or license any of its property or assets to Borrower or any other Subsidiary of Borrower other than
restrictions (i) in agreements evidencing Indebtedness permitted by Section 6.1(k), 6.1(l) or
6.1(m) that impose restrictions on the property so acquired, constructed or improved, (ii) by
reason of customary provisions restricting assignments, subletting or other transfers contained in
leases, licenses, joint venture agreements and similar agreements entered into in the ordinary
course of business, (iii) that are or were created by virtue of any transfer of, agreement to
transfer or option or right with respect to any property, assets or Equity Interests not otherwise
prohibited under this Agreement (including an agreement which has been entered into in connection
with the sale or transfer of assets or Equity Interests of a Subsidiary permitted hereunder) that
impose restrictions on such Equity Interests or assets, (iv) any agreement of a Foreign Subsidiary
governing the Indebtedness permitted by Section 6.1(n)(iii) (provided that such restrictions are no
more onerous or restrictive than those set forth herein and do not prevent the Obligations being
secured as provided herein and in the other Credit Documents), (v) described on Schedule 6.5, (v)
existing under the Second Lien Credit Agreement or the Senior Note Refinancing Third Lien Facility,
or (vi) that exist under or by reason of applicable law.




          6.6. Investments. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly
or indirectly, make or own any Investment in any Person, including any Joint Venture, except:




               (a) Investments in Cash and Cash Equivalents;



               (b) equity Investments owned as of the Closing Date in any Subsidiary and Investments made
after the Closing Date in Borrower and any wholly-owned Guarantor Subsidiary of Borrower;



               (c) Investments (i) in any Securities received in satisfaction or partial satisfaction
thereof from financially troubled account debtors and (ii) deposits, prepayments and other credits
to suppliers made in the ordinary course of business consistent with the past practices of Borrower
and its Subsidiaries;



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               (d) intercompany loans to the extent permitted under Section 6.1(b) and Section 6.1(n)(i);



               (e) Consolidated Capital Expenditures with respect to Borrower and the Guarantors permitted
by Section 6.7(d);



               (f) loans and advances to employees of Borrower and its Subsidiaries made in the ordinary
course of business in an aggregate principal amount not to exceed $1,000,000 in the aggregate;



               (g) Permitted Acquisitions permitted pursuant to Section 6.8;



               (h) Investments described in Schedule 6.6;



               (i) other Investments in Subsidiaries other than wholly-owned Guarantor Subsidiaries of
Borrower in an aggregate amount not to exceed at any time $20,000,000; provided, that no
such Investments may be made in Inactive Entities unless the Equity Interests therein are then
pledged to Collateral Agent in accordance with Section 5.10 and pursuant to the terms of the Pledge
and Security Agreement;



               (j) Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the
ordinary course of business;



               (k) non-cash consideration issued by the purchaser of assets in connection with a sale of
such assets to the extent permitted by Section 6.8;



               (l) Investments in respect of the Boards Transaction; and



               (m) additional Investments (other than in Foreign Subsidiaries) so long as the aggregate
amount invested, loaned or advanced pursuant to this clause (determined without regard to any
write-downs or write-offs of such investments, loans and advances) does not exceed $25,000,000 in
the aggregate at any time outstanding.



     Notwithstanding the foregoing, in no event shall any Credit Party make any Investment which
results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under
the terms of Section 6.4.



          6.7. Financial Covenants.




               (a) Interest Coverage Ratio. Borrower shall not permit the Interest Coverage Ratio
as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2007,
to be less than the correlative ratio indicated:



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	Fiscal	 	Interest Coverage
	Quarter Ending	 	Ratio
	April 1, 2007

	 	1.40:1.00
	July 1, 2007

	 	1.40:1.00
	September 30, 2007

	 	1.40:1.00
	January 6, 2008

	 	1.40:1.00
	April 6, 2008

	 	1.50:1.00
	July 6, 2008

	 	1.50:1.00
	October 5, 2008

	 	1.50:1.00
	January 4, 2009

	 	1.50:1.00
	April 5, 2009

	 	1.60:1.00
	July 5, 2009

	 	1.60:1.00
	October 4, 2009

	 	1.60:1.00
	January 3, 2010

	 	1.60:1.00
	April 4, 2010

	 	1.75:1.00
	July 4, 2010

	 	1.75:1.00
	October 3, 2010

	 	1.75:1.00
	January 2, 2011

	 	1.75:1.00
	Thereafter

	 	2.00:1.00






               (b) Leverage Ratio. Borrower shall not permit the Leverage Ratio as of the last day
of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2007, to exceed the
correlative ratio indicated:



	 	 	 
	Fiscal	 	 
	Quarter Ending	 	Leverage Ratio
	April 1, 2007

	 	6.75:1.00
	July 1, 2007

	 	6.75:1.00
	September 30, 2007

	 	6.75:1.00
	January 6, 2008

	 	6.75:1.00
	April 6, 2008

	 	6.25:1.00
	July 6, 2008

	 	6.25:1.00
	October 5, 2008

	 	6.25:1.00
	January 4, 2009

	 	6.25:1.00
	April 5, 2009

	 	5.50:1.00
	July 5, 2009

	 	5.50:1.00
	October 4, 2009

	 	5.50:1.00
	January 3, 2010

	 	5.50:1.00
	April 4, 2010

	 	4.75:1.00
	July 4, 2010

	 	4.75:1.00
	October 3, 2010

	 	4.75:1.00
	January 2, 2011

	 	4.75:1.00
	Thereafter

	 	4.00:1.00






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               (c) Secured Leverage Ratio. Borrower shall not permit the Secured Leverage Ratio as
of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2007, to
exceed the correlative ratio indicated:



	 	 	 
	Fiscal	 	Secured Leverage
	Quarter Ending	 	Ratio
	April 1, 2007

	 	4.75:1.00
	July 1, 2007

	 	4.75:1.00
	September 30, 2007

	 	4.75:1.00
	January 6, 2008

	 	4.75:1.00
	April 6, 2008

	 	4.25:1.00
	July 6, 2008

	 	4.25:1.00
	October 5, 2008

	 	4.25:1.00
	January 4, 2009

	 	4.25:1.00
	April 5, 2009

	 	3.75:1.00
	July 5, 2009

	 	3.75:1.00
	October 4, 2009

	 	3.75:1.00
	January 3, 2010

	 	3.75:1.00
	April 4, 2010

	 	3.00:1.00
	July 4, 2010

	 	3.00:1.00
	October 3, 2010

	 	3.00:1.00
	January 2, 2011

	 	3.00:1.00
	Thereafter

	 	2.50:1.00






               (d) Maximum Consolidated Capital Expenditures. Borrower shall not, and shall not
permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year
indicated below, in an aggregate amount for Borrower and its Subsidiaries in excess of the
corresponding amount set forth below opposite such Fiscal Year; provided, such amount for
any Fiscal Year shall be increased by an amount equal to (i) the excess, if any, (but in no event
more than $22,500,000) of such amount for the immediately preceding Fiscal Year (as adjusted in
accordance with this proviso) over the actual amount of Consolidated Capital Expenditures for such
previous Fiscal Year and (ii) 30% of the amount of Consolidated Excess Cash Flow for the
immediately preceding Fiscal Year not required to prepay the Loans pursuant to Section 2.15(e) in
an amount not to exceed $10,000,000 in any such Fiscal Year:



	 	 	 	 	 
	Fiscal	 	Consolidated Capital
	Year	 	Expenditures
	2007
	 	$	45,000,000	 
	2008
	 	$	45,000,000	 
	2009
	 	$	45,000,000	 
	2010
	 	$	45,000,000	 
	2011
	 	$	45,000,000	 






105









 





               (e) Certain Calculations. With respect to any period during which a Permitted
Acquisition or an Asset Sale has occurred (each, a “Subject Transaction”), for purposes of
determining compliance with the financial covenants set forth in this Section 6.7 (but not for
purposes of determining the Applicable Margin or Applicable Revolving Commitment Fee Percentage),
Consolidated Adjusted EBITDA shall be calculated with respect to such period on a pro forma basis
(including pro forma adjustments arising out of events which are directly attributable to a
specific transaction, are factually supportable and are expected to have a continuing impact, in
each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under the
Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which
would include cost savings resulting from head count reduction, closure of facilities and similar
restructuring charges, which pro forma adjustments shall be certified by the chief financial
officer of Borrower) using the historical (audited, if available) financial statements of any
business so acquired or to be acquired or sold or to be sold and the consolidated financial
statements of Borrower and its Subsidiaries which shall be reformulated as if such Subject
Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated
or incurred or repaid at the beginning of such period (and assuming that such Indebtedness bears
interest during any portion of the applicable measurement period prior to the relevant acquisition
at the weighted average of the interest rates applicable to outstanding Loans incurred during such
period).



          6.8. Fundamental Changes; Disposition of Assets; Acquisitions. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or license, exchange, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, assets or property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, whether now owned or hereafter
acquired, leased or licensed, or acquire by purchase or otherwise (other than purchases or other
acquisitions of inventory, materials and equipment and Capital Expenditures in the ordinary course
of business) the business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business or other business unit of any Person,
except:




               (a) any Subsidiary of Borrower may be merged with or into Borrower or any Guarantor
Subsidiary, or be liquidated, wound up or dissolved, or all or any part of its business, property
or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Borrower or any Guarantor Subsidiary; provided, in the case
of such a merger, Borrower or such Guarantor Subsidiary, as applicable shall be the continuing or
surviving Person;



               (b) sales or other dispositions of assets that do not constitute Asset Sales;



               (c) Asset Sales (i) the proceeds of which (valued at the principal amount thereof in the
case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market
value in the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset
Sales made from the Closing Date to the date of determination, are less than



106









 







$50,000,000 in the aggregate and (ii) by Foreign Subsidiaries of Borrower organized under any of the laws of Canada
and/or Province or Territory thereof, or by Borrower of the Equity Interests in such Foreign
Subsidiaries; provided, in each case (1) the consideration received for such assets shall
be in an amount at least equal to the fair market value thereof (determined in good faith by the
board of directors of Borrower (or similar governing body)), (2) no less than 75% thereof shall be
paid in Cash, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section
2.15(a);



               (d) disposals of obsolete, worn out or surplus property;



               (e) Permitted Acquisitions, for which the aggregate amount of Cash consideration for all
such Permitted Acquisitions from the Closing Date to the date of determination does not exceed the
sum of (i) $50,000,000 plus (ii) the aggregate amount of the proceeds of Equity Interests issued to
finance such Permitted Acquisition within 180 days of such issuance and received by the Borrower
since the Closing Date (and not otherwise required to be used to prepay Loans pursuant to Section
2.15(c) hereof or used to prepay, redeem, retire or purchase Senior Notes as provided herein);



               (f) sale-leaseback transactions permitted by Section 6.10;



               (g) sales and other dispositions of Non-Core Assets, the proceeds of which (valued at the
principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt
Securities and valued at fair market value in the case of other non-Cash proceeds) when aggregated
with the proceeds of all other such sales or dispositions of Non-Core Assets made from the Closing
Date to the date of determination, are less than $40,000,000 in the aggregate (when aggregated with
sale-leaseback transactions pursuant to Section 6.10(i) and (ii)); provided (1) the
consideration received for such assets shall be in an amount at least equal to the fair market
value thereof (determined in good faith by the board of directors of Borrower (or similar governing
body)), (2) no less than 75% thereof shall be paid in Cash, and (3) the Net Asset Sale Proceeds
thereof shall be applied as required by Section 2.15(a);



               (h) Investments made in accordance with Section 6.6;



               (i) any Foreign Subsidiary of Borrower may be merged with or into a wholly-owned Foreign
Subsidiary of Borrower, or be liquidated, wound up or dissolve, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to a wholly owned Foreign Subsidiary of Borrower; and



               (j) the merger of a special purpose subsidiary, a majority of the voting Equity Interests of
which is owned by one or more Permitted Holders, into Borrower; provided, however,
that (i) the Borrower is the surviving corporation, (ii) no Default in Event of Default exists
immediately before or immediately after the consummation of such merger, (iii) such
special purpose subsidiary shall be an entity formed solely for the purpose of acquiring the
Equity Interests of Borrower and merging with and into the Borrower, and shall have no liabilities,
indebtedness or other obligations, (iv) the Administrative Agent shall be satisfied that,
immediately after the consummation of such merger, there shall be no adverse change in the



107









 







financial position, stockholders’ equity or results of operations of the Borrower as surviving
entity and its subsidiaries, or in the tax, accounting, legal, environmental, regulatory and other
issues relevant to the Borrower as surviving entity and its subsidiaries than immediately prior to
such merger and (v) the Credit Parties shall take all such actions and execute and deliver, or
cause to be executed and delivered, all such mortgages, documents, instruments, agreements,
opinions and certificates (including, without limitation, similar to those described in Sections
3.1(g), 3.1(h) and 3.1(i)) requested by the Administrative Agent.



          6.9. Disposal of Subsidiary Interests. Except for any sale of all of its interests in the Equity
Interests of any of its Subsidiaries in compliance with the provisions of Section 6.8 and Liens
permitted under Sections 6.2(a), and 6.2(l), no Credit Party shall, nor shall it permit any of its
Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose
of any Equity Interests of any of its Subsidiaries, except to qualify directors if required by
applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign,
pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except
to another Credit Party (subject to the restrictions on such disposition otherwise imposed
hereunder), or to qualify directors if required by applicable law.




          6.10. Sales and Lease-Backs. No Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with
respect to any lease of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell or to
transfer to any other Person (other than Borrower or any of its Subsidiaries), or (b) intends to
use for substantially the same purpose as any other property which has been or is to be sold or
transferred by such Credit Party to any Person (other than Borrower or any of its Subsidiaries) in
connection with such lease, except (i) any such transaction involving all or a portion of the
Scheduled Sale-Leaseback Properties on terms no less favorable than those disclosed to the
Administrative Agent prior to the Closing Date, (ii) sale-leasebacks of Non-Core Assets not to
exceed $20,000,000 in the aggregate on fair and reasonable terms no less favorable to such Credit
Party than it could obtain in an arm’s-length transaction with a Person that is not an Affiliate
and pursuant to documentation reasonably acceptable to the Administrative Agent and (iii) any
Capital Lease and Liens in connection therewith permitted by Section 6.1(k) and 6.2(n),
provided that the aggregate amount permitted under Section 6.8(g) for dispositions of
Non-Core Assets is not exceeded after giving effect to the sale-leaseback transactions described in
the foregoing clauses (i) and (ii).




          6.11. Transactions with Shareholders and Affiliates. .No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the rendering of any service)
with any Affiliate of Borrower on terms that are less favorable to Borrower or that Subsidiary, as
the case may be, than those that might be obtained at the time from a Person who is not such a
holder or Affiliate as determined in good
faith by the disinterested members of the Board of Directors of the Borrower;
provided, the foregoing restriction shall not apply to (a) any transaction between Borrower
and any Guarantor Subsidiary; (b) reasonable and customary fees paid to members of the board of
directors (or similar governing body) of Borrower and its Subsidiaries; (c) compensation
arrangements for officers and other employees of Borrower and its Subsidiaries entered into in the
ordinary course of business; (d) the provision of officers’ and

108









 








directors’ indemnification and
insurance in the ordinary course of business to the extent permitted by applicable law; (e)
transactions described in Schedule 6.11; (f) Indebtedness may be incurred to the extent permitted
by Section 6.1(n)(i) or Section 6.1(n)(ii); and (g) Investments may be made to the extent permitted
by Section 6.6(i).




          6.12. Conduct of Business. From and after the Closing Date, no Credit Party shall, nor shall it
permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in
by such Credit Party on the Closing Date and similar or related businesses or reasonable extension
of such businesses and (ii) such other lines of business as may be consented to by Requisite
Lenders.




          6.13. Amendments or Waivers of Organizational Documents. No Credit Party shall nor shall it permit
any of its Subsidiaries to, agree to any amendment, restatement, supplement or other modification
to, or waiver of, any of its Organizational Documents after the Closing Date in a manner that would
adversely affect the ability of such Credit Party to perform its obligations under the Credit
Documents or adversely affect the rights, remedies and benefits available to, or conferred upon,
any Agent and any Lender or any Secured Party under any Credit Document.




          6.14. Amendments or Waivers with respect to Certain Indebtedness. No Credit Party shall, nor shall
it permit any of its Subsidiaries to, amend or otherwise change the terms of the Senior Notes or
the Senior Notes Indenture, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest rate on such
Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are
due thereon, change any event of default or condition to an event of default with respect thereto
(other than to eliminate any such event of default or increase any grace period related thereto),
change the redemption, prepayment or defeasance provisions thereof, change the subordination
provisions of such Indebtedness (or of any guaranty thereof), or if the effect of such amendment or
change, together with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the holders of such
Indebtedness (or a trustee or other representative on their behalf) which would be adverse to any
Credit Party or Lenders); provided, that the foregoing shall not restrict (x) the Senior
Notes Refinancing or the Senior Note Refinancing Third Lien Facility or (y) the use of proceed from
the issuance of Equity Interests prepay, redeem, retire or purchase the Senior Notes to the extent
described in Section 2.15(c) (provided the proceeds of such issuance are applied in accordance
with, and to the extent required by, Section 2.15(c)).




          6.15. Limitation on Voluntary Payments and Amendments or Waivers of the Second Lien Credit
Agreement. No Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) make or
offer to make any optional or voluntary payment, prepayment, repurchase or redemption of, or
otherwise voluntarily or optionally defease any Second Lien Term Loans or segregate funds for any such
payment, prepayment, repurchase, redemption or defeasance (provided that the foregoing shall not
restrict a refinancing of the Second Lien Term Loans permitted by the Intercreditor Agreement) or
(b) agree to any amendment, restatement, supplement or other modification to, or waiver of, any of
its material rights under the Second Lien Credit Agreement or the other Second Lien Credit
Documents after the Closing Date that is prohibited under Section 5.3 of the Intercreditor
Agreement without in each case obtaining the




109









 







prior written consent of Requisite Lenders to such
amendment, restatement, supplement or other modification or waiver.




          6.16. Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to change its
Fiscal Year.




     SECTION 7. GUARANTY



          7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable
benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same
shall become due, whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the
“Guaranteed Obligations”).




          7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively,
the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under
this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a
Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceeds its
Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s
Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the
Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of
the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b)
the aggregate amount paid or distributed on or before such date by all Funding Guarantors under
this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution Amount” means,
with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty that would not render
its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of
state law; provided, solely for purposes of calculating the “Fair Share Contribution
Amount” with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation,
reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means,
with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1)
the aggregate amount of all payments and distributions made on or before such date by such
Contributing Guarantor in respect of this Guaranty (including in respect of this Section 7.2),
minus (2) the aggregate amount of all payments received on or before such date by such Contributing
Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The
amounts payable as contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The

110









 








allocation among
Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be
construed in any way to limit the liability of any Contributing Guarantor hereunder. Each
Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.




          7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may
have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower
to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay, or cause to be paid, in
Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum
of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and
unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower’s
becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed
Obligations, whether or not a claim is allowed against Borrower for such interest in the related
bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.




          7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other than payment in
full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:




               (a) this Guaranty is a guaranty of payment when due and not of collectability. This
Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;



               (b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of
Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with
respect to the existence of such Event of Default;



               (c) the obligations of each Guarantor hereunder are independent of the obligations of
Borrower and the obligations of any other guarantor (including any other
Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and
prosecuted against such Guarantor whether or not any action is brought against Borrower or any of
such other guarantors and whether or not Borrower is joined in any such action or actions;



               (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall
in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the
Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing,
if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s
covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is
not the subject of such suit, and such judgment shall not, except to the extent



111









 







satisfied by such
Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of
the Guaranteed Obligations;



               (e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and
without affecting the validity or enforceability hereof or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate
the payment of the same to the payment of any other obligations; (iii) request and accept other
guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the
Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any security for payment of the
Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation
of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in
respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such Beneficiary may have against any such security, in
each case as such Beneficiary in its discretion may determine consistent herewith or the applicable
Hedge Agreement and any applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable, and even though such action operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any
security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under
the Credit Documents or any Hedge Agreements; and



               (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable
and shall not be subject to any reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any
of the following, whether or not any Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce or agreement or election not to assert or enforce,
or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit
Documents or any Hedge Agreements, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or
with respect to any other guaranty of or security for the payment of the Guaranteed Obligations;
(ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of
the terms or provisions (including provisions relating to events of default) hereof, any of the
other Credit Documents, any of the Hedge Agreements



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or any agreement or instrument executed
pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case
whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement or
any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any
respect; (iv) the application of payments received from any source (other than payments received
pursuant to the other Credit Documents or any of the Hedge Agreements or from the proceeds of any
security for the Guaranteed Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness
other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the
change, reorganization or termination of the corporate structure or existence of Borrower or any of
its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any collateral which secures
any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may
allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including
failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations,
accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do
any other act or thing, which may or might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guaranteed Obligations.



          7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a)
any right to require any Beneficiary, as a condition of payment or performance by such Guarantor,
to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the
Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from
Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any
balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or
any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b)
any defense arising by reason of the incapacity, lack of authority or any disability or other
defense of Borrower or any other Guarantor including any defense based on or arising out of the
lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability of Borrower or any other
Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense
based upon any statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the principal; (d) any
defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed
Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of
law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal
or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute
of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any
rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence
and any requirement that any Beneficiary protect, secure, perfect or insure any security
interest or lien or any property subject thereto; (f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction, including acceptance
hereof, notices of default hereunder, the Hedge Agreements or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any
agreement related thereto, notices of any extension of credit to Borrower and notices of any of the
matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or
benefits that may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms hereof.




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          7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall
have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives any claim,
right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against
Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the
performance by such Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or otherwise and including
(a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may
hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to
enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may
hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed
Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have
terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall
withhold exercise of any right of contribution such Guarantor may have against any other guarantor
(including any other Guarantor) of the Guaranteed Obligations, including any such right of
contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the
waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification
such Guarantor may have against Borrower or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Borrower, to all right, title and
interest any Beneficiary may have in any such collateral or security, and to any right any
Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on
account of any such subrogation, reimbursement, indemnification or contribution rights at any time
when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such
amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall
forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms hereof.




          7.7. Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or
hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of
payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the
Obligee
Guarantor after an Event of Default has occurred and is continuing shall be held in trust for
Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative
Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee
Guarantor under any other provision hereof.




          7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until
all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments and
Synthetic LC Commitments shall have terminated and all Letters of Credit shall have expired or been
cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future
transactions giving rise to any Guaranteed Obligations.





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          7.9. Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire into
the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting
or purporting to act on behalf of any of them.




          7.10. Financial Condition of Borrower. Any Credit Extension may be made to Borrower or continued
from time to time, and any Hedge Agreements may be entered into from time to time, in each case
without notice to or authorization from any Guarantor regardless of the financial or other
condition of Borrower at the time of any such grant or continuation or at the time such Hedge
Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to
disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the
financial condition of Borrower. Each Guarantor has adequate means to obtain information from
Borrower on a continuing basis concerning the financial condition of Borrower and its ability to
perform its obligations under the Credit Documents and the Hedge Agreements, and each Guarantor
assumes the responsibility for being and keeping informed of the financial condition of Borrower
and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each
Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any
matter, fact or thing relating to the business, operations or conditions of Borrower now known or
hereafter known by any Beneficiary.




          7.11. Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Administrative Agent acting pursuant to the
instructions of Requisite Lenders, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency case or proceeding of or against Borrower or any other
Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of
Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by
reason of the order, decree or decision of any court or administrative body resulting from any such
proceeding.




               (b) Each Guarantor acknowledges and agrees that any interest on any portion of the
Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to
in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue
by operation of law by reason of the commencement of such case or proceeding, such interest as
would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not
been commenced) shall be included in the Guaranteed Obligations because it is the intention of
Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order which may relieve
Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person
to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such
interest accruing after the date on which such case or proceeding is commenced.



               (c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower,
the obligations of Guarantors hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such payment(s) are



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rescinded
or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed
Obligations for all purposes hereunder.



          7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Equity Interests of any Guarantor
or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by
merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such
Guarantor or such successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by any Beneficiary or any other Person effective
as of the time of such Asset Sale.




     SECTION 8. EVENTS OF DEFAULT



          8.1. Events of Default. If any one or more of the following conditions or events shall occur:



               (a) Failure to Make Payments When Due. Failure by Borrower to pay (i) when due any
principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to Issuing Bank
in reimbursement of any drawing under a Letter of Credit, (iii) when due any amount in
reimbursement of any Synthetic LC Disbursement; or (iv) any interest on any Loan or any fee or any
other amount due hereunder within five days after the date due; or



               (b) Default in Other Agreements. (i) Failure of any Credit Party or any of their
respective Subsidiaries to pay when due any principal of or interest on or any other amount payable
in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section
8.1(a)) in an individual principal amount of $5,000,000 or more or with an aggregate principal
amount of $15,000,000 or more, in each case beyond the grace period, if any, provided
therefor; or (ii) breach or default by any Credit Party with respect to any other material
term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts
referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement
relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided
therefor, if the effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that
Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity
or the stated maturity of any underlying obligation, as the case may be; or



               (c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply
with any term or condition contained in Section 2.7, Sections 5.1(e) and 5.1(f), Section 5.2 or
Section 6; or



               (d) Breach of Representations, etc. Any representation, warranty, certification or
other statement made or deemed made by any Credit Party in any Credit Document or in any statement
or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any material respect as
of the date made or deemed made; or



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               (e) Other Defaults Under Credit Documents. Any Credit Party shall default in the
performance of or compliance with any term contained herein or any of the other Credit Documents,
other than any such term referred to in any other Section of this Section 8.1, and such default
shall not have been remedied or waived within thirty days after the earlier of (i) an officer of
such Credit Party becoming aware of such default or (ii) receipt by Borrower of notice from
Administrative Agent or any Lender of such default; or



               (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent
jurisdiction shall enter a decree or order for relief in respect of Borrower or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under any applicable federal or state law; or
(ii) an involuntary case shall be commenced against Borrower or any of its Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Borrower or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Borrower or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of Borrower or any of its
Subsidiaries, and any such event described in this clause (ii) shall continue for sixty days
without having been dismissed, bonded or discharged; or



               (g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Borrower or any of its
Subsidiaries shall have an order for relief entered with respect to it or shall commence a
voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its property; or Borrower or
any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Borrower or
any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the board of directors (or similar
governing body) of Borrower or any of its Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions referred to herein or in
Section 8.1(f); or



               (h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess of $10,000,000 or (ii) in
the aggregate at any time an amount in excess of $20,000,000 (in either case to the extent not
adequately covered by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Borrower or any of its Subsidiaries or any
of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of sixty days (or in any event later than five days prior to the date of any proposed sale
thereunder); or



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               (i) Dissolution. Any order, judgment or decree shall be entered against any Credit
Party decreeing the dissolution or split up of such Credit Party and such order shall remain
undischarged or unstayed for a period in excess of thirty days; or



               (j) Employee Benefit Plans. (i) There shall occur an ERISA Event which individually
results in or might reasonably be expected to result in liability of Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates in excess of $10,000,000 during the term
hereof; (ii) there shall occur one or more ERISA Events which individually or in the aggregate
results in or might reasonably be expected to result in liability of Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates in excess of $15,000,000 during the term
hereof; or (iii) there exists any fact or circumstance that reasonably could be expected to result
in the imposition of a Lien or security interest under Section 412(n) of the Internal Revenue Code
or under ERISA which (A) individually results in or might reasonably be expected to result in
liability or obligations of Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates in excess of $10,000,000 during the term hereof or (B) in the aggregate results in or
might reasonably be expected to result in liability or obligations of Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates in excess of $15,000,000 during the term
hereof; or



               (k) Change of Control. A Change of Control shall occur; or



               (l) Guaranties, Collateral Documents and other Credit Documents. At any time after
the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in
full of all Obligations, shall cease to be in full force and effect (other than in accordance with
its terms) or shall be declared to be null and void or any Guarantor shall repudiate its
obligations thereunder, (ii) this Agreement, the Intercreditor Agreement or any Collateral Document
ceases to be in full force and effect (other than by reason of a release of Collateral in
accordance with the terms hereof or thereof or the satisfaction in full of the
Obligations in accordance with the terms hereof) or shall be declared null and void, or
Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral
purported to be covered by the Collateral Documents with the priority required by the relevant
Collateral Document, in each case for any reason other than the failure of Collateral Agent or any
Secured Party to take any action within its control, or (iii) any Credit Party shall contest the
validity or enforceability of any Credit Document in writing or deny in writing that it has any
further liability, including with respect to future advances by Lenders, under any Credit Document
to which it is a party or shall contest the validity or perfection of any Lien in any Collateral
purported to be covered by the Collateral Documents;


THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g),
automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or
with the consent of) Requisite Lenders, upon notice to Borrower by Administrative Agent, (A) the
Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation
of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) the Synthetic LC
Commitments, if any, of each Lender having such Synthetic LC Commitments and the obligation of
Synthetic LC Issuing Bank to issue any Synthetic Letter of Credit shall immediately terminate; (C)
each of the following shall immediately become due and payable, in each case without presentment,
demand, protest or other requirements of any kind, all of which


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 are hereby expressly waived by each
Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) the
unreimbursed amounts of Synthetic LC Disbursements, (III) an amount equal to the maximum amount
that may at any time be drawn under all Letters of Credit and Synthetic Letters of Credit then
outstanding (regardless of whether any beneficiary under any such Letter of Credit or Synthetic
Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or
other documents or certificates required to draw under such Letters of Credit or Synthetic Letters
of Credit), and (IV) all other Obligations; provided, the foregoing shall not affect in any
way the obligations of Lenders under Section 2.3(b)(v), Section 2.4(e) or Section 2.5(e); (D)
Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests
created pursuant to Collateral Documents; and (E) Administrative Agent shall direct Borrower to pay
(and Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Sections 8.1(f) and (g) to pay) to Administrative Agent such additional
amounts of cash as reasonably requested by Issuing Bank, to be held as security for Borrower’s
reimbursement Obligations in respect of Letters of Credit then outstanding.




     SECTION 9. AGENTS



          9.1. Appointment of Agents. GSCP is hereby appointed Syndication Agent hereunder, and each Lender
hereby authorizes GSCP to act as Syndication Agent in accordance with the terms hereof and the
other Credit Documents. GSCP is hereby appointed Administrative Agent hereunder and under the
other Credit Documents and each Lender hereby authorizes GSCP to act as Administrative Agent in
accordance with the terms hereof and the other Credit Documents. Wachovia is hereby appointed
Documentation Agent hereunder and each Lender hereby authorizes Wachovia to act as Documentation
Agent in accordance with the terms hereof and the other Credit Documents.
Wachovia is hereby appointed Collateral Agent hereunder and under the other Credit Documents
and each Lender hereby authorizes Wachovia to act as Collateral Agent in accordance with the terms
hereof and the other Credit Documents. Each Agent hereby agrees to act in its capacity as such
upon the express conditions contained herein and the other Credit Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions thereof. In performing
its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Borrower or any of its Subsidiaries. Each of Syndication Agent and Documentation
Agent, without consent of or notice to any party hereto, may assign any and all of its rights or
obligations hereunder to any of its Affiliates. As of the Closing Date, neither GSCP, in its
capacity as Syndication Agent, nor Wachovia, in its capacity as Documentation Agent, shall have any
obligations but shall be entitled to all benefits of this Section 9.




          9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such
Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other
Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly




119









 







specified herein and the
other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such
duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the
other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or
any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as
to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents
except as expressly set forth herein or therein.




          9.3. General Immunity.




               (a) No Responsibility for Certain Matters. No Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or
sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or in any financial or
other statements, instruments, reports or certificates or any other documents furnished or made by
any Agent to Lenders or by or on behalf of any Credit Party or any Lender in connection with the
Credit Documents and the transactions contemplated thereby or for the financial condition or
business affairs of any Credit Party or any other Person liable for the payment of any Obligations,
nor shall any Agent be required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained in any of the Credit
Documents or as to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Default or to make any disclosures with respect to the
foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall
not have any liability arising from confirmations of the amount of outstanding Loans or the Letter
of Credit Usage or the component amounts thereof.



               (b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors,
employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under
or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection herewith or any of the
other Credit Documents or from the exercise of any power, discretion or authority vested in it
hereunder or thereunder unless and until such Agent shall have received instructions in respect
thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions
under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other
Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain
from acting, or to exercise such power, discretion or authority, in accordance with such
instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or sent by the proper
Person or Persons and shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Borrower and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against any Agent as a result of such Agent acting or (where so instructed)
refraining from acting hereunder or any of the other Credit Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to give such
instructions under Section 10.5).



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               (c) Delegation of Duties. Administrative Agent may perform any and all of its duties
and exercise its rights and powers under this Agreement or under any other Credit Document by or
through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory, indemnification and other provisions of this
Section 9.3 and of Section 9.6 shall apply to any the Affiliates of Administrative 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. All of the rights, benefits,
and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and
of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and
shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were
named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent
appointed by Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this
Agreement with respect to all such rights, benefits and privileges (including exculpatory rights
and rights to indemnification) and shall have all of the rights and benefits of a third party
beneficiary, including an independent right of action to enforce such rights, benefits and
privileges (including exculpatory rights and rights to indemnification) directly, without the
consent or joinder of any other Person, against any or all of the Credit Parties and the Lenders,
(ii) such rights, benefits and privileges (including exculpatory rights and rights to
indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii)
such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party,
Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights,
directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.



          9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect
any of the rights and powers of, or impose any duties or obligations upon, any Agent in its
individual capacity as a Lender hereunder. With respect to its participation in the Loans and the
Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender
and may exercise the same as if it were not performing the duties and functions delegated to it
hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include
each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend
money to, own securities of, and generally engage in any kind of banking, trust, financial advisory
or other business with Borrower or any of its Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower for services in
connection herewith and otherwise without having to account for the same to Lenders.




          9.5. Lenders’ Representations, Warranties and Acknowledgment.




               (a) Each Lender represents and warrants that it has made its own independent investigation
of the financial condition and affairs of Borrower and its Subsidiaries in connection with Credit
Extensions hereunder and that it has made and shall continue to make its own appraisal of the
creditworthiness of Borrower and its Subsidiaries. No Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any such appraisal on
behalf of Lenders or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making



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of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.



               (b) Each Lender, by delivering its signature page to this Agreement or an Assignment
Agreement and funding its Term Loan, Synthetic LC Deposit and/or Revolving Loans on the Closing
Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit
Document and each other document required to be approved by any Agent, Requisite Lenders or
Lenders, as applicable on the Closing Date.



          9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit
Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent
in exercising its powers, rights and remedies or performing its duties hereunder or under the other
Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out
of this Agreement or the other Credit Documents; provided, no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful
misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such additional indemnity is furnished;
provided, in no event shall this sentence require any Lender to indemnify any Agent against
any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement in excess of such Lender’s Pro Rata Share thereof; and provided
further, this sentence shall not be deemed to require any Lender to indemnify any Agent
against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement described in the proviso in the immediately preceding sentence.




          9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender. Administrative Agent
may resign at any time by giving thirty days’ prior written notice thereof to Lenders and Borrower,
and Administrative Agent may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to Borrower and Administrative Agent and signed by
Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders
shall have the right, upon five Business Days’ notice to Borrower, to appoint a successor
Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by
a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the retiring or removed
Administrative Agent and the retiring or removed Administrative Agent shall promptly transfer to
such successor Administrative Agent all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative Agent under the
Credit Documents, whereupon such retiring or removed Administrative Agent shall be discharged from
its duties and obligations hereunder. If the Requisite Lenders have not appointed a successor
Administrative Agent, Administrative Agent shall have the right to appoint a financial institution
to act as Administrative Agent hereunder and in any case, Administrative Agent’s resignation shall

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become effective on the thirtieth day after such notice of resignation. If neither the Requisite
Lenders nor Administrative Agent have appointed a successor Administrative Agent, the Requisite
Lenders shall be deemed to succeeded to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent After any retiring or removed Administrative
Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent hereunder. The Collateral Agent may resign in accordance with the terms of
the Pledge and Security Agreement. Any resignation or removal of Wachovia or its successor as
Collateral Agent pursuant to the Pledge and Security Agreement shall also constitute the
resignation or removal of Wachovia or its successor as Swing Line Lender, and any successor
Collateral Agent appointed pursuant to the Pledge and Security Agreement shall, upon its acceptance
of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such
event (a) Borrower shall prepay any outstanding Swing Line Loans made by the retiring or removed
Collateral Agent in its capacity as Swing Line Lender, (b) upon such prepayment, the retiring or
removed Collateral Agent and Swing Line Lender shall surrender any Swing Line Note held by it to
Borrower for cancellation, and (c) Borrower shall issue, if so requested by successor Collateral
Agent and Swing Line Loan Lender, a new Swing Line Note to the successor Collateral Agent and Swing
Line Lender, in the principal amount of the Swing Line Loan Sublimit then in effect and with other
appropriate insertions.




          9.8. Collateral Documents and Guaranty.




               (a) Agents under Collateral Documents and Guaranty. Each Secured Party hereby
further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for
the benefit of Secured Parties, to be the agent for and representative of the Secured Parties with
respect to the Guaranty, the Collateral and the Collateral Documents; provided that neither
Administrative Agent nor Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of
care, duty of disclosure or any other obligation whatsoever to any holder of Obligations with
respect to any Hedge Agreement. Subject to Section 10.5, without further written consent or
authorization from any Secured Party, Administrative Agent or Collateral Agent, as applicable
shall, at the request and expense of Borrower, execute any documents or instruments necessary to
(i) in connection with a sale or disposition of assets permitted by this Agreement, release any
Lien encumbering any item of Collateral that is the subject of such sale or other disposition of
assets or to which Requisite Lenders (or such other Lenders as may be required to give such consent
under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty
pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may
be required to give such consent under Section 10.5) have otherwise consented.



               (b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any
of the Credit Documents to the contrary notwithstanding, Borrower, Administrative Agent, Collateral
Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right
individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood
and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative
Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights
and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii)
in the event of a foreclosure by Collateral Agent on



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any of the Collateral pursuant to a public or
private sale or other disposition, Collateral Agent or any Lender may be the purchaser or licensor
of any or all of such Collateral at any such sale or other disposition and Collateral Agent, as
agent for and representative of Secured Parties (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall
be entitled, for the purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and apply any of the
Obligations as a credit on account of the purchase price for any collateral payable by Collateral
Agent at such sale or other disposition.



               (c) Rights under Hedge Agreements. No Hedge Agreement will create (or be
deemed to create) in favor of any Lender Counterparty that is a party thereto any rights in
connection with the management or release of any Collateral or of the obligations of any Guarantor
under the Credit Documents except as expressly provided in Section 10.5(c)(v) of this Agreement and
Section 7.2 of the Pledge and Security Agreement.



          9.9. Intercreditor Agreement.




     Each Lender hereby consents to and approves each and all of the provisions of the
Intercreditor Agreement, including the purchase rights set forth in Section 5.6 thereof, and
irrevocably authorizes and directs the Collateral Agent to execute and deliver the Intercreditor
Agreement and to exercise and enforce its rights and remedies and perform its obligations
thereunder.



  SECTION 10. MISCELLANEOUS



          10.1. Notices.




               (a) Notices Generally. Any notice or other communication herein required or
permitted to be given to a Credit Party, Syndication Agent, Documentation Agent, Collateral Agent,
Administrative Agent, Swing Line Lender, Issuing Bank, Synthetic LC Issuing Bank, shall be sent to
such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in
the case of any Lender, the address as indicated on Appendix B or otherwise indicated to
Administrative Agent in writing. Except as otherwise set forth in paragraph (b) below, each notice
hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given when delivered in
person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile
or telex, or three Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided, no notice to any Agent shall be effective until received
by such Agent; provided further, any such notice or other communication shall at
the request of Administrative Agent be provided to any sub-agent appointed pursuant to Section
9.3(c) hereto as designated by Administrative Agent from time to time.



               (b) Electronic Communications.




          (i)
Notices and other communications to the Lenders, Issuing Bank and Synthetic LC Issuing Bank hereunder may be delivered or furnished by



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electronic communication
(including e-mail and Internet or intranet websites, including the Platform) pursuant to
procedures approved by Administrative Agent, provided that the foregoing shall
not apply to notices to any Lender, Issuing Bank or Synthetic LC Issuing Bank pursuant
to Section 2 if such Lender, Issuing Bank or Synthetic LC Issuing Bank, as applicable,
has notified Administrative Agent that it is incapable of receiving notices under such
Section by electronic communication. Administrative Agent or 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.
Unless Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested”
function, as available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not sent during the
normal business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next Business Day for the recipient,
and (ii) notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.




          (ii) Each of the Credit Parties understands that the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution and agrees and assumes
the risks associated with such electronic distribution, except to the extent caused by
the willful misconduct or gross negligence of Administrative Agent.




          (iii) The Platform and any Approved Electronic Communications are provided “as is”
and “as available”. None of the Agents or any of their respective officers, directors,
employees, agents, advisors or representatives (the “Agent Affiliates”) warrant the
accuracy, adequacy, or completeness of the Approved Electronic Communications or the
Platform and each expressly disclaims liability for errors or omissions in the Platform
and the Approved Electronic Communications. No warranty of any kind, express, implied
or statutory, including any warranty of merchantability, fitness for a particular
purpose, non-infringement of third party rights or freedom from viruses or other code
defects is made by the Agent Affiliates in connection with the Platform or the Approved
Electronic Communications.




          (iv) Each of the Credit Parties, the Lenders, Issuing Bank, Synthetic LC Issuing
Bank and the Agents agree that Administrative Agent may, but shall not be obligated to,
store any Approved Electronic Communications on the Platform in accordance with
Administrative Agent’s customary document retention procedures and policies.



          10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, Borrower
agrees to pay promptly (a) all the actual and reasonable costs and


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expenses of the Agents, Issuing
Bank and Synthetic LC Issuing Bank in connection with the negotiation, preparation, execution and
administration of the Credit Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Borrower, including, without limitation,
the reasonable fees, expenses and disbursements of counsel (in each case including allocated costs
of internal counsel); (b) all the costs of furnishing all opinions by counsel for Borrower and the
other Credit Parties; (c) all the actual costs and reasonable expenses of creating, perfecting and
recording Liens in favor of Collateral Agent, for the benefit of the Secured Parties, including
filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of
counsel providing any opinions that any Agent or Requisite Lenders may request in respect of the
Collateral or the Liens created pursuant to the Collateral Documents; (d) all the actual costs and
reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers
(provided, that, so long as no Event of Default has occurred and is continuing, no more than one
such third party appraiser, consultant or advisor shall be retained on behalf the Agents, Issuing
Bank, Synthetic LC Issuing Bank and Lenders without the prior written consent of the Borrower); (e)
all the actual costs and reasonable expenses (including the reasonable fees, expenses and
disbursements of any appraisers, consultants, advisors and agents employed or retained by
Collateral Agent and its counsel) in connection with the custody or preservation of any of the
Collateral; (f) all other actual and reasonable costs and expenses incurred by each Agent in
connection with the syndication of the Loans and Commitments and the negotiation, preparation and
execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (g) after the occurrence of a Default or an Event of
Default, all costs and expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel) and costs of settlement, incurred by any Agent and Lenders in enforcing any
Obligations of or in collecting any payments due from any Credit Party hereunder or under the other
Credit Documents by reason of such Default or Event of Default (including in connection with the
sale, lease or license of, collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy cases or proceedings.




          10.3. Indemnity.




               (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the
transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject
to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and
the officers, partners, members, directors, trustees, advisors, employees, agents, sub-agents and
Affiliates of each Agent and each Lender (each, an “Indemnitee”), from and against any and all
Indemnified Liabilities; provided, (i) no Credit Party shall have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise from the gross negligence or willful misconduct of that Indemnitee and (ii) no
Credit Party shall be liable for any settlement of any claim or proceeding effected by any
Indemnitee without the prior written consent of Borrower (which consent shall not be unreasonably
withheld or delayed), but if settled with such consent or if there shall be a final judgment
against an Indemnitee, each of the Credit Parties shall indemnify and hold harmless such
Indemnitees from and against any loss or liability by reason of such settlement or



126









 







judgment in the
manner set forth in this Agreement. To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because
they are violative of any law or public policy, the applicable Credit Party shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.



               (b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit
Party hereby waives, any claim against each Lender, each Agent and their respective Affiliates,
directors, employees, attorneys, agents or sub-agents, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or
not the claim therefor is based on contract, tort or duty imposed by any applicable legal
requirement) arising out of, in connection with, arising out of, as a result of, or in any way
related to, this Agreement or any Credit Document or any agreement or instrument contemplated
hereby or thereby or referred to herein or therein, the transactions contemplated hereby or
thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in
connection therewith, and Borrower hereby waives, releases and agrees not to sue upon any such
claim or any such damages, whether or not accrued and whether or not known or suspected to exist in
its favor.



          10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by
way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is
hereby authorized by each Credit Party at any time or from time to time subject to the consent of
Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to
any Credit Party or to any other Person (other than Administrative Agent), any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general
or special, including Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing
by such Lender to or for the credit or the account of any Credit Party against and on account of
the obligations and liabilities of any Credit Party to such Lender hereunder, the Letters of
Credit, the Synthetic Letters of Credit and participations therein and under the other Credit
Documents, including all claims of any nature or description arising out of or connected hereto,
the Letters of Credit, the Synthetic Letters of Credit and participations therein or with any other
Credit Document, irrespective of whether or not (a) such Lender shall have made any demand
hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit, the Synthetic Letters of Credit or any other amounts due hereunder shall have
become due and payable pursuant to Section 2 and although such obligations and liabilities, or any
of them, may be contingent or unmatured.




          10.5. Amendments and Waivers.




               (a) Requisite Lenders’ Consent. Subject to the additional requirements of Sections
10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the
Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be
effective without the written concurrence of the Requisite Lenders; provided that
Administrative Agent may, with the consent of Borrower only, amend, modify or supplement this
Agreement to cure any ambiguity, omission, defect or inconsistency, so long as



127









 







such amendment,
modification or supplement does not adversely affect the rights of any Lender, Issuing Bank or
Synthetic LC Issuing Bank.



               (b) Affected Lenders’ Consent. Without the written consent of each Lender (other
than a Defaulting Lender) that would be affected thereby, no amendment, modification, termination,
or consent shall be effective if the effect thereof would:




          (i) extend the scheduled final maturity of any Loan or Note;




          (ii) waive, reduce or postpone any scheduled repayment (but not prepayment);




          (iii) extend the stated expiration date of any Letter of Credit beyond the
Revolving Commitment Termination Date, or extend the stated expiration date of any
Synthetic Letter of Credit beyond the Synthetic LC Commitment Termination Date;




          (iv) extend the date on which any Synthetic LC Deposit is required to be made by,
or returned to, any Synthetic LC Lender.




          (v) reduce the rate of interest on any Loan (other than any waiver of any increase
in the interest rate applicable to any Loan pursuant to Section 2.11) or any fee or any
premium payable hereunder;




          (vi) extend the time for payment of any such interest or fees;




          (vii) reduce the principal amount of any Loan or any reimbursement obligation in
respect of any Letter of Credit or Synthetic Letter of Credit;




          (viii) amend, modify, terminate or waive any provision of Section 2.14(b)(iii),
this Section 10.5(b), Section 10.5(c) or any other provision of this Agreement that
expressly provides that the consent of all Lenders is required;




          (ix) amend the definition of “Requisite Lenders” or “Pro Rata Share”;
provided, with the consent of Requisite Lenders, additional extensions of credit
pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata
Share” on substantially the same basis as the Term Loan Commitments, the Term Loans, the
Synthetic LC Commitments, the Synthetic LC Deposits, the Revolving Commitments and the
Revolving Loans are included on the Closing Date;




          (x) release all or substantially all of the Collateral or all or substantially all
of the Guarantors from the Guaranty except as expressly provided in the Credit
Documents; or




          (xi) consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under any Credit Document.



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               (c) Other Consents. No amendment, modification, termination or waiver of any
provision of the Credit Documents, or consent to any departure by any Credit Party therefrom,
shall:




          (i) increase any Commitment of any Lender over the amount thereof then in effect
without the written consent of such Lender; provided, no amendment, modification
or waiver of any condition precedent, covenant, Default or Event of Default shall
constitute an increase in any Commitment of any Lender;




          (ii) amend, modify, terminate or waive any provision hereof relating to the Swing
Line Sublimit or the Swing Line Loans without the written consent of Swing Line Lender;




          (iii) alter the required application of any repayments or prepayments as between
Classes pursuant to Section 2.16 without the written consent of Lenders holding more
than 50% of the aggregate Term Loan Exposure of all Lenders, Synthetic LC Exposure of
all Lenders or Revolving Exposure of all Lenders,
as applicable, of each Class which is being allocated a lesser repayment or
prepayment as a result thereof; provided, Requisite Lenders may waive, in whole
or in part, any prepayment so long as the application, as between Classes, of any
portion of such prepayment which is still required to be made is not altered;




          (iv) amend, modify, terminate or waive any obligation of Lenders relating to (x)
the Letters of Credit, including the purchase of participations in Letters of Credit as
provided in Section 2.4(e) without the written consent of Administrative Agent,
Collateral Agent and Issuing Bank, or (y) the Synthetic Letters of Credit, including the
purchase of participations in Synthetic Letters of Credit as provided in Section 2.5(e)
without the written consent of Administrative Agent, Collateral Agent and Synthetic LC
Issuing Bank;




          (v) amend, modify or waive this Agreement or the Pledge and Security Agreement so
as to alter the ratable treatment of Obligations arising under the Credit Documents and
Obligations arising under Hedge Agreements or the definition of “Lender Counterparty,”
“Hedge Agreement,” “Obligations,” or “Secured Obligations” in each case in a manner
adverse to any Lender Counterparty with Obligations then outstanding without the written
consent of any such Lender Counterparty;




          (vi) amend, modify, terminate or waive any provision of Section 9 as the same
applies to any Agent, or any other provision hereof as the same applies to the rights or
obligations of any Agent, in each case without the written consent of such Agent;




          (vii) amend, modify or waive the definition of “Applicable Loan to Value Ratio”,
“Loan to Value Ratio”, “Inventory” or “Value” under this Agreement, or Section 2.15(f),
Section 2.16, Section 2.17(h), Section 3.2(a)(ii), Section 5.1(p) or Section 5.14(c)
(notwithstanding anything to the contrary contained



129









 







in Section 5.14) of this Agreement,
or Section 7.2 of the Pledge and Security Agreement, in each case without the written
consent of the Collateral Agent;




          (viii) amend, modify, terminate or waive any provision of Section 8.1 of the Pledge
and Security Agreement, as the same applies to the Collateral Agent, or any other
provision thereof as the same applies to the rights or obligations of the Collateral
Agent, in each case without the written consent of the Collateral Agent; or




          (ix) amend, modify, terminate or waive any provision of this Agreement as the same
applies to the rights or obligations of the Issuing Bank, Synthetic LC Issuing Bank or
the Synthetic LC Depositary Bank, in each case without the written consent of the
Issuing Bank, Synthetic LC Issuing Bank or the Synthetic LC Depositary Bank,
respectively.



               (d) Execution of Amendments, etc. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments, modifications,
waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender
at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.



          10.6. Successors and Assigns; Participations.




               (a) Generally. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any
interest therein may be assigned or delegated by any Credit Party without the prior written consent
of all Lenders. 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
and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.



               (b) Register. Borrower, Administrative Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the corresponding
Commitments, Synthetic LC Deposits and Loans listed therein for all purposes hereof, and no
assignment or transfer of any such Commitment, Synthetic LC Deposit or Loan shall be effective, in
each case, unless and until recorded in the Register following receipt of an Assignment Agreement
effecting the assignment or transfer thereof, in each case, as provided in Section 10.6(d). Each
assignment shall be recorded in the Register on the Business Day the Assignment Agreement is
received by Administrative Agent, if received by 12:00 noon New York City time, and on the
following Business Day if received after such time, prompt notice thereof shall be provided to
Borrower and a copy of such Assignment Agreement shall be maintained, as applicable. The date of
such recordation of a transfer shall be referred to herein



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as the “Assignment Effective Date.” Any
request, authority or consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding Commitments, Synthetic LC Deposits
or Loans.



               (c) Right to Assign. Each Lender shall have the right at any time to sell, assign
or transfer all or a portion of its rights and obligations under this Agreement, including all or a
portion of its Commitment, Synthetic LC Deposit or Loans owing to it or other Obligations
(provided, however, that pro rata assignments shall not be required and each
assignment shall be of a uniform, and not varying, percentage of all rights and obligations under
and in respect of any applicable Loan and any related Commitments):




          (i) to any Person meeting the criteria of clause (i) of the definition of the term
of “Eligible Assignee” upon the giving of notice to Borrower and Administrative Agent;
and




          (ii) to any Person meeting the criteria of clause (ii) of the definition of the
term of “Eligible Assignee” upon giving of notice to Borrower and Administrative Agent
and, in the case of assignments of Revolving Loans or Revolving Commitments to any such
Person (except in the case of assignments made by or to GSCP), consented to by each of
Borrower and Administrative Agent (such consent not to be (x) unreasonably withheld or
delayed or, (y) in the case of Borrower, required at any time an Event of Default shall
have occurred and then be continuing); provided, further each such assignment
pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than
(A) $1,000,000 (or such lesser amount as may be agreed to by Borrower and Administrative
Agent or as shall constitute the aggregate amount of the Revolving Commitments and
Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving
Commitments and Revolving Loans, (B) $2,500,000 (or such lesser amount as may be agreed
to by Borrower and Administrative Agent or as shall constitute the aggregate amount of
the Term Loans of the assigning Lender) with respect to the assignment of Term Loans and
(C) $250,000 (or such lesser amount as may be agreed to by Borrower and Administrative
Agent or as shall constitute the aggregate amount of the Synthetic LC Commitment and
Synthetic LC Deposits of the assigning Lender) with respect to the assignment of the
Synthetic LC Commitment and Synthetic LC Deposits.



               (d) Mechanics. Assignments and assumptions of Loans, Synthetic LC Deposits and
Commitments shall only be effected by manual execution and delivery to Administrative Agent of an
Assignment Agreement. Assignments shall be effective as of the Assignment Effective Date. In
connection with all assignments there shall be delivered to Administrative Agent such forms,
certificates or other evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may be required to deliver
pursuant to Section 2.21(c).



               (e) Representations and Warranties of Assignee. Each Lender, upon execution and
delivery hereof or upon succeeding to an interest in the Commitments, Synthetic



131









 







LC Deposits, and
Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment
Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the
making of or investing in commitments or loans such as the applicable Commitments, Synthetic LC
Deposits or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its
Commitments, Synthetic LC Deposits or Loans for its own account in the ordinary course and without
a view to distribution of such Commitments, Synthetic LC Deposits or Loans within the meaning of
the Securities Act or the Exchange Act or other federal securities laws (it being understood that,
subject to the provisions of this Section 10.6, the disposition of such Commitments, Synthetic LC
Deposits or Loans or any interests therein shall at all times remain within its exclusive control).



               (f) Effect of Assignment. Subject to the terms and conditions of this Section 10.6,
as of the Assignment Effective Date with respect to any Assignment Agreement (i) the assignee
thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its
interest in the Loans, Synthetic LC Deposits and Commitments as reflected in the Register and shall
thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder have been
assigned to the assignee, relinquish its rights (other than any rights which survive the
termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the
case of an assignment covering all or the remaining portion of an assigning Lender’s rights and
obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective
Date; provided, anything contained in any of the Credit Documents to the contrary
notwithstanding, (x) Issuing Bank shall continue to have all rights and obligations thereof with
respect to any Letters of Credit issued by such Issuing Bank until the cancellation or expiration
of such Letters of Credit and the reimbursement of any amounts drawn thereunder, (y) Synthetic LC
Issuing Bank shall continue to have all rights and obligations thereof with respect to any
Synthetic Letters of Credit issued by such Synthetic LC Issuing Bank until the cancellation or
expiration of such Synthetic Letters of Credit and the reimbursement of any amounts drawn
thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all
indemnities hereunder as specified herein with respect to matters arising out of the prior
involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be
modified to reflect any Commitment of such assignee and any Commitment of such assigning Lender, if
any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning
Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable,
surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrower
shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such
assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving
Commitments and/or outstanding Loans of the assignee and/or the assigning Lender.



               (g) Synthetic LC Deposits. In connection with each assignment of a Synthetic LC
Deposit, the Synthetic LC Deposit of the assigning Synthetic LC Lender shall not be released, but
shall instead be purchased by the relevant assignee, and the amount of such Synthetic LC Deposit
shall continue to be held in the Synthetic LC Deposit Account for application (to the extent not
already applied) in accordance with Section 2.5 to satisfy such assignee’s obligations in respect
of the Synthetic LC Usage. Each Synthetic LC Lender agrees that immediately prior to each such
assignment (i) Administrative Agent shall establish a new Sub-Account in the name of the assignee,
(ii) a corresponding portion of the amount held in the



132









 







Synthetic LC Deposit Account credited by
Administrative Agent to the Sub-Account of the assigning Synthetic LC Lender shall be purchased by
the assignee and shall be transferred from the assigning Synthetic LC Lender’s Sub-Account to the
assignee’s Sub-Account and (iii) if after giving effect to such assignment the Synthetic LC Deposit
of the assigning Synthetic LC Lender shall be zero, Administrative Agent shall close the
Sub-Account of such assigning Synthetic LC Lender.



               (h) Participations.




          (i) Each Lender shall have the right at any time to sell one or more participations
to any Person (other than Borrower, any of its Subsidiaries or any of its Affiliates) in
all or any part of its Commitments, Loans or in any other Obligation.




          (ii) The holder of any such participation, other than an Affiliate of the Lender
granting such participation, shall not be entitled to require such Lender to take or
omit to take any action hereunder except with respect to any amendment,
modification or waiver that would (A) extend the final scheduled maturity of any
Loan, Note, Letter of Credit (unless such Letter of Credit is not extended beyond the
Revolving Commitment Termination Date) or Synthetic Letter of Credit (unless such
Synthetic Letter of Credit is not extended beyond the Synthetic LC Termination Date) in
which such participant is participating, or reduce the rate or extend the time of
payment of interest or fees thereon (except in connection with a waiver of applicability
of any post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant’s participation over the amount thereof then
in effect (it being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted without
the consent of any participant if the participant’s participation is not increased as a
result thereof), (B) consent to the assignment or transfer by any Credit Party of any of
its rights and obligations under this Agreement or (C) release all or substantially all
of the Collateral under the Collateral Documents (except as expressly provided in the
Credit Documents) supporting the Loans hereunder in which such participant is
participating.




          (iii) Borrower agrees that each participant shall be entitled to the benefits of
Sections 2.19(c), 2.20 and 2.21 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (c) of this Section;
provided, (x) a participant shall not be entitled to receive any greater payment
under Section 2.20 or 2.21 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such participant, unless the sale of
the participation to such participant is made with Borrower’s prior written consent and
(y) a participant that would be a Non-US Lender if it were a Lender shall not be
entitled to the benefits of Section 2.21 unless Borrower is notified of the
participation sold to such participant and such participant agrees, for the benefit of
Borrower, to comply with Section 2.21 as though it were a Lender; provided
further that, except as specifically set forth in clauses (x) and (y) of this
sentence, nothing herein shall require any notice to Borrower or any other Person in
connection with the sale of any



133









 







participation. To the extent permitted by law, each
participant also shall be entitled to the benefits of Section 10.4 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18 as though it were
a Lender.



               (i) Certain Other Assignments and Participations. In addition to any other
assignment or participation permitted pursuant to this Section 10.6:




          (i) any Lender may assign and/or pledge all or any portion of its Loans, the other
Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of
such Lender including any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors and any operating circular issued by such Federal
Reserve Bank; and




          (ii) notwithstanding anything to the contrary in this Section 10.6, any Lender may
sell participations (or otherwise transfer its rights) in or to all or a portion of its
rights and obligations under the Credit Documents (including all its
rights and obligations with respect to the Term Loans, Revolving Loans, Letters of
Credit and Synthetic Letters of Credit) to one or more lenders or other Persons that
provide financing to such Lender;




provided, that no Lender, as between Borrower and such Lender, shall be relieved of
any of its obligations hereunder as a result of any such assignment, pledge, participation
or other transfer and provided further, that in no event shall the
applicable Federal Reserve Bank, pledge, trustee, lender or other financing source described
in the preceding clauses (i) or (ii) be considered to be a “Lender” or be entitled to
require the assigning, selling or transferring Lender to take or omit to take any action
hereunder.



          10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.




          10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and
agreements made herein shall survive the execution and delivery hereof and the making of any Credit
Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of
each Credit Party set forth in Sections 2.19(c), 2.20, 2.21, 10.2, 10.3 and 10.4 and the agreements
of Lenders set forth in Sections 2.18, 9.3(b) and 9.6 shall survive the payment of the Loans, the
return of the Synthetic LC Deposits, the cancellation or expiration of the Letters of Credit and
the Synthetic Letters of Credit, and the reimbursement of any amounts drawn thereunder, and the
termination hereof.




          10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or




134









 







privilege preclude
other or further exercise thereof or of any other power, right or privilege. The rights, powers
and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to
and independent of all rights, powers and remedies existing by virtue of any statute or rule of law
or in any of the other Credit Documents or any of the Hedge Agreements. Any forbearance or failure
to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the
further exercise of any such right, power or remedy.




          10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any
obligation to marshal any assets in favor of any Credit Party or any other Person or against or in
payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or
payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or
any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to
be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor or related
thereto, shall be revived and continued in full force and effect as if such payment or payments had
not been made or such enforcement or setoff had not occurred.




          10.11. Severability. In case any provision in or obligation hereunder or under any other Credit
Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.




          10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders
hereunder are several and no Lender shall be responsible for the obligations or Commitment of any
other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The amounts payable at
any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for
any other Lender to be joined as an additional party in any proceeding for such purpose.




          10.13. Headings. Section headings herein are included herein for convenience of reference only and
shall not constitute a part hereof for any other purpose or be given any substantive effect.




          10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.




135









 








          10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING
OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.
BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE
OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT
TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS
AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.




          10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE
OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE
TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR




136









 







TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.




          10.17. Confidentiality. Each Agent, and each Lender (which term shall for the purposes of this Section
10.17 include Issuing Bank and Synthetic LC Issuing Bank) shall hold all non-public information
regarding Borrower and its Subsidiaries and their businesses identified as such by Borrower and
obtained by such Lender pursuant to the requirements hereof in accordance with such Lender’s
customary procedures for handling confidential information of such nature, it being understood and
agreed by Borrower that, in any event, each Agent and each Lender may make (i) disclosures of such
information to Affiliates of such Lender or Agent and to their respective agents and advisors (and
to other Persons authorized by a Lender or Agent to organize, present or disseminate such
information in connection with disclosures otherwise made in accordance with this Section
10.17), (ii) disclosures of such information reasonably required by any bona fide or potential
assignee, pledgee, transferee or participant in connection with the contemplated assignment,
pledge, transfer or participation of any Loans or any participations therein or by any direct or
indirect contractual counterparties (or the professional advisors thereto) to any swap or
derivative transaction relating to Borrower and its obligations (provided, such assignees,
pledgees, transferees, participants, counterparties and advisors are advised of and agree to be
bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as
this Section 10.17), (iii) disclosure to any rating agency when required by it, provided
that, prior to any disclosure, such rating agency shall undertake in writing to preserve the
confidentiality of any confidential information relating to the Credit Parties received by it from
any of the Agents or any Lender, and (iv) disclosures required or requested by any governmental
agency or representative thereof or by the NAIC or pursuant to legal or judicial process;
provided, unless specifically prohibited by applicable law or court order, each Lender and
each Agent shall make reasonable efforts to notify Borrower of any request by any governmental
agency or representative thereof (other than any such request in connection with any examination of
the financial condition or other routine examination of such Lender by such governmental agency)
for disclosure of any such non-public information prior to disclosure of such information. In
addition, each Agent and each Lender may disclose the existence of this Agreement and the
information about this Agreement to market data collectors, similar services providers to the
lending industry, and service providers to the Agents and the Lenders in connection with the
administration and management of this Agreement and the other Credit Documents.




          10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate
charged with respect to any of the Obligations, including all charges or fees in connection
therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful
Rate. If the rate of interest (determined without regard to the preceding sentence) under this
Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect. In addition, if when the
Loans made hereunder are repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this



137









 




Agreement had at all times been in
effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an amount
equal to the difference between the amount of interest paid and the amount of interest which would
have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which
constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding
amount of the Loans made hereunder or be refunded to Borrower.




          10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.




          10.20. Effectiveness. This Agreement shall become effective upon the execution of a counterpart
hereof by each of the parties hereto and receipt by Borrower and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof.




          10.21. Patriot Act. Each Lender and Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow such Lender or
Administrative Agent, as applicable, to identify Borrower in accordance with the Patriot Act.




          10.22. Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words
of like import in any Assignment Agreement shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.




          10.23. Post-Closing Actions. Notwithstanding anything to the contrary contained in this Agreement or
the other Loan Documents, the parties hereto acknowledge and agree that Borrower and its
Subsidiaries shall be required to take the actions specified in Schedule 10.23 as promptly as
practicable, and in any event within the time periods set forth in Schedule 10.23 or such other
time periods as Administrative Agent may agree. The provisions of Schedule 10.23 shall be deemed
incorporated by reference herein as fully as if set forth herein in their entirety. All provisions
of this Agreement and the other Credit Documents (including, without limitation, all conditions
precedent, representations, warranties, certificates, borrowing notices, covenants, events of
default and other agreements herein and therein) shall be deemed modified to the extent necessary
to effect the foregoing (and to permit the taking of the actions described above within the time
periods required above, rather than as otherwise provided in the Credit Documents);
provided that (a) to the extent any representation and warranty would not be true




138









 







because
the foregoing actions were not taken on the Closing Date, the respective representation and
warranty shall be required to be true and correct in all material respects at the time the
respective action is taken (or was required to be taken) in accordance with the foregoing
provisions of this Section 10.23 and (b) all representations and warranties relating to the
Collateral Documents shall be required to be true immediately after the actions required to be
taken by this Section 10.23 have been taken (or were required to be taken). The parties hereto
acknowledge and agree that the failure to take any of the actions required above within the
relevant time periods required above shall give rise to an immediate Event of Default pursuant to
this Agreement.




[Remainder of page intentionally left blank]




139









 





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



	 	 	 	 	 
	 	MOVIE GALLERY, INC.

 	 
	 	By:  	 	 
	 	Name:  	S. Page Todd 	 
	 	Title:  	Executive Vice President, Secretary, and
 General
Counsel 	 
	 
	 	MOVIE GALLERY US, LLC

 	 
	 	By:  	Movie Gallery, Inc., its Manager and Sole Member
 	 
	 	 	 
	 	By:  	
 	 
	 	Name:  	S. Page Todd 	 
	 	Title:  	Executive Vice President, Secretary, and
 General
Counsel 	 
	 
	 	M.G. DIGITAL, LLC

 	 
	 	By:  	Movie Gallery US, LLC, its Manager and Sole Member
 	 



	 	 	 	 	 	 
	 

	 	By:
	 	Movie Gallery, Inc., its Manager and	 
	 

	 	 	 	Sole Member	 






	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 
	 

	 	Name:
	 	S. Page Todd	 
	 

	 	Title:
	 	Executive Vice President, Secretary, and	 
	 

	 	 	 	General Counsel	 






[Signatures Continued on the Next Page]




 









 








	 	 	 	 	 
	 	M.G.A REALTY I, LLC

 	 
	 	By:  	Movie Gallery US, LLC, its Manager and Sole
 	 
	 	 	Member 	 




	 	 	 	 	 	 	 
	 

	 	By:
	 	Movie Gallery, Inc., its Manager and	 	 
	 

	 	 	 	Sole Member	 	 





	 	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 

	 	Name:
	 	S. Page Todd	 	 
	 

	 	Title:
	 	Executive Vice President, Secretary, and	 	 
	 

	 	 	 	General Counsel	 	 






	 	 	 	 	 
	 	HOLLYWOOD ENTERTAINMENT CORPORATION

 	 
	 	By:  	 	 
	 	Name:  	S. Page Todd 	 
	 	Title:  	Executive Vice President, Secretary, and General
Counsel 	 
	 
	 	MG AUTOMATION LLC

 	 
	 	By:  	Hollywood Entertainment Corporation, its Manager and Sole Member
 	 
	 	 	 
	 	By:  	
 	 
	 	Name:  	S. Page Todd 	 
	 	Title:  	 Executive Vice President, Secretary, and General
Counsel 	 



 









 






	 	 	 	 	 
	 	GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Administrative Agent, Syndication Agent and a

Lender

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 



 









 






	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

as Collateral Agent, Documentation Agent, Swing Line

Lender, Issuing Bank, Synthetic LC Issuing Bank and a

Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: