EX-10.2 SECOND LIEN CREDIT AGREEMENT



 





Exhibit 10.2




EXECUTION VERSION




SECOND 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,




and




CAPITALSOURCE FINANCE LLC,

as Administrative Agent and Collateral Agent



 




$175,000,000 Senior Secured Second Priority Credit Facilities



 




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINITIONS AND INTERPRETATION
	 	 	1	 
	1.1. Definitions
	 	 	1	 
	1.2. Accounting Terms
	 	 	29	 
	1.3.
Interpretation, etc.
	 	 	29	 
	SECTION 2. LOANS
	 	 	29	 
	2.1. Loans
	 	 	29	 
	2.2. Pro Rata Shares; Availability of Funds
	 	 	30	 
	2.3. Use of Proceeds
	 	 	31	 
	2.4. Evidence of Debt; Register; Lenders’ Books and Records; Notes
	 	 	31	 
	2.5. Interest on Loans
	 	 	31	 
	2.6. Conversion/Continuation
	 	 	34	 
	2.7. Default Interest
	 	 	34	 
	2.8. Fees
	 	 	35	 
	2.9. Payments at Maturity
	 	 	35	 
	2.10. Voluntary Prepayments/Call Protection
	 	 	35	 
	2.11. Mandatory Prepayments
	 	 	36	 
	2.12. Application of Prepayments
	 	 	38	 
	2.13. General Provisions Regarding Payments
	 	 	38	 
	2.14. Ratable Sharing
	 	 	39	 
	2.15. Making or Maintaining Eurodollar Rate Loans
	 	 	40	 
	2.16. Increased Costs; Capital Adequacy
	 	 	42	 
	2.17. Taxes;
Withholding, etc.
	 	 	43	 
	2.18. Obligation to Mitigate
	 	 	45	 
	2.19. Removal or Replacement of a Lender
	 	 	46	 
	2.20. Incremental Facilities
	 	 	46	 
	SECTION 3. CONDITIONS PRECEDENT
	 	 	48	 
	3.1. Closing Date
	 	 	48	 
	3.2. Notices
	 	 	53	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	4.1. Organization; Requisite Power and Authority; Qualification
	 	 	53	 
	4.2. Equity Interests and Ownership
	 	 	53	 
	4.3. Due Authorization
	 	 	54	 
	4.4. No Conflict
	 	 	54	 
	4.5. Governmental Consents
	 	 	54	 
	4.6. Binding Obligation
	 	 	54	 
	4.7. Historical Financial Statements
	 	 	54	 
	4.8. Projections
	 	 	55	 
	4.9. No Material Adverse Change
	 	 	55	 
	4.10. No Restricted Junior Payments
	 	 	55	 
	4.11.
Adverse Proceedings, etc.
	 	 	55	 
	4.12. Payment of Taxes
	 	 	55	 
	4.13. Properties
	 	 	56	 
	4.14. Environmental Matters
	 	 	56	 






ii









 







	 	 	 	 	 
	 	 	Page	 
	4.15. No Defaults
	 	 	57	 
	4.16. Material Contracts
	 	 	57	 
	4.17. Governmental Regulation
	 	 	57	 
	4.18. Margin Stock
	 	 	57	 
	4.19. Employee Matters
	 	 	57	 
	4.20. Employee Benefit Plans
	 	 	58	 
	4.21. Certain Fees
	 	 	58	 
	4.22. Solvency
	 	 	59	 
	4.23. Compliance with Statutes, etc.
	 	 	59	 
	4.24. Disclosure
	 	 	59	 
	4.25. Patriot Act
	 	 	59	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	60	 
	5.1. Financial Statements and Other Reports
	 	 	60	 
	5.2. Existence
	 	 	64	 
	5.3. Payment of Taxes and Claims
	 	 	64	 
	5.4. Maintenance of Properties
	 	 	64	 
	5.5. Insurance
	 	 	64	 
	5.6. Books and Records; Inspections
	 	 	65	 
	5.7. Lenders Meetings
	 	 	65	 
	5.8. Compliance with Laws
	 	 	65	 
	5.9. Environmental
	 	 	65	 
	5.10. Subsidiaries
	 	 	67	 
	5.11. Additional Material Real Estate Assets
	 	 	67	 
	5.12. Interest Rate Protection
	 	 	68	 
	5.13. Further Assurances
	 	 	68	 
	5.14. Miscellaneous Covenants
	 	 	68	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	68	 
	6.1. Indebtedness
	 	 	68	 
	6.2. Liens
	 	 	71	 
	6.3. No Further Negative Pledges
	 	 	72	 
	6.4. Restricted Junior Payments
	 	 	73	 
	6.5. Restrictions on Subsidiary Distributions
	 	 	73	 
	6.6. Investments
	 	 	74	 
	6.7. Fundamental Changes; Disposition of Assets; Acquisitions
	 	 	75	 
	6.8. Disposal of Subsidiary Interests
	 	 	77	 
	6.9. Sales and Lease-Backs
	 	 	77	 
	6.10. Transactions with Shareholders and Affiliates
	 	 	77	 
	6.11. Conduct of Business
	 	 	78	 
	6.12. Amendments or Waivers of Organizational Documents
	 	 	78	 
	6.13. Amendments or Waivers with respect to Certain Indebtedness
	 	 	78	 
	6.14. Limitation on Voluntary Payments and Amendments or Waivers of the
First Lien Credit Agreement
	 	 	78	 
	6.15. Fiscal Year
	 	 	79	 
	SECTION 7. GUARANTY
	 	 	79	 
	7.1. Guaranty of the Obligations
	 	 	79	 
	7.2. Contribution by Guarantors
	 	 	79	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	7.3. Payment by Guarantors
	 	 	80	 
	7.4. Liability of Guarantors Absolute
	 	 	80	 
	7.5. Waivers by Guarantors
	 	 	82	 
	7.6. Guarantors’ Rights of Subrogation, Contribution, etc.
	 	 	82	 
	7.7. Subordination of Other Obligations
	 	 	83	 
	7.8. Continuing Guaranty
	 	 	83	 
	7.9. Authority of Guarantors or Borrower
	 	 	83	 
	7.10. Financial Condition of Borrower
	 	 	83	 
	7.11. Bankruptcy, etc.
	 	 	84	 
	7.12. Discharge of Guaranty Upon Sale of Guarantor
	 	 	84	 
	SECTION 8. EVENTS OF DEFAULT
	 	 	85	 
	8.1. Events of Default
	 	 	85	 
	SECTION 9. AGENTS
	 	 	88	 
	9.1. Appointment of Agents
	 	 	88	 
	9.2. Powers and Duties
	 	 	88	 
	9.3. General Immunity
	 	 	88	 
	9.4. Agents Entitled to Act as Lender
	 	 	90	 
	9.5. Lenders’ Representations, Warranties and Acknowledgment
	 	 	90	 
	9.6. Right to Indemnity
	 	 	90	 
	9.7. Successor Administrative Agent and Collateral Agent
	 	 	91	 
	9.8. Collateral Documents and Guaranty
	 	 	91	 
	9.9. Intercreditor Agreement
	 	 	92	 
	SECTION 10. MISCELLANEOUS
	 	 	92	 
	10.1. Notices
	 	 	92	 
	10.2. Expenses
	 	 	94	 
	10.3. Indemnity
	 	 	94	 
	10.4. Set-Off
	 	 	95	 
	10.5. Amendments and Waivers
	 	 	95	 
	10.6. Successors and Assigns; Participations
	 	 	97	 
	10.7. Independence of Covenants
	 	 	100	 
	10.8. Survival of Representations, Warranties and Agreements
	 	 	100	 
	10.9. No Waiver; Remedies Cumulative
	 	 	100	 
	10.10. Marshalling; Payments Set Aside
	 	 	101	 
	10.11. Severability
	 	 	101	 
	10.12. Obligations Several; Independent Nature of Lenders’ Rights
	 	 	101	 
	10.13. Headings
	 	 	101	 
	10.14. APPLICABLE LAW
	 	 	101	 
	10.15. CONSENT TO JURISDICTION
	 	 	101	 
	10.16. WAIVER OF JURY TRIAL
	 	 	102	 
	10.17. Confidentiality
	 	 	103	 
	10.18. Usury Savings Clause
	 	 	103	 
	10.19. Counterparts
	 	 	104	 
	10.20. Effectiveness
	 	 	104	 
	10.21. Patriot Act
	 	 	104	 
	10.22. Electronic Execution of Assignments
	 	 	104	 
	10.23. Post-Closing Actions
	 	 	104	 






iv









 






	 	 	 	 	 	 	 
	APPENDICES:

	 	 	A	 	 	Commitments
	 

	 	 	B	 	 	Notice Addresses
	 
	SCHEDULES:

	 	 	1	 	 	    Fiscal Years
	 

	 	 	2	 	 	    Fourth Quarter 2006 EBITDA Methodology
	 

	 	 	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
	 

	 	 	6.10	 	 	    Certain Affiliate Transactions
	 

	 	 	10.23	 	 	    Post-Closing Actions
	 
	EXHIBITS:

	 	 	A-1	 	 	Funding Notice
	 

	 	 	A-2	 	 	Conversion/Continuation Notice
	 

	 	 	B	 	 	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	 	 	Joinder Agreement
	 

	 	 	N	 	 	Senior Notes Refinancing Third Lien Intercreditor Terms









v









 








SECOND LIEN CREDIT AND GUARANTY AGREEMENT




          This SECOND 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 CAPITALSOURCE
FINANCE LLC (“CapitalSource”), as Administrative Agent (together with its permitted successors in
such capacity, “Administrative Agent”) and as Collateral Agent (together with its permitted
successors in such capacity, “Collateral 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 a term loan credit facility to Borrower, in an
aggregate amount not to exceed $175,000,000 (plus the amount of any interest that is paid in the
form of additional principal thereto in accordance with Section 2.5(f) as in effect on the Closing
Date) to be used to, together with the proceeds of the First Lien Term Loans advanced under the
First Lien Credit Facilities, (i) to fund the refinancing of the Existing Indebtedness and (ii) to
pay certain other fees and expenses relating to the credit facility established hereunder;



     WHEREAS, Borrower has agreed to secure all of its Obligations by granting to Collateral Agent,
for the benefit of Secured Parties, a Second 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 Second 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 2.13(b).



               “Affected Loans” as defined in Section 2.13(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.



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



2









 





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



               “Aggregate Amounts Due” as defined in Section 2.14.



               “Aggregate Payments” as defined in Section 7.2.



               “Agreement” means this Second 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 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 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).



3









 





               “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.



               “Beneficiary” means each Agent and Lender.



               “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.



               “CapitalSource” as defined in the preamble.



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



               “Cash Election” has the meaning assigned to that term in Section 2.5(f).



4









 





               “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) 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.



5









 





               “Class” means (i) with respect to Lenders, each of the following classes of Lenders: (a)
Lenders having Loan Exposure and (b) Lenders having New Term Loan Exposure of each applicable
Series, and (ii) with respect to Loans, each of the following classes of Loans: (a) Loans (other
than New Term Loans) and (b) each Series of New Term Loans.



               “Closing Date” means the date on which the 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 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 the commitment of a Lender to make or otherwise fund a Loan and
“Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s
Commitment (other than a New Term Loan Commitment), if any, is set forth on Appendix A or in the
applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and
conditions hereof. The aggregate amount of the Commitments (other than New Term Loan Commitments)
as of the Closing Date is $175,000,000.



               “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



6









 







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.



               With respect to any period during which a Permitted Acquisition or an Asset Sale has occurred
(each, a “Subject Transaction”), 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).



               “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



7









 







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 under the First Lien
Credit Agreement except to the extent the Revolving Commitments under the First Lien Credit
Agreement 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(e)), but excluding, however, any amount not
payable in Cash and any amounts referred to in Section 2.8(e)(i) payable on or before the Closing
Date.



               “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



8









 







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 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.



               “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 Document” means any of this Agreement, the Notes, if any, the Collateral Documents,
the Intercreditor Agreement, and all other documents, instruments or



9









 







agreements executed and delivered by a Credit Party for the benefit of any Agent or any Lender
in connection herewith.



               “Credit Extension” means the making of a Loan.



               “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.



               “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.



               “Discharge of First Lien Obligations” has the meaning assigned to that term in the
Intercreditor Agreement.



               “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 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.



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



10









 





               “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.



               “Election” has the meaning assigned to that term in Section 2.5(f).



               “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



11









 




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 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.



12









 





               “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 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).



13









 





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



               “First Lien Credit Agreement” means (i) the First 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 and (ii) any other First Lien Credit Agreement (as defined in the Intercreditor
Agreement), in each instance under each of clauses (i) and (ii), as it may be amended, restated,
supplemented or otherwise modified from time to time. In each instance where a defined term used
herein is defined as used in the First Lien Credit Agreement and the First Lien Credit Agreement in
effect at such time does not define such term, then such defined term used in this Agreement shall
have the meaning of the defined term in the First Lien Credit Agreement then in effect that is
substantially similar to the defined term that is defined in the initial First Lien Credit
Agreement.



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



               “First Lien Credit Facilities” means the credit facilities in an aggregate principal amount of
$725,000,000 under the First Lien Credit Agreement described in clause (i) of such defined term,
and any Refinancing (as defined in the Intercreditor Agreement) of such facilities in accordance
with the Intercreditor Agreement.



               “First Lien Term Loans” means term loans in an aggregate principal amount of $600,000,000 made
on the Closing Date under the First Lien Credit Agreement.



               “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 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 Guarantors” as defined in Section 7.2.



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



14









 





               “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 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” has the meaning assigned to that term in the First Lien Credit Agreement.



               “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



15









 







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 Amount Date” as defined in Section 2.20.



               “Increased-Cost Lenders” as defined in Section 2.19.



               “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 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



16









 







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.



               “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, 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 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.



               “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.



17









 





               “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 First Lien Collateral Agent.



               “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 Closing 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; and (c) no Interest Period with respect to any portion of any Class of the Loans
shall extend beyond such Class’s Maturity 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.



               “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



18









 







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.



               “Joinder Agreement” means an agreement substantially in the form of Exhibit M.



               “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.



               “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 or a Joinder
Agreement.



               “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 Loan made by a Lender to Borrower pursuant to Section 2.1(a) and a New Term
Loan.



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



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



19









 





               “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.



               “Maturity Date” means (x) with respect to Loans (other than New Term Loans), the earliest to
occur of (i) March 31, 2007, if the Loans are not made on or before that date, (ii) September 8,
2012, (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 (provided, that if, after operation of this clause (iii) and clause (iii)
under the definition of “Maturity Date” in the First Lien Credit Agreement, the “Maturity Date”
under and as defined in the First Lien Credit Agreement is thereafter extended in accordance with
the terms of the First Lien Credit Documents, then the Maturity Date under this clause (iii) shall
be extended to the same date (but in no event shall the Maturity Date under this clause (iii) be
extended beyond the five and one-half year anniversary of the Closing Date)), and (iv) the date
that all such Loans become due in payable in full hereunder, whether by acceleration or otherwise;
and (y) with respect to New Term Loans of any Series, the New Term Loan Maturity Date of any such
Series of New Term Loans.



               “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.



20









 





               “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 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.



               “New Term Loan Commitments” as defined in Section 2.20.



               “New Term Loan Exposure” means, with respect to any Lender, as of any date of determination,
the outstanding principal amount of the New Term Loans of such Lender.



               “New Term Loan Lender” as defined in Section 2.20.



               “New Term Loan Maturity Date” means the date that New Term Loans of a Series shall become due
and payable in full hereunder, as specified in the applicable Joinder Agreement, including by
acceleration or otherwise.



               “New Term Loans” as defined in Section 2.20.



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



21









 





               “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 2.17(c).



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



               “Notice” means a Funding 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, under any Credit Document, 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), 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,



22









 






	 	(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 Subsidiary of Borrower, each of the actions set forth in
Sections 5.10 and/or 5.11, as applicable;
	 
	 	(iv)	 	Borrower shall have delivered to Administrative Agent (A) at
least 10 Business Days prior to such proposed acquisition, all relevant
financial information with respect to such acquired assets, including the
aggregate consideration for such acquisition 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;
	 
	 	(v)	 	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
	 
	 	(vi)	 	prior to the Discharge of First Lien Obligations, the aggregate
unused portion of the Revolving Commitments under the First Lien Credit
Agreement 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



23









 







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



               “PIK Election” has the meaning assigned to that term in Section 2.5(f).



               “PIK Interest” has the meaning assigned to that term in Section 2.5(f).



               “PIK Margin Increase” has the meaning assigned to that term in Section 2.5(f).



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



               “Pledge and Security Agreement” means the Pledge and Security Agreement (Second Lien) 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 Administrative Agent’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 Administrative
Agent may from time to time designate in writing to Borrower 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 any Lender, the percentage obtained by dividing (a) the Loan Exposure of that Lender by
(b) the aggregate Loan Exposure of all Lenders and (ii) with respect to all payments, computations,
and other matters relating to New Term Loans of a particular Series, the percentage obtained by
dividing (a) the New Term Loan Exposure of that Lender with respect to that Series by (b) the
aggregate New Term Loan Exposure of all Lenders with respect to that Series. 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 Loan Exposure and the New Term Loan Exposure of that Lender,
by (B) an amount equal to the sum of the aggregate Loan Exposure and the aggregate New Term Loan
Exposure of all Lenders.



24









 





               “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.



               “Register” as defined in Section 2.4(b).



               “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.



               “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 2.19.



               “Required Prepayment Date” as defined in Section 2.12(b).



               “Requisite Lenders” means one or more Lenders having or holding Loan Exposure and/or New Term
Loan Exposure and representing more than 50% of the sum of (i) the aggregate Loan Exposure of all
Lenders and (ii) the aggregate New Term Loan 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 any
Indebtedness under the Senior Notes Indenture.



25









 





               “Revolving Commitments” shall mean “Revolving Commitments” under and as defined in the First
Lien Credit Agreement.



               “Revolving Loans” shall mean “Revolving Loans” under and as defined in the First Lien Credit
Agreement..



               “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 Priority” means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien is (i) the only Lien to which such Collateral
is subject, other than any Permitted Lien and (ii) junior in priority to the Liens created under or
relating to the First Lien Credit Documents in accordance with the Intercreditor 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



26









 







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 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 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 $325,000,000, (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 N 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 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 Credit Documents) and (E) no Default or Event of Default
shall have occurred and be continuing or result therefrom.



               “Series” as defined in Section 2.20.



               “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



27









 







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).



               “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 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 Loans” shall mean “Swing Line Loans” under and as defined in the First Lien Credit
Agreement.



               “Syndication Agent” as defined in the preamble 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).



               “Terminated Lender” as defined in Section 2.19.



               “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 Indebtedness with respect to First Lien Term Loans plus “Letter of
Credit Usage” under (and as defined in) the First Lien Credit Agreement (only to the extent drawn
and not reimbursed) and “Synthetic LC Usage” under (and as defined in) the First Lien Credit
Agreement (only to the extent drawn and not reimbursed) 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).



               “Type of Loan” means a Base Rate Loan or a Eurodollar Rate Loan.



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               “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 2.17(c).



               “Waivable Mandatory Prepayment” as defined in Section 2.12(b).



          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.



     SECTION 2. LOANS



          2.1. 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 Commitment. Borrower may make only one borrowing under the 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 2.10(a) and 2.11, all
amounts owed hereunder with respect to the Loans shall be paid in full no later than the Maturity



29









 







Date. Each Lender’s Commitment shall terminate immediately and without further action on the
Closing Date after giving effect to the funding of such Lender’s Commitment.



               (b) Borrowing Mechanics for 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 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 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. Pro Rata Shares; Availability of Funds.




               (a) Pro Rata Shares. All Loans 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 requested hereunder or purchase a participation required hereby nor shall
any 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 Closing Date that such Lender does not intend to make available to
Administrative Agent the amount of such Lender’s Loan requested on the Closing Date, Administrative
Agent may assume that such Lender has made such amount available to Administrative Agent on such
Closing Date and Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding amount on the Closing 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 the Closing 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, 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 the Closing Date until the date such



30









 







amount is paid to
Administrative Agent, at the rate payable hereunder for the applicable Loans. Nothing in this
Section 2.2(b) shall be deemed to relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any
default by such Lender hereunder.



          2.3. Use of Proceeds. The proceeds of the 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 facility established hereunder. No portion of the proceeds of
any Loans shall be used in any manner that causes or might cause such Loans 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.




          2.4. 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 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 and Loans of each Lender (the “Register”). The Register shall be available for inspection
by Borrower or any Lender (with respect to any entry relating to such Lender’s Loans) 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 Loans of each Lender in accordance with
the provisions of Section 10.6, and each repayment or prepayment in respect of the principal amount
of the Loans, 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 Borrower’s Obligations in respect of any Loan. Borrower hereby
designates CapitalSource to serve as Borrower’s agent solely for purposes of maintaining the
Register as provided in this Section 2.4, and Borrower hereby agrees that, to the extent
CapitalSource serves in such capacity, CapitalSource 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 Loan.



          2.5. Interest on Loans.





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




               (1) if a Base Rate Loan, at the Base Rate plus 5.50% per
annum (plus the PIK Margin Increase at any time that PIK
Interest is in effect, as described in Section 2.5(f) below); or




               (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar
Rate plus 6.50% per annum (plus the PIK Margin Increase
at any time that PIK Interest is in effect, as described in
Section 2.5(f) below);



               (b) The basis for determining the rate of interest with respect to any Loan, 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 has been completed,
as determined by Syndication Agent, the 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.



               (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 2.5(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



32









 







 Loan or the last
Interest Payment Date with respect to such 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) Subject to clause (f) below and 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) Interest will be paid, at Borrower’s option, in cash (a “Cash Election”) or by adding such
interest to the principal amount of the outstanding Loans (a “PIK Election” and, together with a
Cash Election, an “Election”), in each case, on each Interest Payment Date. With respect to each
interest period, Borrower may elect to (i) pay interest on the entire principal amount of the Loans
in cash, (ii) pay interest on the entire principal amount of the Loans by adding such interest to
such principal amount (the “PIK Interest”) or (iii) pay interest on 50% of the principal amount of
the Loans in cash and pay interest on the remaining portion of the principal amount of the Loans in
PIK Interest. Notwithstanding anything to the contrary herein, with respect to each interest
period for which Borrower has made a PIK Election, interest shall be payable (as to the portion of
the interest payable as PIK Interest subject to such PIK Election only) at the applicable rate for
such interest period as set forth in the immediately preceding paragraphs plus 75 basis points
(such 75 basis point increase, the “PIK Margin Increase”).



                    Borrower shall make an Election with respect to each interest period by providing at least 15
days’ notice to Administrative Agent prior to the beginning of such interest period. If an
Election is not made by Borrower in a timely fashion or at all with respect to the method of
payment of interest for an interest period, interest for such interest period shall be payable
according to the Election for the previous interest period. Any Cash Election, PIK Election or the
combination thereof provided above shall apply to all outstanding Loans. Administrative Agent
shall provide written notice of Borrower’s Election to all Lenders. The
obligation of Borrower to pay all such PIK Interest so added shall be automatically evidenced
by this Agreement or, if applicable, all Notes. Upon request of Administrative Agent or any
Lender, Borrower shall confirm in writing the principal amount then outstanding on Loans, including
all PIK Interest so added; provided, however, that in no even shall the aggregate
principal amount of Loans hereunder, including Loans arising by reason of any PIK Election to pay
interest as PIK Interest, together with the aggregate principal amount of Loans outstanding under
the First Lien Credit Agreement, exceed the principal amounts permitted to be incurred thereby
under the Senior Notes Indenture.



33









 





          2.6. Conversion/Continuation.




               (a) Subject to Section 2.15 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 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 2.15 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 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.




          2.7. 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); 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 2.7 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 Administrative Agent or any Lender.




34









 








          2.8. Fees




     Borrower agrees to pay to Lenders to Agents such other fees in the amounts and at the times
separately agreed upon.



          2.9. Payments at Maturity.




     The Loans, together with all other amounts owed hereunder with respect thereto, shall be paid
in full no later than the Maturity Date.



          2.10. Voluntary Prepayments/Call Protection.




               (a) Voluntary Prepayments.




               (i) Subject to the terms of Section 2.10(b) below, after the first anniversary of
the Closing Date and after or concurrently with the Discharge of First Lien Obligations
or so long as not prohibited under the terms of the First Lien Credit Agreement or with
the consent of the lenders under the First Lien Credit Agreement, at 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; and




               (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.




               (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; and




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


in each case given to Administrative Agent 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 (and
Administrative Agent will promptly transmit such telephonic or original notice by telefacsimile or
telephone to each Lender). 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 2.12(a), and


35









 







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) Call Protection. In the event all or any portion of the Loans are repaid for any
reason other than a prepayment required under Section 2.11(a), (b), (c) and (e) prior to the second
anniversary of the Closing Date, such repayments will be made at (i) 102.0% of the amount repaid if
such repayment occurs after the first anniversary of the Closing Date, but on or prior to the
second anniversary of the Closing Date and (ii) at 101.0% of the amount repaid if such repayment
occurs after the second anniversary of the Closing Date but on or prior to the third anniversary of
the Closing Date.



          2.11. Mandatory Prepayments.




               (a) Asset Sales. Subject to Section 2.12(b) and after Discharge of the First Lien
Obligations, 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 2.12(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 6.7(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 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.



               (b) Insurance/Condemnation Proceeds. Subject to Section 2.12(b) and after Discharge
of the First Lien Obligations, no later than the first Business Day following the date of receipt
by Borrower or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net
Insurance/Condemnation Proceeds, Borrower shall prepay the Loans as set forth in Section 2.12(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.



               (c) Issuance of Equity Securities. Subject to Section 2.12(b) and after Discharge of
the First Lien Obligations, 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



36









 




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 2.12(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.)




               (d) Issuance of Debt. Subject to Section 2.12(b) and after Discharge of the First
Lien Obligations, 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 2.12(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. Subject to Section 2.12(b) and after Discharge of
the First Lien Obligations, 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 2.12(b) in an
aggregate amount equal to (i) 75% of such Consolidated Excess Cash Flow minus (ii)
voluntary repayments of the Loans and loans under the First Lien Credit Facilities (excluding
repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments
are permanently reduced under the First Lien Credit Agreement 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 and loans under the First Lien Credit Facilities (excluding
repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments
are permanently reduced under the First Lien Credit Agreement in connection with such repayments).



               (f) Prepayment Certificate. Concurrently with any prepayment of the Loans pursuant to
Sections 2.11(a) through 2.11(e), Borrower shall deliver to Administrative Agent a



37









 




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 in an amount equal to such
excess, and Borrower shall concurrently therewith deliver to Administrative Agent a certificate of
an Authorized Officer demonstrating the derivation of such excess.




          2.12. Application of Prepayments.




               (a) 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 2.15(c).



               (b) Waivable Mandatory Prepayment. Anything contained herein to the contrary
notwithstanding, in the event Borrower is required to make any mandatory prepayment (a “Waivable
Mandatory Prepayment”) of the Loans, not less than three Business Days prior to the date (the
“Required Prepayment Date”) on which Borrower is required to make such Waivable Mandatory
Prepayment, Borrower shall notify Administrative Agent of the amount of such prepayment, and
Administrative Agent will promptly thereafter notify each Lender of the amount of such Lender’s Pro
Rata Share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount.
Each such Lender may exercise such option by giving written notice to Borrower and Administrative
Agent of its election to do so on or before the first Business Day prior to the Required Prepayment
Date (it being understood that any Lender which does not notify Borrower and Administrative Agent
of its election to exercise such option on or before the first Business Day prior to the Required
Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option). On
the Required Prepayment Date, Borrower shall pay to Administrative Agent that portion of the
Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such
option, to prepay the Loans of such Lenders (which prepayment shall be applied in accordance with
Section 2.12(a)).



          2.13. 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 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



38









 




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) 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.



               (f) Borrower hereby authorizes Administrative Agent to charge Borrower’s accounts with
Administrative Agent in order to cause timely payment to be made to Administrative 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 and each applicable Lender
(confirmed in 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 2.7 from
the date such amount was due and payable until the date such amount is paid in full.



               (h) Subject to the terms of the Intercreditor Agreement, 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, 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.



          2.14. 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




39









 







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




          2.15. 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 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 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



40









 




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 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 2.15(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
Administrative 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 2.15(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 2.15(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 2.15 and under Section 2.16 shall be made



41









 




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 2.15 and under Section
2.16.




          2.16. Increased Costs; Capital Adequacy.




               (a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section
2.17 (which shall be controlling with respect to the matters covered thereby), in the event that
any Lender 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
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 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 Administrative Agent)
a written statement, setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Lender under this Section 2.16(a), which statement shall be conclusive and
binding upon all parties hereto absent manifest error.



42









 





               (b) Capital Adequacy Adjustment. In the event that any Lender 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 or participations therein or other obligations hereunder with
respect to the Loans 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 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 Administrative Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to Lender under this Section 2.16(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 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 right to demand such compensation; provided
that Borrower shall not be under any obligation to compensate any Lender under paragraph (a) or (b)
of this Section 2.16 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.



          2.17. 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 under any of the Credit



43









 




Documents: (i) Borrower
shall notify Administrative 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 Administrative 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 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



44









 




deliver to Administrative 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 2.17(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 for transmission to Borrower two new
original copies of Internal Revenue Service Form W-8BEN or W-8ECI , or a Certificate re 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 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 2.17(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 2.17(c), or (2) to notify
Administrative 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 2.17(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 2.17(c) shall relieve Borrower of its obligation to pay any additional amounts
pursuant this Section 2.17 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.




          2.18. Obligation to Mitigate. Each Lender agrees that, as promptly as practicable after the officer of such Lender
responsible for administering its Loans 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 2.15, 2.16 or 2.17, 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 2.15, 2.16 or 2.17 would
be materially reduced and if, as determined by such Lender in its sole discretion, the making,
issuing, funding or maintaining of such Loans through such other office or in accordance with such
other measures, as the case may be, would not otherwise adversely affect such Loans or the
interests of such Lender; provided, such Lender will not be obligated to utilize such other
office pursuant to this Section 2.18 unless Borrower agrees




45









 







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 2.18
(setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender
to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.




          2.19. 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 2.15, 2.16 or 2.17, (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) 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 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 or
Non-Consenting Lender (the “Terminated Lender”), Borrower may, by giving written notice to
Administrative 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 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; 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 and (B) an amount equal to all
accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.8 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 2.15(c), 2.16 or 2.17; 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. Upon the prepayment of all amounts owing to any Terminated Lender 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.




          2.20. Incremental Facilities. Borrower may by written notice to GSCP and Administrative Agent
elect to request the establishment of one or more new term loan commitments (the “New Term Loan
Commitments”), by an amount not in excess of $25,000,000 in the aggregate and not less than
$10,000,000 individually (or such lesser amount which shall be approved by Administrative Agent or
such lesser amount that shall constitute the difference between $10,000,000 and all such New Term
Loan Commitments obtained prior to such date), and integral multiples of $1,000,000 in excess of
that amount. Each such notice shall specify (A) the date (each, an “Increased Amount Date”) on
which Borrower proposes that the New Term Loan Commitments shall be effective, which shall be a
date not less than 10 Business




46









 







Days after the date on which such notice is delivered to GSCP and
Administrative Agent and (B) the identity of each Lender or other Person that is an Eligible
Assignee (each, a “New Term Loan Lender”, as applicable) to whom Borrower proposes any portion of
such New Term Loan Commitments be allocated and the amounts of such allocations; provided
that GSCP may elect or decline to arrange such New Term Loan Commitments in its sole discretion and
any Lender approached to provide all or a portion of the New Term Loan Commitments may elect or
decline, in its sole discretion, to provide a New Term Loan Commitment. Such New Term Loan
Commitments shall become effective as of such Increased Amount Date; provided that (1) no
Default or Event of Default shall exist on such Increased Amount Date before or after giving effect
to such New Term Loan Commitments; (2) both before and after giving effect to the making of any
Series of New Term Loans, each of the conditions set forth in Section 3.2 shall be satisfied; (3)
the New Term Loan Commitments shall be effected pursuant to one or more Joinder Agreements executed
and delivered by Borrower, the New Term Loan Lender and Administrative Agent, and each of which
shall be recorded in the Register and each New Term Loan Lender shall be subject to the
requirements set forth in Section 2.17(c); (4) Borrower shall make any payments required pursuant
to Section 2.15(c) in connection with the New Term Loan Commitments; and (5) Borrower shall deliver
or cause to be delivered any legal opinions or other documents reasonably requested by
Administrative Agent in connection with any such transaction. Any New Term Loans made on an
Increased Amount Date shall be designated a separate series (a “Series”) of New Term Loans for all
purposes of this Agreement.




     On any Increased Amount Date on which any New Term Loan Commitments of any Series are
effective, subject to the satisfaction of the foregoing terms and conditions, (i) each New Term
Loan Lender of any Series shall make a Loan to Borrower (a “New Term Loan”) in an amount equal to
its New Term Loan Commitment of such Series, and (ii) each New Term Loan Lender of any Series shall
become a Lender hereunder with respect to the New Term Loan Commitment of such Series and the New
Term Loans of such Series made pursuant thereto.



     Administrative Agent shall notify Lenders promptly upon receipt of Borrower’s notice of each
Increased Amount Date and, in respect thereof, the Series of New Term Loan Commitments and the New
Term Loan Lenders of such Series.



     The terms and provisions of the New Term Loans and New Term Loan Commitments of any Series
shall be, except as otherwise set forth herein or in the Joinder Agreement, identical to the Loans.
In any event (i) the weighted average life to maturity of all New Term Loans of any Series shall
be no shorter than the weighted average life to maturity of the Loans, (ii) the applicable New Term
Loan Maturity Date of each Series shall be no shorter than the Maturity Date (and shall be defined
in substantially the same manner as in the definition of Maturity Date hereunder, including clause
(iii) of such definition), (iii) the rate of interest applicable to the New Term Loans of each
Series shall be determined by Borrower and the applicable new Lenders and shall be set forth in
each applicable Joinder Agreement; provided however that the interest rate
applicable to the New Term Loans (after giving effect to all upfront or similar fees or original
issue discount payable with respect to such New Term Loans) shall not be greater than 0.25% higher
than the highest interest rate that may, under any circumstances, be payable with respect to Loans
unless the interest rate with respect to the Loans is increased by an amount equal to the
difference between the interest rate applicable to the New Term Loans (after giving effect to all
upfront or similar fees or original issue discount payable with respect to such New Term Loans)



47









 




and
the interest rate on the Loans, minus 0.25%. Each Joinder Agreement may, without the consent of
any other Lenders, effect such amendments to this Agreement and the other Credit Documents as may
be necessary or appropriate, in the opinion of Administrative Agent to effect the provision of this
Section 2.20.




     SECTION 3. CONDITIONS PRECEDENT



          3.1. Closing Date. The obligation of each Lender to make a Loan 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.



               (b) Borrowings under First Lien Loan Agreement. On or before the Closing Date,




               (i) Borrower shall have received gross proceeds from the borrowing of First Lien
Term Loans in an aggregate amount in cash of not less than $600,000,000; and




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



48









 





               (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” under (and as each such term is defined in) the First Lien
Credit Agreement 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 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 Second 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,



49









 







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




               (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 Second 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;



50









 






               (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.



               (i) Environmental Reports. Administrative 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 2.8.



               (n) Solvency Certificate. On the Closing Date Administrative Agent and Syndication
Agent shall have received a Solvency Certificate from Borrower and in form, scope



51









 




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 First 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
and Syndication Agent an originally executed Closing Date Certificate, together with all
attachments thereto.



               (p) Credit Rating. The credit facility 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 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 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 shall have received a duly executed
letter of direction from Borrower addressed to GSCP and Administrative Agent, on behalf of itself
and Lenders, directing the disbursement on the Closing Date of the proceeds of the Loans made on
such date.



               (u) Minimum EBITDA. Administrative Agent and Syndication Agent shall have received
evidence reasonably satisfactory to Administrative 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) Funding Notice. Administrative Agent shall have received a fully executed and
delivered Funding Notice.



52









 





               (x) Representations and Warranties. The representations and warranties contained
herein and in the other Credit Documents shall be true and correct in all material respects on and
as of the Closing 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.



               (y) No Default. No event shall have occurred and be continuing or would result from
the making of the Loans that would constitute an Event of Default or a Default.


Any Agent or Requisite Lenders shall be entitled, but not obligated to, request and receive, prior
to the Closing Date, 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.




          3.2. 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, or conversion/continuation, 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 or continuation/conversion. 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 to enter into this Agreement and to make the Loans to be made
thereby, each Credit Party represents and warrants to each Lender 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



53









 




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 First 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.



               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



54









 




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. 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;



55









 




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 6.7 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.



               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.



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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 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,



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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 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.



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               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



               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.



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     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, 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,
GSCP 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 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 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;



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                    (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
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;



61









 





                    (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 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



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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); and



                    (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, 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.


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 and 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.




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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 6.7, 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.



               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



64









 




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.




               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 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 Administrative Agent may visit Borrower only
once during any Fiscal Year at Borrower’s expense, and no Lender may visit the Borrower more than
once per Fiscal Year and such visit shall be at the expense of such Lender.



               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



65









 






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
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)



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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 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 Second 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 6.9 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



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favor of Collateral Agent, for the benefit
of Secured Parties, a valid and, subject to any filing and/or recording referred to herein,
perfected Second 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 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.



     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, 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:



68









 





                    (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 Second 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 and other “Obligations” under (and as defined in) the First Lien Credit
Agreement in an aggregate principal amount at any time outstanding not to exceed $725,000,000 and,
subject to the terms of the Intercreditor Agreement, Indebtedness incurred to refinance, renew or
replace such Indebtedness 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 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



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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;



                    (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;



70









 





                    (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
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;



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



71









 





                    (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 (and as defined in) the First
Lien Credit 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 N 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.



               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



72









 




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 First 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 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 2.11(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 2.11(c));



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



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



                    (d) 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 2.11(c);



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



                    (f) 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



73









 




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 in the First Lien Credit Agreement or, after Discharge of First
Lien Obligations, 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 First 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;



                    (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;



                    (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 6.7;



74









 





                    (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 6.7;



                    (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. 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;



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                    (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 $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 2.11(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
2.11(c) hereof or used to prepay, redeem, retire or purchase Senior Notes as provided herein);



                    (f) sale-leaseback transactions permitted by Section 6.9;



                    (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 6.9(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 2.11(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



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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
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.




               6.8. 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 6.7 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.



               6.9. 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 6.7(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).



               6.10. 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



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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 directors’ indemnification and insurance in the
ordinary course of business to the extent permitted by applicable law; (e) transactions described
in Schedule 6.10; (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).




               6.11. 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.



               6.12. 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.



               6.13. 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 2.11(c) (provided the proceeds of such issuance are applied in accordance
with, and to the extent required by, Section 2.11(c)).



               6.14. Limitation on Voluntary Payments and Amendments or Waivers of the First Lien Credit
Agreement. 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 material
rights under the First Lien Credit Agreement or the other First Lien Credit Documents after the
Closing Date that is prohibited under Section 5.3 of the Intercreditor



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Agreement without in each
case obtaining the prior written consent of Requisite Lenders to such amendment, restatement,
supplement or other modification or waiver.




               6.15. 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



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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



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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 and with 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; 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, 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 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 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 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



81









 




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 or under 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.



               7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations
shall have been indefeasibly paid in full, 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,



82









 




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, 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. Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any
Guaranteed Obligations.



               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 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, as the case
may be. No Beneficiary shall have any obligation to disclose or discuss



83









 




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 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
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,



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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 or (ii) 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; provided, that with respect to
any failure to pay or breach or default under the First Lien Credit Agreement, such event shall
only constitute an Event of Default hereunder if there is an Event of Default (as defined in the
First Lien Credit Agreement) under subsection 8.1(a) of the First Lien Credit Agreement, if the
First Lien Credit Facilities shall have been accelerated or if 60 days have passed since the date
of any other Event of Default under the First Lien Credit Agreement and such Event of Default has
not been cured or waived during such period; or



                    (c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply
with any term or condition contained in Section 2.3, 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



                    (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



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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



                    (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



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                    (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, subject to the Intercreditor Agreement, (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) 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 are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and
accrued interest on the Loans and (II) all other Obligations; and (B) Administrative Agent may
cause Collateral Agent to enforce any and all Liens and security interests created pursuant to
Collateral Documents.




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     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. CapitalSource is hereby appointed Administrative Agent hereunder and
under the other Credit Documents and each Lender hereby authorizes CapitalSource to act as
Administrative Agent in accordance with the terms hereof and the other Credit Documents.
CapitalSource is hereby appointed Collateral Agent hereunder and under the other Credit Documents
and each Lender hereby authorizes CapitalSource 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. Syndication 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, GSCP, in its capacity as Syndication
Agent, shall have no 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 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. Administrative Agent hereby agrees that it shall
(i) furnish to GSCP, in its capacity as Arranger, upon GSCP’s request, a copy of the Register, (ii)
cooperate with GSCP in granting access to any Lenders (or potential lenders) who GSCP identifies to
the Platform and (iii) maintain GSCP’s access to the Platform, provided however, that
Administrative Agent shall not be obligated to items (i) and (iii) above in
the event GSCP is administrative agent with respect to the First Lien Credit Agreement and
Administrative Agent believes in good faith that GSCP’s access to such information would be adverse
to the Lenders.



               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



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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.




                    (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).



                    (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 facility 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



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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, 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 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, an Assignment Agreement
or a Joinder Agreement and funding its Loan on the Closing Date, or by the funding of any New Term
Loans, as the case may be, 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 or as of the date of funding of
such New Term Loans.



               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,



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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 and Collateral Agent . 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
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.



               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



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Parties with
respect to the Guaranty, the Collateral and the Collateral Documents. 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 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.



               9.9. Intercreditor Agreement.



          Each Lender hereby consents to and approves each and all of the provisions of the
Intercreditor Agreement, 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, Collateral Agent or Administrative Agent, 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



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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 hereunder may be delivered or
furnished by 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
pursuant to Section 2 if such Lender 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



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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 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 expenses of the Agents,
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 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,



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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 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. Subject to the terms of the Intercreditor Agreement, 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 and under the other Credit Documents, including all claims of any nature or
description arising out of or connected hereto 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 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.



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                 (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 such amendment,
modification or supplement does not adversely affect the rights of any Lender.



                 (b) Affected Lenders’ Consent. Without the written consent of each 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) 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 2.7) or any fee
or any premium payable hereunder;




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




               (v) reduce the principal amount of any Loan;




               (vi) amend, modify, terminate or waive any provision of 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;




               (vii) 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 Commitments and the Loans are included on
the Closing Date;




               (viii) 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;




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




               (x) 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 consent of the Collateral Agent.



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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) alter the required application of any repayments or prepayments as between Classes
pursuant to Section 2.15 without the written consent of Lenders holding more than 50% of the
aggregate Loan Exposure of all Lenders or New Term Loan 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; or (ii) 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.



                    (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 Loans
listed therein for all purposes hereof, and no assignment or transfer of any such 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 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 Loans.



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                 (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 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):




               (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;
provided, further each such assignment pursuant to this Section 10.6(c)(ii)
shall be in an aggregate amount of not less than $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 Loans or New Term Loans of a Series of the assigning Lender).



                 (d) Mechanics. Assignments and assumptions of Loans 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
2.17(c).



                 (e) Representations and Warranties of Assignee. Each Lender, upon execution and
delivery hereof or upon succeeding to an interest in the 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 Loans; and (iii) it will make or invest in its Loans for its own account in the
ordinary course and without a view to distribution of such 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 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 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, such assigning Lender shall continue to be entitled



98









 




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); and (iii) 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 outstanding Loans of the assignee
and/or the assigning Lender.




                 (g) 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 or Note 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 2.15(c), 2.16 and 2.17 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 2.16 or 2.17 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 2.17 unless Borrower is notified of the
participation sold to such participant and such participant agrees, for the benefit of
Borrower, to comply with Section 2.17 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 participation. To the extent permitted by law, each
participant also shall be entitled to



99









 






the benefits of Section 10.4 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.14 as though it were
a Lender.



                 (h) 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 Loans) 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 2.15(c), 2.16, 2.17, 10.2, 10.3 and 10.4 and
the agreements of Lenders set forth in Sections 2.14, 9.3(b) and 9.6 shall survive the payment of
the Loans.



               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
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. Any forbearance or failure to
exercise, and any delay in exercising, any right, power or remedy



100









 




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.



               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



101









 




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 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.



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               10.17. Confidentiality. Each Agent, and each Lender 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 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



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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 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



104









 




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]





105









 





     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 Syndication Agent and a
Lender

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 



 









 






	 	 	 	 	 
	 	CAPITALSOURCE  FINANCE  LLC,

as Administrative Agent, Collateral Agent and a
Lender


 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: