Exhibit 10.55



 




Exhibit 10.55












CREDIT AGREEMENT




Dated as of August 11, 2003




among




THE GYMBOREE CORPORATION, and




Certain Additional Borrowers Named Herein,




collectively, as the Borrowers,




and




BANK OF AMERICA, N.A.,




as the Lender














 







 



TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	ARTICLE I.	 	DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 	1.01	 	 	Defined Terms
	 	 	1	 
	 	1.02	 	 	Other Interpretive Provisions
	 	 	18	 
	 	1.03	 	 	Accounting Terms
	 	 	19	 
	 	1.04	 	 	Rounding
	 	 	19	 
	 	1.05	 	 	References to Agreements and Laws
	 	 	19	 
	 	1.06	 	 	Times of Day
	 	 	19	 
	 	1.07	 	 	Letter of Credit Amounts
	 	 	19	 
	 	1.08	 	 	Additional Alternative Currencies
	 	 	20	 
	 	1.09	 	 	Redenomination of Certain Alternative Currencies
	 	 	20	 
	ARTICLE II.	 	THE COMMITMENT AND CREDIT EXTENSIONS
	 	 	20	 
	 	2.01	 	 	Loans
	 	 	20	 
	 	2.02	 	 	Borrowings, Conversions and Continuations of Loans
	 	 	20	 
	 	2.03	 	 	Letters of Credit
	 	 	22	 
	 	2.04	 	 	Prepayments
	 	 	27	 
	 	2.05	 	 	Termination or Reduction of Commitment
	 	 	28	 
	 	2.06	 	 	Repayment of Loans
	 	 	28	 
	 	2.07	 	 	Interest
	 	 	28	 
	 	2.08	 	 	Fees
	 	 	29	 
	 	2.09	 	 	Computation of Interest and Fees
	 	 	29	 
	 	2.10	 	 	Evidence of Debt
	 	 	30	 
	 	2.11	 	 	Payments Generally
	 	 	30	 
	 	2.12	 	 	Option to Increase Commitment
	 	 	30	 
	ARTICLE III.	 	TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	31	 
	 	3.01	 	 	Taxes
	 	 	31	 
	 	3.02	 	 	Illegality
	 	 	32	 
	 	3.03	 	 	Inability to Determine Eurodollar Rate
	 	 	32	 
	 	3.04	 	 	Increased Cost and Reduced Return; Capital Adequacy
	 	 	32	 
	 	3.05	 	 	Funding Losses
	 	 	33	 
	 	3.06	 	 	Requests for Compensation
	 	 	33	 
	 	3.07	 	 	Survival
	 	 	34	 
	ARTICLE IV.	 	CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	34	 
	 	4.01	 	 	Conditions of Initial Credit Extension
	 	 	34	 
	 	4.02	 	 	Conditions to all Credit Extensions
	 	 	35	 
	ARTICLE V.	 	REPRESENTATIONS AND WARRANTIES
	 	 	36	 
	 	5.01	 	 	Existence, Qualification and Power; Compliance with Laws
	 	 	36	 
	 	5.02	 	 	Authorization; No Contravention
	 	 	36	 
	 	5.03	 	 	Governmental Authorization; Other Consents
	 	 	36	 
	 	5.04	 	 	Binding Effect
	 	 	36	 
	 	5.05	 	 	Financial Statements; No Material Adverse Effect
	 	 	36	 
	 	5.06	 	 	Litigation
	 	 	37	 



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	 	5.07	 	 	No Default
	 	 	37	 
	 	5.08	 	 	Ownership of Property; Liens
	 	 	37	 
	 	5.09	 	 	Existing Credit Agreement
	 	 	37	 
	 	5.10	 	 	Environmental Compliance
	 	 	38	 
	 	5.11	 	 	Insurance
	 	 	38	 
	 	5.12	 	 	Taxes
	 	 	38	 
	 	5.13	 	 	ERISA Compliance
	 	 	38	 
	 	5.14	 	 	Subsidiaries
	 	 	39	 
	 	5.15	 	 	Margin Regulations; Investment Company Act; Public
Utility Holding Company Act
	 	 	39	 
	 	5.16	 	 	Disclosure
	 	 	39	 
	 	5.17	 	 	Compliance with Laws
	 	 	40	 
	 	5.18	 	 	Tax Shelter Regulations
	 	 	40	 
	 	5.19	 	 	Intellectual Property; Licenses, Etc
	 	 	40	 
	ARTICLE VI.	 	AFFIRMATIVE COVENANTS
	 	 	40	 
	 	6.01	 	 	Financial Statements
	 	 	41	 
	 	6.02	 	 	Certificates; Other Information
	 	 	41	 
	 	6.03	 	 	Notices
	 	 	42	 
	 	6.04	 	 	Payment of Obligations
	 	 	43	 
	 	6.05	 	 	Preservation of Existence, Etc
	 	 	43	 
	 	6.06	 	 	Maintenance of Properties
	 	 	43	 
	 	6.07	 	 	Maintenance of Insurance
	 	 	43	 
	 	6.08	 	 	Compliance with Laws
	 	 	44	 
	 	6.09	 	 	Books and Records
	 	 	44	 
	 	6.10	 	 	Inspection Rights
	 	 	44	 
	 	6.11	 	 	Use of Proceeds
	 	 	44	 
	 	6.12	 	 	Additional Guarantors
	 	 	44	 
	 	6.13	 	 	Existing Credit Agreement
	 	 	44	 
	ARTICLE VII.	 	NEGATIVE COVENANTS
	 	 	45	 
	 	7.01	 	 	Liens
	 	 	45	 
	 	7.02	 	 	Investments
	 	 	46	 
	 	7.03	 	 	Indebtedness
	 	 	47	 
	 	7.04	 	 	Fundamental Changes
	 	 	48	 
	 	7.05	 	 	Dispositions
	 	 	48	 
	 	7.06	 	 	Restricted Payments
	 	 	49	 
	 	7.07	 	 	Change in Nature of Business
	 	 	49	 
	 	7.08	 	 	Transactions with Affiliates
	 	 	49	 
	 	7.09	 	 	Burdensome Agreements
	 	 	49	 
	 	7.10	 	 	Use of Proceeds
	 	 	50	 
	 	7.11	 	 	Financial Covenants
	 	 	50	 
	 	7.12	 	 	Capital Expenditures
	 	 	50	 
	 	7.13	 	 	Inoperative Subsidiaries
	 	 	50	 
	ARTICLE VIII.	 	EVENTS OF DEFAULT AND REMEDIES
	 	 	50	 
	 	8.01	 	 	Events of Default
	 	 	50	 
	 	8.02	 	 	Remedies Upon Event of Default
	 	 	52	 



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	 	8.03	 	 	Application of Funds
	 	 	53	 
	ARTICLE IX.	 	MISCELLANEOUS
	 	 	53	 
	 	9.01	 	 	Amendments; Etc
	 	 	53	 
	 	9.02	 	 	Notices and Other Communications; Facsimile Copies
	 	 	53	 
	 	9.03	 	 	No Waiver; Cumulative Remedies
	 	 	54	 
	 	9.04	 	 	Attorney Costs, Expenses and Taxes
	 	 	54	 
	 	9.05	 	 	Indemnification by the Borrowers
	 	 	55	 
	 	9.06	 	 	Payments Set Aside
	 	 	55	 
	 	9.07	 	 	Successors and Assigns
	 	 	56	 
	 	9.08	 	 	Confidentiality
	 	 	58	 
	 	9.09	 	 	Set-off
	 	 	58	 
	 	9.10	 	 	Interest Rate Limitation
	 	 	59	 
	 	9.11	 	 	Automatic Debits of Fees
	 	 	59	 
	 	9.12	 	 	Joint and Several Liability
	 	 	59	 
	 	9.13	 	 	Contribution and Indemnification among the Borrowers
	 	 	60	 
	 	9.14	 	 	Agency of the Company for each other Borrower
	 	 	61	 
	 	9.15	 	 	Counterparts
	 	 	61	 
	 	9.16	 	 	Integration
	 	 	61	 
	 	9.17	 	 	Survival of Representations and Warranties
	 	 	61	 
	 	9.18	 	 	Severability
	 	 	61	 
	 	9.19	 	 	Governing Law
	 	 	62	 
	 	9.20	 	 	Waiver of Right to Trial by Jury
	 	 	62	 
	 	9.21	 	 	Time of the Essence
	 	 	62	 
	 	9.22	 	 	Entire Agreement
	 	 	62	 
	SIGNATURES
	SCHEDULES	 	 
	 	 	 	 
	 	1.01	(e)	 	Existing Letters of Credit
	 	 	 	 
	 	1.01	(g)	 	Guarantors
	 	 	 	 
	 	5.05	 	 	Supplement to Interim Financial Statements
	 	 	 	 
	 	5.06	 	 	Litigation
	 	 	 	 
	 	5.09	 	 	Existing Credit Agreement Lien Filings
	 	 	 	 
	 	5.10	 	 	Environmental Matters
	 	 	 	 
	 	5.14	 	 	Subsidiaries and Other Equity Investments
	 	 	 	 
	 	5.19	 	 	Intellectual Property Matters
	 	 	 	 
	 	7.01	 	 	Existing Liens
	 	 	 	 
	 	7.02	 	 	Existing Investments
	 	 	 	 
	 	7.03	 	 	Existing Indebtedness
	 	 	 	 
	 	9.02	 	 	Lending Office, Addresses for Notices
	 	 	 	 



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	EXHIBITS
	 	 	 	 	Form of
	 	 	 	 
	 	A	 	 	Loan Notice
	 	 	 	 
	 	B	 	 	Note
	 	 	 	 
	 	C	 	 	Compliance Certificate
	 	 	 	 
	 	D	 	 	Guaranty
	 	 	 	 
	 	E	 	 	Opinion Matters
	 	 	 	 
	 	F	 	 	Request To Increase Commitment
	 	 	 	 



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CREDIT AGREEMENT



     This CREDIT AGREEMENT (“Agreement”) is entered into as of August 11, 2003
by and among THE GYMBOREE CORPORATION, a Delaware corporation (the “Company”)
and each Borrower named in the signature pages hereof (together with the
Company, each a “Borrower” and, collectively, the “Borrowers”) and BANK OF
AMERICA, N.A. (the “Lender”).



     WHEREAS, the Company has requested the Lender to make available to the
Borrowers a revolving line of credit for loans and letters of credit in an
amount not to exceed in the aggregate of $60,000,000 (subject to an option to
increase the amount by a further $10,000,000 on the terms and conditions
herein) and which extensions of credit the Borrowers will use for their working
capital needs, capital expenditures and general business purposes.



     WHEREAS, the Lender has agreed to make available to the Borrowers a
revolving line of credit upon the terms and conditions set forth in this
Agreement.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Lender and the Borrowers hereto covenant and agree as
follows:




ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS



     1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:



     “Accommodation Payment” has the meaning specified in Section 9.12.



     “Acquisition” has the meaning specified in Section 7.02(h).



     “Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the
generality of the foregoing, a Person shall be deemed to be Controlled by
another Person if such other Person possesses, directly or indirectly, power to
vote 10% or more of the securities having ordinary voting power for the
election of directors, managing general partners or the equivalent.



     “Agreement” means this Credit Agreement.



     “Allocable Amount” has the meaning specified in Section 9.12.



     “Alternative Currency” means each of Euro, Sterling and Canadian Dollars,
and each other currency (other than Dollars) which is approved by the Lender in
accordance with Section 1.08.



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     “Applicable Rate” means the following percentages per annum, based upon
the Consolidated Adjusted Leverage Ratio as set forth in the most recent
Compliance Certificate received by the Lender pursuant to Section 6.02(a):




Applicable Rate




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Eurodollar Rate Loans/	 	 	 	 
	 	 	 	 	 	 	 	 	Letters of Credit	 	Base Rate Loans
	Pricing Level	 	Consolidated Adjusted Leverage Ratio	 	Unused Line Fee (%)	 	(%)	 	(%)
	
	 	
	 	
	 	
	 	

	1	 	
> 2.50:1.00 but ≤ 3.00:1.00
	 	 	0.500	 	 	 	1.50	 	 	 	0.25	 
	2	 	
> 2.25:1.00 but ≤ 2.50:1.00
	 	 	0.375	 	 	 	1.25	 	 	 	0.00	 
	3	 	
> 2.00:1.00 but ≤ 2.25:1.00
	 	 	0.375	 	 	 	1.00	 	 	 	0.00	 
	4	 	
≤ 2.00:1.00
	 	 	0.250	 	 	 	0.75	 	 	 	0.00	 



     Any increase or decrease in the Applicable Rate resulting from a change in
the Consolidated Adjusted Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(a); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, then
Pricing Level 1 shall apply as of the first Business Day after the date on
which such Compliance Certificate was required to have been delivered. The
Applicable Rate in effect from the Closing Date through the date the Company
delivers its Compliance Certificate in respect of its fiscal quarter ending
nearest July 31, 2003 pursuant to Section 6.02(a) shall be determined based
upon Pricing Level 2, subject to the preceding proviso.



     “Applicable Time” means, with respect to any borrowings and payments in
any Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by the Lender to be necessary for
timely settlement on the relevant date in accordance with normal banking
procedures in the place of payment.



     “Approved Fund” has the meaning specified in Section 9.07(f).



     “Attorney Costs” means and includes all fees, expenses and disbursements
of any law firm or other external counsel and, without duplication, the
allocated cost of internal legal services and all expenses and disbursements of
internal counsel.



     “Attributable Indebtedness” means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capital Lease.



     “Audit Firm” has the meaning specified in Section 6.01(a).



     “Audited Financial Statements” means the audited consolidated balance
sheet of the Company and its Subsidiaries for the fiscal year ended February 1,
2003, and the related


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 consolidated statements of income or operations, shareholders’ equity and
cash flows for such fiscal year of the Company and its Subsidiaries, including
the notes thereto.



     “Auto-Renewal Letter of Credit” has the meaning specified in Section
2.03(b)(iii).



     “Availability Period” means the period from and including the Closing Date
to the Maturity Date.



     “Base Rate” means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by the
Lender as its “prime rate.” The “prime rate” is a rate set by the Lender based
upon various factors including the Lender’s costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by the Lender shall take effect at the
opening of business on the day specified in the public announcement of such
change.



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



     “Benchmark Date” means the last day of the fiscal quarter of the Company
ended nearest May 3, 2003.



     “Borrower” has the meaning specified in the introductory paragraph hereto.



     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in
fact closed in, the state where the Lending Office is located and:





		
	 	     (a) if such day relates to any Eurodollar Rate Loan, means any such
day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market;
	 
	 	     (b) if such day relates to an L/C Credit Extension with respect to
any Letter of Credit denominated in Euro, means a TARGET Day; and
	 
	 	     (c) if such day relates to an L/C Credit Extension with respect to a
Letter of Credit denominated in a currency other than Dollars or Euro,
means any such day on which banks are open for foreign exchange business
in the principal financial center of the country of such currency.



     “Canadian Dollars” or “C$” means the lawful currency of Canada.



     “Capital Leases” means any Capital Lease or sublease that is required by
GAAP to be capitalized on a balance sheet.



     “Cash Collateralize” has the meaning specified in Section 2.03(f).



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     “Change of Control” means, with respect to any Person, an event or series
of events by which:





		
	 	     (a) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person
or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to
acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 25% or more of the equity securities of such Person
entitled to vote for members of the board of directors or equivalent
governing body of such Person on a fully-diluted basis (and taking into
account all such securities that such person or group has the right to
acquire pursuant to any option right); or
	 
	 	     (b) during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of
such Person cease to be composed of individuals (i) who were members of
that board or equivalent governing body on the first day of such period,
(ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body
was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the
case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or
more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of
directors).



     “Closing Date” means the first date all the conditions precedent in
Section 4.01 are satisfied or waived by the Lender.



     “Code” means the Internal Revenue Code of 1986.



     “Commercial L/C Fee Letter” means the letter agreement dated as of August
11, 2003 between the Company and the Lender.



     “Commitment” means the obligation of the Lender to make Loans and other
Credit Extensions hereunder in an aggregate principal amount at any one time
not to exceed: $60,000,000, or, as such amount may be adjusted from time to
time in accordance with Section 2.05 or Section 2.12 of this Agreement.



     “Company” has the meaning specified in the introductory paragraph hereto.



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



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     “Consolidated EBITDA” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net
Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) Consolidated Interest Charges,
(b) the provision for federal, state, local and foreign income taxes payable by
the Company and its Subsidiaries, and (c) the amount of depreciation and
amortization expense deducted in determining such Consolidated Net Income.



     “Consolidated Adjusted EBITDAR” means, for any period, Consolidated EBITDA
plus Lease Expenses.



     “Consolidated Adjusted Leverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness as of such
date plus six times the amount of Lease Expenses for the Subject Period to (b)
Consolidated Adjusted EBITDAR for the Subject Period.



     “Consolidated Asset Coverage Ratio” means, as of any date of
determination, in respect of the Company and its Subsidiaries on a consolidated
basis, the ratio of (a) the sum of cash, marketable securities, trade accounts
receivable arising in the ordinary course of business, and inventory as of that
date determined in accordance with GAAP, consistently applied, to (b) as of
that date, the sum of current liabilities determined in accordance with GAAP,
consistently applied, plus, without duplication, all Outstanding Amounts.



     “Consolidated Funded Indebtedness” means, as of any date of determination,
for the Company and its Subsidiaries on a consolidated basis, the sum of (a)
the outstanding principal amount of all obligations, whether current or
long-term, for borrowed money (including Obligations hereunder) and all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all fixed and
non-contingent direct obligations arising under standby letters of credit,
bankers’ acceptances, bank guaranties, surety bonds and similar instruments
(other than commercial letters of credit), (d) all obligations in respect of
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business), (e) Attributable Indebtedness in
respect of Capital Leases, (f) without duplication, all Guarantees with respect
to outstanding Indebtedness of the types specified in clauses (a) through (e)
above of Persons other than the Company or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Company or a Subsidiary
is a general partner or joint venturer, unless such Indebtedness is expressly
made non-recourse to the Company or such Subsidiary.



     “Consolidated Interest Charges” means, for any period, for the Company and
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Company and
its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, consistently
applied, and (b) the portion of rent expense of the Company and its
Subsidiaries with respect to such period under Capital Leases that is treated
as interest in accordance with GAAP, consistently applied.





-5-









 



     “Consolidated Net Income” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the net income of the Company and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period.



     “Consolidated Tangible Net Worth” means, as of any date of determination,
for the Company and its Subsidiaries on a consolidated basis, Shareholders’
Equity of the Company and its Subsidiaries on that date minus the Intangible
Assets of the Company and its Subsidiaries on that date.



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



     “Control” has the meaning specified in the definition of “Affiliate.”



     “Credit Extension” means each of the following: (a) a borrowing of a Loan
and (b) an L/C Credit Extension.



     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.



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



     “Default Rate” means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including
any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in
each case to the fullest extent permitted by applicable Laws.



     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.



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



     “Dollar Equivalent” means, at any time (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars, as determined by the Lender at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
Dollars with such Alternative Currency.



     “Domestic Subsidiary” means any Subsidiary of the Company that is
organized under the laws of any political subdivision of the United States.



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     “Eligible Assignee” has the meaning specified in Section 9.07(f).



     “EMU” means the economic and monetary union in accordance with the Treaty
of Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty
of 1992 and the Amsterdam Treaty of 1998, as amended from time to time.



     “EMU Legislation” means the legislative measure of the European Council
for the introduction of, changeover to or operation of a single or unified
European currency (whether known as the “euro” or otherwise).



     “Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.



     “ERISA” means the Employee Retirement Income Security Act of 1974.



     “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with any Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 400 1(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Sections 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower
or any ERISA Affiliate.



     “Euro” and “EUR” mean the lawful currency of the Participating Member
States introduced in accordance with EMU Legislation.



     “Eurodollar Base Rate” has the meaning specified in the definition of
Eurodollar Rate.



     “Eurodollar Rate” means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Lender pursuant to the
following formula:




	 	 	 
	Eurodollar Rate =	 	
Eurodollar Base Rate
	 	 	


	 	 	
1.00 — Eurodollar Reserve Percentage



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     Where,





		
	 	     “Eurodollar Base Rate” means, for such Interest Period:
	 
	 	     (a) the rate per annum equal to the rate determined by the Lender to
be the offered rate that appears on the page of the Telerate screen (or
any successor thereto) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period, or
	 
	 	     (b) if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the Lender
to be the offered rate on such other page or other service that displays
an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as of
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period, or
	 
	 	     (c) if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Lender as the rate of
interest at which deposits in Dollars for delivery on the first day of
such Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted and with a term
equivalent to such Interest Period would be offered by the Lender’s
London Branch to major banks in the London interbank eurodollar market at
their request at approximately 4:00 p.m. (London time) two Business Days
prior to the first day of such Interest Period; and
	 
	 	     “Eurodollar Reserve Percentage” means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, carried
out to five decimal places) in effect on such day applicable to the
Lender under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as “Eurocurrency
liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate
Loan shall be adjusted automatically as of the effective date of any
change in the Eurodollar Reserve Percentage.



     “Eurodollar Rate Loan” means a Loan that bears interest based on the
Eurodollar Rate.



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



     “Existing Credit Agreement” means that certain Credit Agreement dated as
of August 24, 2000 among the Company, the additional Borrowers named therein,
Fleet Retail Finance Inc. (as administrative agent), Back Bay Capital Funding
LLC and the additional financial institutions named therein.



     “Existing Letters of Credit” means the letter(s) of credit listed in
Schedule 1.01(e) attached hereto.



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     “Federal Funds Rate” means, for any day, the rate per annum 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 that (a) 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 (b) 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 (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender
on such day on such transactions as determined by the Lender.



     “Fleet Takeout SLC” means the Standby Letter of Credit issued by the
Lender at the Closing Date to Fleet Retail Finance Inc. in an amount equal to
105% of the aggregate undrawn face amounts of all letters of credit outstanding
as of the Closing Date under the Existing Credit Agreement.



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



     “Fund” has the meaning specified in Section 9.07(f).



     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as maybe approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination.



     “Governmental Authority” means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.



     “Guarantors” mean, initially, each of the Guarantors listed in Schedule
1.01(g) attached hereto, and from time to time, each such Guarantor, together
with any Person who, following the Closing Date, executes and delivers a
Guaranty pursuant to Section 6.12.



     “Guaranty” means the Guaranty made by each Guarantor in favor of the
Lender, substantially in the form of Exhibit D.



     “Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working

-9-







 




capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee
in respect of such Indebtedness or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing
any Indebtedness or other obligation of any other Person, whether or not such
Indebtedness or other obligation is assumed by such Person. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.



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



     “Honor Date” has the meaning specified in Section 2.03(c)(i).



     “ICC” has the meaning specified in Section 2.03(g).



     “Increase Effective Date” has the meaning specified in Section 2.12.



     “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:





		
	 	     (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;
	 
	 	     (b) all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;
	 
	 	     (c) net obligations of such Person under any Swap Contract;
	 
	 	     (d) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the
ordinary course of business);
	 
	 	     (e) indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse;
	 
	 	     (f) Capital Leases and Synthetic Lease Obligations; and



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	 	     (g) all Guarantees of such Person in respect of any of the
foregoing.



For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any Capital Lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.



     “Indemnified Liabilities” has the meaning specified in Section 9.05.



     “Indemnitees” has the meaning specified in Section 9.05.



     “Information” has the meaning specified in Section 9.08.



     “Inoperative Subsidiary” means each of Gymboree Japan K.K., a Japanese
corporation, Gymboree Industries Holdings Limited, an Irish corporation, GOFI96
Limited, an Irish corporation, and Gymboree U. K. Limited, a company
incorporated under the laws of England and Wales.



     “Intangible Assets” means assets that are considered to be intangible
assets under GAAP, consistently applied.



     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the respective dates that fall every three
months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.



     “Interest Period” means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to
or continued as a Eurodollar Rate Loan and ending on the date one, two, three
or six months thereafter, as selected by the Borrower in its Loan Notice;
provided that:





		
	 	     (i) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day;
	 
	 	     (ii) 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 end on the last Business Day of the calendar month at the
end of such Interest Period; and
	 
	 	     (iii) no Interest Period shall extend beyond the Maturity Date.



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     “Investment” means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.



     “IP Rights” has the meaning specified in Section 5.19.



     “IRS” means the United States Internal Revenue Service.



     “Laws” means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.



     “L/C Availability Termination Date” means the day that is seven days prior
to the Scheduled Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).



     “L/C Credit Extension” means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof or the renewal or
increase of the amount thereof.



     “L/C Issuer” has the meaning specified in Section 2.03(a).



     “L/C Obligations” means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus the aggregate of all
unreimbursed drawings under all Letters of Credit.



     “Lease Expenses” means, for any period, all payments of the Company and
its Subsidiaries in respect of Minimum Rent and Percentage Rent, under any and
all leases that are not Capital Leases.



     “Lender” has the meaning specified in the introductory paragraph hereto.



     “Lender Party” has the meaning specified in Section 9.11.



     “Lending Office” means the office or offices of the Lender described as
such on Schedule 9.02, or such other office or offices as the Lender may from
time to time notify the Borrower.



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     “Letter of Credit” means any letter of credit issued hereunder and shall
include the Existing Letters of Credit. A Letter of Credit may be a commercial
letter of credit or a Standby Letter of Credit.



     “Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in
use by the Lender.



     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic
effect as any of the foregoing).



     “Loan” has the meaning specified in Section 2.01.



     “Loan Documents” means this Agreement, any Note, the Guaranties, the Loan
Notices, the Letters of Credit, applications for, or reimbursement agreements
or other documents or certificates executed by any Borrower in favor of the
Lender relating to the Loans or the Letters of Credit, and any certificates
delivered by or on behalf of any Loan Party pursuant hereto.



     “Loan Notice” means a notice of (a) a borrowing of a Loan, (b) a
conversion of a Loan from one Type to the other, or (c) a continuation of a
Eurodollar Rate Loan as the same Type, pursuant to Section 2.02(a), which, if
in writing, shall be substantially in the form of Exhibit A.



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



     “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual or contingent), condition (financial or otherwise) or prospects of the
Company or the Company and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under
any Loan Document to which it is a party; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against any Loan Party
of any Loan Document to which it is a party.



     “Maturity Date” means (a) the Scheduled Maturity Date, or (b) such earlier
date upon which the Commitment may be terminated in accordance with the terms
hereof.



     “Material Subsidiary” means, at any time, any Subsidiary that meets either
of the following conditions at such time: (a) such Subsidiary’s consolidated
total revenues for the period of the immediately preceding fiscal year is equal
to or greater than 5% of the consolidated total revenues of the Company and its
Subsidiaries for such period, determined in accordance with GAAP, consistently
applied, in each case as reflected in the most recent annual financial
statements required to be delivered pursuant to Section 6.01(d), or (b) such
Subsidiary’s total consolidated assets, as of the last day of the immediately
preceding fiscal year, are equal to or greater than 5% of the consolidated
total assets of the Company and its Subsidiaries as of such date, determined in
accordance with GAAP, consistently applied, in each case as reflected in the
most recent annual financial statements of the Company required to be delivered
pursuant to Section 6.01(d).



-13-







 


     “Maximum Rate” has the meaning specified in Section 9.10.



     “Minimum Rent” means, in respect of any lease, any obligation to pay
regularly-scheduled, periodic rent or any prepayment or deposit in respect of
rent, other than Percentage Rent.



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



     “Net Cash Proceeds” means:



     (a)  with respect to the Disposition of any property by the Company or any
Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such Disposition (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) over (ii) the sum of (A) the
principal amount of any Indebtedness that is secured by such asset and that is
required to be repaid in connection with the Disposition thereof (other than
Indebtedness under the Loan Documents), (B) the out-of-pocket expenses incurred
by the Company or any Subsidiary in connection with such Disposition, and (C)
income taxes reasonably estimated to be actually payable within two years of
the date of the relevant Disposition as a result of any gain recognized in
connection therewith; and



     (b)  with respect to the Disposition of any capital stock or other equity
interest by any Borrower, the excess of (i) the sum of the cash and cash
equivalents received in connection with such sale over (ii) the underwriting
discounts and commissions, and other out-of-pocket expenses, incurred by such
Borrower in connection with such Disposition.



     “Note” means a promissory note made by any Borrower in favor of the Lender
evidencing Loans made by the Lender, substantially in the form of Exhibit B.



     “Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest
and fees are allowed claims in such proceeding.



     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or

-14-







 




organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.



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



     “Outstanding Amount” means (i) with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans occurring on such date; and
(ii) with respect to any L/C Obligations on any date, the Dollar Equivalent
amount of such L/C Obligations on such date after giving effect to any L/C
Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or
any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.



     “Participant” has the meaning specified in Section 9.07(c).



     “Participating Member State” means each state so described in any EMU
Legislation.



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.



     “Percentage Rent” means, in respect of any lease, any obligation to pay
rental amounts that vary in accordance with revenue, sales, traffic or other
relevant factor.



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



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



     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30-day notice period has been waived.



     “Request for Credit Extension” means (a) with respect to a borrowing,
conversion or continuation of a Loan, a Loan Notice, and (b) with respect to an
L/C Credit Extension, a Letter of Credit Application.



     “Responsible Officer” means the chief executive officer, president, chief
financial officer, controller or treasury director of a Loan Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been

-15-







 




authorized by all necessary corporate, partnership and/or other action on
the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.



     “Revaluation Date” means each of the following: (a) each date of issuance
of a Letter of Credit denominated in an Alternative Currency, (b) each date of
an amendment of any such Letter of Credit having the effect of increasing the
amount thereof, and (c) such additional dates as the Lender shall specify.



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



     “Scheduled Maturity Date” means August 11, 2006.



     “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.



     “Shareholders’ Equity” means, as of any date of determination,
consolidated shareholders’ equity of the Company and its Subsidiaries as of
that date determined in accordance with GAAP, consistently applied.



     “Specified Level” means (a) in relation to Gymboree Japan KK, the Dollar
Equivalent of YEN69,000,000, (b) in relation to Gymboree Industries Holdings
Limited, the Dollar Equivalent of EUR26,000, (c) in relation to GOF196 Limited,
the Dollar Equivalent of EUR370,000, and (d) in relation to Gymboree U.K.
Limited, the Dollar Equivalent of £935,000.



     “Spot Rate” for a currency means the rate quoted by the Lender as the
spot-rate for the purchase by the Lender of such currency with another currency
through its principal foreign exchange trading office at approximately 11:00
a.m., on the date two Business Days prior to the date as of which the foreign
exchange computation is made.



     “Standby Letter of Credit” means any standby letter of credit and, in
respect of instruments issued outside of the United States, any similar
undertaking of the Person issuing such instrument in form and substance
satisfactory to the Lender.



     “Standby Letter of Credit Sublimit” means, at any time, an amount equal to
$10,000,000 plus the amount available at such time to be drawn under the Fleet
Takeout SLC, as such amount may be reduced pursuant to Section 2.05. The
Standby Letter of Credit Sublimit is part of, and not in addition to, the
Commitment.



     “Standby L/C Obligations” means, at any time, the aggregate L/C
Obligations in respect of Standby Letters of Credit at such time.





-16-









 



     “Subject Period” means, as of any date of determination, the period of
four consecutive fiscal quarters most recently ended on or before such date.



     “Sterling” or “£” means the lawful currency of the United Kingdom.



     “Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of the Company.



     “Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.



     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include the Lender or any
Affiliate of the Lender).



     “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).



     “TARGET Day” means any day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer (TARGET) System (or, if such clearing system
ceases to be


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operative, such other clearing (if any) determined by the Lender
to be a suitable replacement) is operating.



     “Taxes” has the meaning specified in Section 3.01(a).



     “Threshold Amount” means $2,500,000.



     “Total Outstandings” means, at any time, the aggregate Outstanding Amount
of all Loans and all L/C Obligations at such time.



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



     “UFCA” has the meaning specified in Section 9.12.



     “UFTA” has the meaning specified in Section 9.12.



     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.



     “United States” and “U.S.” mean the United States of America.



     “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).



     “Yen” means the lawful currency of Japan.



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



     (a)  The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.



     (b)  (i) The words “herein,” “hereto,” “hereof’ and “hereunder” and words
of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.



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



     (iii)  The term “including” is by way of example and not limitation.



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



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



     (d)  Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.



     1.03 Accounting Terms.



     (a)  All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied
on a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.



     (b)  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Company or the Lender shall so request, the Lender and the Company shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP, provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Company shall
provide to the Lender financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.



     1.04 Rounding. Any financial ratios required to be maintained by any
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).



     1.05 References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements
(including the Loan Documents) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto, but only to the extent that such
amendments, restatements, extensions, supplements and other modifications are
not prohibited by any Loan Document; and (b)
references to any Law shall include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such Law.



     1.06 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as
applicable).



     1.07 Letter of Credit Amounts. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of



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Credit or the Letter of Credit
Application therefor, whether or not such maximum face amount is in effect at
such time.



     1.08 Additional Alternative Currencies. The Borrowers may from time to
time request Letters of Credit be issued in a currency other than those
specifically listed in the definition of “Alternative Currency.” Any such
requests shall be made to the Lender not later than 10:00 a.m., 15 Business
Days prior to the date of the desired L/C Credit Extension. If the Lender
consents, in its discretion, to issuing Letters of Credit in such requested
currency, the Lender shall so notify the Borrowers within five Business Days
and such currency shall thereupon be deemed for all purposes to be an
Alternative Currency hereunder.



     1.09 Redenomination of Certain Alternative Currencies.



     (a)  Each obligation of any Borrower to make a payment denominated in the
national currency unit of any member state of the European Union that adopts
the Euro as its lawful currency shall be redenominated into Euro at the time of
such adoption (in accordance with the EMU Legislation). If, in relation to the
currency of any such member state, the basis of accrual of interest expressed
in this Agreement in respect of that currency shall be inconsistent with any
convention or practice in the London interbank market for the basis of accrual
of interest in respect of the Euro, such expressed basis shall be replaced by
such convention or practice with effect from the date on which such member
state adopts the Euro as its lawful currency.



     (b)  Each provision of this Agreement shall be subject to such reasonable
changes of construction as the Lender may from time to time specify to be
appropriate to reflect (i) the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro, or (ii) a change in currency of any other country and any relevant market
conventions or practices relating to such change in currency.




ARTICLE II.

THE COMMITMENT AND CREDIT EXTENSIONS



     2.01 Loans. Subject to the terms and conditions set forth herein, the
Lender agrees to make loans (each such loan, a “Loan”) to the Borrowers from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of the
Commitment; provided, however, that after giving effect to any borrowing, the
Total Outstandings shall not exceed the Commitment. Within the limits of the
Commitment, and subject to the other terms and conditions hereof, the Borrowers
may borrow under this Section 2.01, prepay under Section 2.04, and reborrow
under this Section 2.01. A Loan may be a Base Rate Loan or a Eurodollar Rate
Loan, as further provided herein.



     2.02 Borrowings, Conversions and Continuations of Loans.



     (a)  Each borrowing, each conversion of a Loan from one Type to the other,
and each continuation of a Eurodollar Rate Loan shall be made upon the
Company’s irrevocable notice to the Lender, which may be given by telephone.
Each such notice must be received by the Lender not later than 10:00 a.m. (i)
three Business Days prior to the requested date of any borrowing of, conversion
to or continuation of a Eurodollar Rate Loan or of any conversion of a
Eurodollar Rate Loan to a Base Rate Loan, and (ii) on the requested date of any
borrowing of a Base Rate


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Loan. Notwithstanding anything to the contrary
contained herein, but subject to the provisions of Section 9.02(d), any such
telephonic notice may be given by an individual who has been authorized in
writing to do so by a Responsible Officer of the Company. Each such telephonic
notice must be confirmed promptly by delivery to the Lender of a written Loan
Notice, appropriately completed and signed by a Responsible Officer of the
Company. Each borrowing of, conversion to or continuation of a Eurodollar Rate
Loan shall be in a principal amount of $250,000 or a whole multiple of $50,000
in excess thereof. Except as provided in Section 2.03(c), each borrowing of or
conversion to a Base Rate Loan shall be in a principal amount of $100,000 or a
whole multiple of $50,000 in excess thereof. Each Loan Notice (whether
telephonic or written) shall specify (i) the Borrower that the request relates
to, (ii) whether the Company is requesting a borrowing, a conversion of a Loan
from one Type to the other, or a continuation of a Eurodollar Rate Loan, (iii)
the requested date of the borrowing, conversion or continuation, as the case
may be (which shall be a Business Day), (iv) the principal amount of the Loan
to be borrowed, converted or continued, (v) the Type of Loan to be borrowed or
to which an existing Loan is to be converted, and (vi) if applicable, the
duration of the Interest Period with respect thereto. If the Company fails to
specify a Type of Loan in a Loan Notice or if the Company fails to give a
timely notice requesting a conversion or continuation, then the applicable Loan
shall be made as, or converted to, a Base Rate Loan. Any such automatic
conversion to a Base Rate Loan shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loan. If the Company requests a borrowing of, conversion to, or continuation
of a Eurodollar Rate Loan in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.



     (b)  Upon satisfaction of the applicable conditions set forth in Section
4.02 (and, if a borrowing is the initial Credit Extension, Section 4.01), the
Lender shall make the proceeds of each Loan available to the applicable
Borrower either by (i) crediting the account of the Company on the books of the
Lender with the amount of such proceeds or (ii) wire transfer of such proceeds,
in each case in accordance with instructions provided to (and reasonably
acceptable to) the Lender by the Company; provided, however, that if on the
date of the Loan Notice with respect to such borrowing is given, there are
drawings under Letters of Credit that have not been reimbursed by the
applicable Borrower, then the proceeds of such borrowing shall be applied,
first, to the payment in full of any such unreimbursed drawings, and second, to
the Company as provided above.



     (c)  Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loan may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Lender.



     (d)  The Lender shall promptly notify the Company of the interest rate
applicable to any Interest Period for a Eurodollar Rate Loan upon determination
of such interest rate. The determination of the Eurodollar Rate by the Lender
shall be conclusive in the absence of manifest error. At any time that a Base
Rate Loan is outstanding, the Lender shall notify the Company of any change in
the Lender’s prime rate used in determining the Base Rate promptly following
the public announcement of such change.



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     (e)  After giving effect to all borrowings, all conversions of Loans from
one Type to the other, and all continuations of Loans as the same Type, there
shall not be more than seven Interest Periods in effect.



     2.03 Letters of Credit.



     (a)  The Letter of Credit Commitment.





		
	 	     (i) Subject to the terms and conditions set forth herein, the Lender
agrees (A) from time to time on any Business Day during the period from
the Closing Date until the L/C Availability Termination Date, to issue or
cause one or more of its Affiliates to issue (any such issuer, “L/C
Issuer”) Letters of Credit denominated in Dollars or in one or more
Alternative Currencies for the account of any Borrower, and to amend or
renew Letters of Credit previously issued by it, in accordance with
subsection (b) below, and (B) to honor (or cause such L/C Issuer to
honor) drafts under the Letters of Credit; provided that the L/C Issuer
shall not be obligated to make any L/C Credit Extension with respect to
any Letter of Credit if as of the date of such L/C Credit Extension, (y)
the Total Outstandings would exceed the Commitment, or (z) the
Outstanding Amount of the Standby L/C Obligations would exceed the
Standby Letter of Credit Sublimit. Within the foregoing limits, and
subject to the terms and conditions hereof, the Borrowers’ ability to
obtain Letters of Credit shall be fully revolving, and accordingly the
Borrowers may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit that have expired or that have been drawn upon
and reimbursed. All Existing Letters of Credit
shall be deemed to have been issued pursuant hereto, and from and
after the Closing Date shall be subject to and governed by the terms and
conditions hereof.
	 
	 	     (ii) The Lender shall be under no obligation to issue or cause any
other L/C Issuer to issue any Letter of Credit if:




		
	 	     (A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any
Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters
of credit generally or such Letter of Credit in particular or shall
impose upon the Lender with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Lender
is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the L/C Issuer any unreimbursed
loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;
	 
	 	     (B) subject to Section 2.03(b)(iii), the expiry date of such
requested Letter of Credit would occur (y) in relation to Standby
Letters of Credit, more than 12 months after the date of issuance
or last renewal or more than 12 months after the Scheduled Maturity
Date, or (z) in relation to commercial Letters of



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	 	Credit, more than
180 days after the date of issuance or last renewal or more than 90
days after the Scheduled Maturity Date;
	 
	 	     (C) the issuance of such Letter of Credit would violate one or
more policies of the Lender;
	 
	 	     (D) such Letter of Credit is in an initial amount less than
$3,000, or is to be denominated in a currency other than Dollars or
an Alternative Currency; or
	 
	 	     (E) such Letter of Credit, if a commercial Letter of Credit,
provides for (y) time drafts having a maximum tenor in excess of
180 days, or (z) provides for time drafts having a maximum tenor
which, if such drafts were presented on the expiry date of such
Letter of Credit, would result in a maturity date that is later
than 90 days after the Scheduled Maturity Date.





		
	 	     (iii) The L/C Issuer shall be under no obligation to amend any
Letter of Credit if (A) the Lender would have no obligation at such time
to issue such Letter of Credit in its amended form under the terms
hereof, or (B) the beneficiary of such Letter of Credit does not accept
the proposed amendment to such Letter of Credit.



     (b)  Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.





		
	 	     (i) Each Letter of Credit shall be issued or amended, as the case
may be, upon the request of the applicable Borrower delivered to the
Lender in the form of a Letter of Credit Application, appropriately
completed and signed by a Responsible Officer of the applicable Borrower.
Such Letter of Credit Application must be received by the Lender (i) not
later than 10:00 a.m., at least two Business Days (or such later date and
time as the Lender may agree in a particular instance in its sole
discretion) prior to the proposed issuance date or date of amendment, as
the case may be, of any Letter of Credit denominated in Dollars, and (ii)
not later than 10:00 a.m. at least two Business Days prior to the
proposed issuance date or date of amendment, as the case may be, of any
Letter of Credit denominated in an Alternative Currency. In the case of
a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the
Lender: (A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof (C) the expiry
date thereof; (D) the name and address of the beneficiary thereof; (E)
the documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters
as the Lender or L/C Issuer may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the Lender
(A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the Lender or L/C
Issuer may require.



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	 	     (ii) Upon the Lender’s determination that the requested issuance or
amendment is permitted in accordance with the terms hereof, then, subject
to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the
applicable Borrower or enter into the applicable amendment, as the case
may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices.
	 
	 	     (iii) If the applicable Borrower so requests in any applicable
Letter of Credit Application for any Standby Letter of Credit, the Lender
may, in its sole and absolute discretion, agree to issue or cause the L/C
Issuer to issue a Standby Letter of Credit that has automatic renewal
provisions (each, an “Auto-Renewal Letter of Credit”); provided that any
such Auto-Renewal Letter of Credit must permit the Lender to prevent any
such renewal at least once in each twelve-month period (commencing with
the date of issuance of such Standby Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day in each such
twelve-month period to be agreed upon at the time such Standby Letter of
Credit is issued. Unless otherwise directed by the Lender, the
applicable Borrower shall not be required to make a specific request to
the Lender for any such renewal. Once an Auto-Renewal Letter of Credit
has been issued, the Lender shall, subject to the terms and conditions
set forth herein, permit the renewal of such Letter of Credit to an
expiry date not later than 12 months after the Scheduled Maturity Date;
provided, however, that the Lender shall have no obligation to permit the
renewal of any Auto-Renewal Letter of Credit at any time if it has
determined that it would have no
obligation at such time to issue such Letter of Credit in its
renewed form under the terms hereof (by reason of the provisions of
Section 2.03(a)(ii) or otherwise).
	 
	 	     (iv) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto
or to the beneficiary thereof, the Lender will also deliver (or cause the
L/C Issuer to deliver) to the applicable Borrower a true and complete
copy of such Letter of Credit or amendment.



     (c)  Drawings and Reimbursements.





		
	 	     (i) Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the Lender shall notify
(or cause the L/C Issuer to notify) the applicable Borrower thereof. Not
later than 10:00 a.m. on the date of any payment by the L/C Issuer under
a Letter of Credit denominated in Dollars, or the Applicable Time on the
date of any payment by the Lender under a Letter of Credit denominated in
an Alternative Currency (each such date, an “Honor Date”), the applicable
Borrower shall reimburse the Lender in an amount equal to the amount of
such drawing and in the applicable currency. If the applicable Borrower
fails to so reimburse the Lender, such Borrower shall be deemed to have
requested a borrowing of a Base Rate Loan to be disbursed on the Honor
Date in a Dollar Equivalent amount equal to the amount of such
unreimbursed drawing (the “Unreimbursed Amount”), without regard to the
minimum and multiples specified in Section 2.02 for the principal amount
of Base Rate Loans, but subject to the amount of the unutilized portion
of the Commitment and the conditions set forth in Section 4.02 (other
than the delivery of a Loan Notice).



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	 	     (ii) If the applicable Borrower fails to reimburse the Lender for
any drawing under any Letter of Credit (whether by means of a borrowing
or otherwise), such Unreimbursed Amount shall be due and payable on
demand (together with interest) and shall bear interest at the Default
Rate.



     (d)  Obligations Absolute. The obligation of the Borrowers to reimburse
the Lender for each drawing under each Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including the following:





		
	 	     (i) any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other agreement or instrument relating thereto;
	 
	 	     (ii) the existence of any claim, counterclaim, set-off, defense or
other right that any Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for
whom any such beneficiary or any such transferee may be acting), the
Lender or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by such Letter of Credit or any
agreement or instrument relating thereto, or any unrelated transaction;
	 
	 	     (iii) any draft, demand, certificate or other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such
Letter of Credit;
	 
	 	     (iv) any payment by the L/C Issuer under such Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or any payment made by
the L/C Issuer under such Letter of Credit to any Person purporting to be
a trustee in bankruptcy, debtor-in-possession, assignee for the benefit
of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor
Relief Law;
	 
	 	     (v) any adverse change in the relevant exchange rates or in the
availability of the relevant Alternative Currency to the Borrowers or in
the relevant currency markets generally; or
	 
	 	     (vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Borrower.



     Each Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim
of noncompliance with the Borrower’s instructions or other irregularity, such
Borrower will immediately notify the Lender. Such Borrower shall be
conclusively deemed to have waived any such claim against the Lender and its
correspondents unless such notice is given as aforesaid.



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     (e)  Role of Lender. Each Borrower agrees that, in paying any drawing
under a Letter of Credit, neither the L/C Issuer nor the Lender shall have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. Each Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee
with respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude any Borrower pursuing
such rights and remedies as it may have against the beneficiary or transferee
at law or under any other agreement. None of the Lender, L/C Issuer, any of
their Affiliates, any of the respective officers, directors, employees, agents
or attorneys-in-fact of the Lender, L/C Issuer and their Affiliates, nor any of
the respective correspondents, participants or assignees of the Lender or L/C
Issuer shall be liable or responsible for any of the matters described in
clauses (i) through (vi) of Section 2.03(d) provided, however, that anything in
such clauses to the contrary notwithstanding, the Borrowers may have a claim
against the Lender, and the Lender may be liable to the Borrowers, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrowers which the Borrowers prove were
caused by the Lender’s or L/C Issuer’s willful misconduct or gross negligence
or the Lender’s or L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to
it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit. In furtherance
and not in limitation of the foregoing, the Lender and L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and the Lender and L/C Issuer shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.



     (f)  Cash Collateral. Upon the request of the Lender, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has not been reimbursed on the applicable Honor Date,
or (ii) if, as of the Maturity Date, any Letter of Credit may for any reason
remain outstanding and partially or wholly undrawn, the Borrower shall
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations (in an amount equal to such Outstanding Amount determined as of the
applicable Honor Date or the Maturity Date, as the case may be). For purposes
hereof, “Cash Collateralize” means to pledge and deposit with or deliver to the
Lender, as collateral for the L/C Obligations, cash or deposit account
balances, in currencies satisfactory to the Lender, pursuant to documentation
in form and substance satisfactory to the Lender. Derivatives of such term
have corresponding meanings. Cash Collateral shall be maintained in blocked,
non-interest bearing deposit accounts at the Lender.



     (g)  Applicability of ISP98 and UCP. Unless otherwise expressly agreed by
the Lender and the Borrower when a Letter of Credit is issued (including any
such agreement applicable to an Existing Letter of Credit), (i) the rules of
the “International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) shall apply to each Standby Letter of
Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce
(the “ICC”) at the time of issuance


-26-







 




 (including the ICC decision published by
the Commission on Banking Technique and Practice on April 6, 1998 regarding the
European single currency (euro)) shall apply to each commercial Letter of
Credit.



     (h)  Letter of Credit Fees.





		
	 	     (i) Standby Letters of Credit. The applicable Borrower shall pay to
the Lender a letter of credit fee for each Standby Letter of Credit equal
to the Applicable Rate times the daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is
then in effect under such Letter of Credit). Such letter of credit fees
shall be computed on a quarterly basis in arrears, and shall be due and
payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Maturity Date and
thereafter on demand. If there is any change in the Applicable Rate
during any quarter, the daily maximum amount of each Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for
each
period during such quarter that such Applicable Rate was in effect.
Such fees shall be fully earned when paid and are non-refundable.
	 
	 	     (ii) Commercial Letters of Credit. The applicable Borrower shall
pay to the Lender a letter of credit fee for each commercial Letter of
Credit equal to the applicable fee set out in the Commercial L/C Fee
Letter. Such fees shall be fully earned when paid and are
non-refundable.



     (i)  Documentary and Processing Charges Payable to Lender. In relation to
Standby Letters of Credit, the applicable Borrower shall pay to the Lender in
Dollars or such Alternative Currency as shall be separately agreed, the
customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. Such customary fees and standard costs
and charges are due and payable on demand and are nonrefundable.



     (j)  Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.



     2.04 Prepayments.



     (a)  Each Borrower may, upon notice to the Lender, at any time or from time
to time voluntarily prepay any Loan in whole or in part without premium or
penalty; provided that (i) such notice must be received by the Lender not later
than 10:00 a.m. (A) three Business Days prior to any date of prepayment of a
Eurodollar Rate Loan, and (B) on the date of prepayment of a Base Rate Loan;
(ii) any prepayment of a Eurodollar Rate Loan shall be in a principal amount of
$250,000 or a whole multiple of $50,000 in excess thereof; and (iii) any
prepayment of a Base Rate Loan shall be in a principal amount of $100,000 or a
whole multiple of $50,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loan(s) to be
prepaid. If such notice is given by a Borrower, such Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified


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therein. Any prepayment of a Eurodollar Rate
Loan shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05.



     (b)  If for any reason the Total Outstandings at any time exceed the
Commitment then in effect, the Borrowers shall immediately prepay Loans and/or
Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that the Borrowers shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless and
to the extent that, after the prepayment in full of the Loans, the Total
Outstandings exceed the Commitment then in effect.



     (c)  If the Company or any Subsidiary Disposes of any property in
transactions (other than those expressly permitted by Section 7.05(a), (b),
(c), (d), (e), (f) and (g)) which in the aggregate will result in the
realization by the Company or such Subsidiary of Net Cash Proceeds (determined
as of the date of such Disposition, whether or not such Net Cash Proceeds are
then received by the Company or such Subsidiary) in excess of $1,000,000 for
any transaction or
related group of transactions, the Borrowers shall immediately repay Loans
in an aggregate amount equal to such Net Cash Proceeds immediately upon receipt
thereof by the Company or such Subsidiary.



     (d)  Upon the Disposition by any Borrower of any capital stock of any
Subsidiary or other equity interest of any such Subsidiary (other than to
another Borrower), the Borrowers shall immediately repay Loans in an aggregate
amount equal to the amount of the Net Cash Proceeds of such Disposition.



     (e)  The Borrowers agree to reduce the Loans outstanding under this
Agreement to zero for a period of at least 30 consecutive days during the
period from January 1 to March 31 in each calendar year during which the
Commitment is in effect.



     2.05 Termination or Reduction of Commitment. The Borrowers may, upon
notice to the Lender, terminate the Commitment, or from time to time
permanently reduce the Commitment; provided that (i) any such notice shall be
received by the Lender not later than 10:00 a.m., five Business Days prior to
the date of termination or reduction, (ii) any such partial reduction shall be
in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in
excess thereof, (iii) the Borrower shall not terminate or reduce the Commitment
if, after giving effect thereto and to any concurrent prepayments hereunder,
the Total Outstandings would exceed the Commitment, and (iv) if, after giving
effect to any reduction of the Commitment, the Standby Letter of Credit
Sublimit exceeds the amount of the Commitment, such Standby Letter of Credit
Sublimit shall be automatically reduced by the amount of such excess. All
facility and unused line fees accrued until the effective date of any
termination of the Commitment shall be paid on the effective date of such
termination.



     2.06 Repayment of Loans. The Borrowers shall repay to the Lender on the
Maturity Date the aggregate principal amount of Loans outstanding on such date.



     2.07 Interest.



     (a)  Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate


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 per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.



     (b)  If any amount payable by any Borrower under any Loan Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.
Furthermore, while any Event of Default exists, the Borrowers shall pay
interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.



     (c)  Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.



     2.08 Fees. In addition to certain fees described in subsections (h) and
(i) of Section 2.03:



     (a)  Upfront Fee. The Borrowers shall pay to the Lender on the Closing
Date an upfront fee of $100,000.



     (b)  Facility Fee. The Borrowers shall pay to the Lender on the Closing
Date, and on each anniversary of the Closing Date, a facility fee of $100,000.



     (c)  Unused Line Fee. The Borrowers shall pay to the Lender an unused line
fee equal to the Applicable Rate times the average daily amount by which the
Commitment exceeds the Total Outstandings. The unused line fee shall be due
and payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
Closing Date, and on the Maturity Date. The unused line fee shall be
calculated quarterly in arrears and if there is any change in the Applicable
Rate during any quarter, the daily amount shall be computed and multiplied by
the Applicable Rate for each period during which such Applicable Rate was in
effect. The unused line fee shall accrue at all times from and after the
Closing Date, including at any time during which one or more of the conditions
in Article IV is not met.



     2.09 Computation of Interest and Fees. All computations of interest for
Base Rate Loans when the Base Rate is determined by the Lender’s “prime rate”
shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computations of fees and interest shall be
made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which
the Loan is made, and shall not accrue on a Loan, or any portion thereof, for
the day on which the Loan or


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such portion is paid, provided that any Loan that
is repaid on the same day on which it is made shall, subject to Section
2.11(a), bear interest for one day.



     2.10 Evidence of Debt. The Credit Extensions made by the Lender shall be evidenced by one or more
accounts or records maintained by the Lender in the ordinary course of
business. The accounts or records maintained by the Lender shall be conclusive
absent manifest error of the amount of the Credit Extensions made by the Lender
to the Borrowers and the interest and payments thereon. Any failure to so
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrowers hereunder to pay any amount owing with respect
to the Obligations. Upon the request of the Lender, each Borrower shall
execute and deliver to the Lender a Note, which shall evidence the Lender’s
Loans in addition to such accounts or records. The Lender may attach schedules
to the Note and endorse thereon the date, Type, amount and maturity of each
Loan and payments with respect thereto.



     2.11 Payments Generally.



     (a)  All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or set-off.
Except as otherwise expressly provided herein, all payments by the Borrowers
hereunder shall be made to the Lender at the applicable Lending Office in
Dollars and in immediately available funds not later than 12:00 noon on the
date specified herein. All payments received by the Lender after 12:00 noon
shall be deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue.



     (b)  If any payment to be made by any Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.



     (c)  Nothing herein shall be deemed to obligate the Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by the Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.



     2.12 Option to Increase Commitment. From and after the Closing Date and
up to and including the second anniversary of the Closing Date, the Company
may, upon written notice to the Lender, request an increase in the Commitment
on a one-time basis by up to $10,000,000. Upon such request, the Commitment
shall be increased by the amount specified in such notice, not to exceed
$10,000,000, effective as of the date specified in such request (not to be
earlier than three Business Days after the date such request is received by
Lender) (the “Increase Effective Date”). As a condition precedent to such
increase, the Company shall deliver to the Lender a certificate of the Company
signed by a Responsible Officer of the Company in the form of Exhibit F hereto
(i) certifying and attaching the resolutions adopted by each Loan Party
approving or consenting to such increase or authorizing a Responsible Officer
of the Company to approve such increase, and (ii) certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article V and the other Loan Documents are and shall be true and
correct on and as of the Increase Effective Date, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are and shall be true and correct as of such
earlier date, and except that for purposes of


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this Section 2.12, the
representations and warranties contained in subsections (a) and (b) of Section
5.05 shall be deemed to refer to the most recent financial statements furnished
pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no
Default or Event of Default exists.




ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY



     3.01 Taxes.



     (a)  Any and all payments by the Borrowers to or for the account of the
Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Lender is organized or maintains a lending office (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred to
as “Taxes”). If any Borrower shall be required by any Laws to deduct any Taxes
from or in respect of any sum payable under any Loan Document to the Lender,
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), the Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the applicable Borrower
shall make such deductions, (iii) the applicable Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the applicable Borrower shall furnish to the Lender the original or a
certified copy of a receipt evidencing payment thereof.



     (b)  In addition, the Borrowers agree to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).



     (c)  If any Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to the
Lender, the Borrower shall also pay to the Lender, at the time interest is
paid, such additional amount that the Lender specifies is necessary to preserve
the after-tax yield (after factoring in all taxes, including taxes imposed on
or measured by net income) that the Lender would have received if such Taxes or
Other Taxes had not been imposed.



     (d)  Each Borrower agrees to indemnify the Lender for (i) the full amount
of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid by the
Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes or
Other Taxes


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 were correctly or legally imposed or asserted by the relevant Governmental
Authority. Payment under this subsection (d) shall be made within 30 days
after the date the Lender makes a demand therefor.



     (e)  At the request of the Borrower, the Lender will designate a different
Lending Office if such designation will decrease or eliminate any such Taxes or
Other Taxes and will not, as determined by the Lender at its discretion,
otherwise be materially disadvantageous to the Lender.



     3.02 Illegality. If the Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for the Lender or its Lending Office to make, maintain or fund Eurodollar Rate
Loans, or to determine or charge interest rates based upon the Eurodollar Rate,
then, on notice thereof by the Lender to the Borrowers, any obligation of the
Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans
to Eurodollar Rate Loans shall be suspended until the Lender notifies the
Borrowers that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrowers shall, upon demand from the
Lender, prepay or, if applicable, convert all Eurodollar Rate Loans to Base
Rate Loans, either on the last day of the Interest Period therefor, if the
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such
day, or immediately, if the Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrowers
shall also pay accrued interest on the amount so prepaid or converted. The
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of the
Lender, otherwise be materially disadvantageous to the Lender.



     3.03 Inability to Determine Eurodollar Rate. If the Lender determines that
for any reason adequate and reasonable means do not exist for determining the
Eurodollar Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan, or that the Eurodollar Base Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to the Lender of funding such Loan,
the Lender will promptly so notify the Borrowers. Thereafter, the obligation
of the Lender to make or maintain Eurodollar Rate Loans shall be suspended
until the Lender revokes such notice. Upon receipt of such notice, the
Borrowers may revoke any pending request for a borrowing of, conversion to or
continuation of a Eurodollar Rate Loan or, failing that, will be deemed to have
converted such request into a request for a borrowing of a Base Rate Loan in
the amount specified therein.



     3.04 Increased Cost and Reduced Return; Capital Adequacy.



     (a)  If the Lender determines that as a result of the introduction of or
any change in or in the interpretation of any Law, or the Lender’s compliance
therewith, there shall be any increase in the cost to the Lender of agreeing to
make or making, funding or maintaining
Eurodollar Rate Loans or issuing Letters of Credit, or a reduction in the
amount received or receivable by the Lender in connection with any of the
foregoing (excluding for purposes of this subsection (a) any such increased
costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to
which Section 3.01 shall govern), (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or any foreign
jurisdiction or any political


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 subdivision of either thereof under the Laws of
which the Lender is organized or has its Lending Office, and (iii) reserve
requirements utilized in the determination of the Eurodollar Rate), then from
time to time upon demand of the Lender, the Borrowers shall pay to the Lender
such additional amounts as will compensate the Lender for such increased cost
or reduction.



     (b)  If the Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by the Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of the Lender or any corporation
controlling the Lender as a consequence of the Lender’s obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
the Lender’s desired return on capital), then from time to time upon demand of
the Lender, the Borrowers shall pay to the Lender such additional amounts as
will compensate the Lender for such reduction.



     (c)  At the request of the Borrower, the Lender will designate a different
Lending Office if such designation will decrease or eliminate any amount
otherwise arising under Section 3.04(a) and will not, as determined by the
Lender at its discretion, otherwise be materially disadvantageous to the
Lender.



     3.05 Funding Losses. Upon demand of the Lender from time to time, the
Borrowers shall promptly compensate the Lender for and hold the Lender harmless
from any loss, cost or expense incurred by it as a result of:



     (a)  any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or



     (b)  any failure by any Borrower (for a reason other than the failure of
the Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by such
Borrower,



including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were
obtained. The Borrowers shall also pay any customary administrative fees
charged by the Lender in connection with the foregoing.



     For purposes of calculating amounts payable by the Borrowers to the Lender
under this Section 3.05, the Lender shall be deemed to have funded each
Eurodollar Rate Loan at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan was in fact so funded.



     3.06 Requests for Compensation. A certificate of the Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Lender may use any reasonable
averaging and attribution methods.



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     3.07 Survival. All of the Borrowers’ obligations under this Article III
shall survive termination of the Commitment and repayment of all other
Obligations hereunder.




ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS



     4.01 Conditions of Initial Credit Extension. The obligation of the Lender
to make its initial Credit Extension hereunder is subject to satisfaction of
the following conditions precedent:



     (a)  The Lender’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Lender and its legal counsel:





		
	 	     (i) executed counterparts of this Agreement and the Guaranty,
sufficient in number for distribution to the Lender and the Company;
	 
	 	     (ii) if requested by the Lender, a Note executed by each of the
Borrowers;
	 
	 	     (iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each
Loan Party as the Lender may require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;
	 
	 	     (iv) such documents and certifications as the Lender may reasonably
require to evidence that each Loan Party is duly organized or formed, and
that each of the Borrowers and each of the Guarantors is validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect;
	 
	 	     (v) a favorable opinion of Perkins Coie, counsel to the Loan
Parties, and of such foreign counsel as is reasonably required by the
Lender, each addressed to the Lender, as to the matters set forth in
Exhibit E and such other matters concerning the Loan Parties and the Loan
Documents as the Lender may reasonably request;
	 
	 	     (vi) a certificate of a Responsible Officer of each Loan Party
either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by
such Loan Party and the validity against such Loan Party of the Loan
Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;
	 
	 	     (vii) a certificate signed by a Responsible Officer of each of the
Borrowers certifying that the conditions specified in Sections 4.02(a)
and (b) have been satisfied;



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	 	     (viii) a Compliance Certificate dated as of the Benchmark Date
signed by a Responsible Officer of the Company;
	 
	 	     (ix) evidence that the Existing Credit Agreement has been or
concurrently with the Closing Date is being terminated, all amounts
thereunder having been paid, and all Liens securing obligations under the
Existing Credit Agreement have been or substantially concurrently with
the Closing Date are being released; and
	 
	 	     (x) such other assurances, certificates, documents, consents or
opinions as the Lender reasonably may require.



     (b)  Any fees required to be paid on or before the Closing Date shall have
been paid.



     (c)  The Company shall have paid all Attorney Costs of the Lender to the
extent invoiced prior to or on the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts
between the Company and the Lender).



     4.02 Conditions to all Credit Extensions. The obligation of the Lender to
make any Credit Extension (including the initial Credit Extension occurring on
the Closing Date with regard to the deemed issue of the Existing Letters of
Credit pursuant to Section 2.03(a)(i) hereof) is subject to the following
conditions precedent:



     (a)  The representations and warranties of each of the Borrowers and each
other Loan Party contained in Article V or any other Loan Document, or which
are contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and
correct on and as of the date of such Credit Extension, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date, and except that for purposes of this Section 4.02, the representations
and warranties contained in subsections (a) and (b) of Section 5.05 shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01.



     (b)  No Default or Event of Default shall exist, or would result from such
proposed Credit Extension.



     (c)  The Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.



     Each Request for Credit Extension (other than a Loan Notice requesting
only a conversion of a Loan to the other Type or a continuation of a Eurodollar
Rate Loan) submitted by any Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.





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ARTICLE V.

REPRESENTATIONS AND WARRANTIES



     Each of the Borrowers represents and warrants to the Lender that:



     5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan
Party (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of
the jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own its assets and carry on its business and (ii)
execute, deliver and perform its obligations under the Loan Documents to
which it is a party, (c) is duly qualified and is licensed and in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license, and (d) is in compliance with all Laws; except in
each case referred to in clause (b)(i), (c) or (d), to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect.



     5.02 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Loan Party
is party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Loan Party’s Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, (i) any
Contractual Obligation to which such Loan Party is a party or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Loan Party or its property is subject; or (c) violate any Law.



     5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.



     5.04 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, except to the extent limited by
bankruptcy, insolvency, reorganization and other similar laws affecting
creditors’ rights generally, and except that the remedy of specific performance
or similar equitable relief is available only at the discretion of the court
before which enforcement is sought.



     5.05 Financial Statements; No Material Adverse Effect.



     (a)  The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with


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GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Company and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Indebtedness.



     (b)  The unaudited consolidated financial statements of the Company and its
Subsidiaries dated May 3, 2003, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal
quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit adjustments,
and (iii) except as specifically disclosed in Schedule 5.05 hereto, set forth
all material indebtedness and other liabilities, direct or contingent, of the
Company and its consolidated Subsidiaries as of the date of such financial
statements, including liabilities for taxes, material commitments and
Indebtedness.



     (c)  Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.



     5.06 Litigation. Except as specifically disclosed in Schedule 5.06, there
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of each Borrower after due and diligent investigation, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Borrower or any Subsidiary or against any of their
properties or revenues that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated hereby, or
(b) either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.



     5.07 No Default. None of the Borrowers nor any Subsidiary is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any
other Loan Document.



     5.08 Ownership of Property; Liens. Each of the Borrowers and each
Subsidiary has good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The property of the Borrowers and the Subsidiaries is not
subject to any Liens, other than Liens permitted by Section 7.01.



     5.09 Existing Credit Agreement.

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     (a)  As of the Closing Date, the outstanding Dollar Equivalent amount of
letters of credit under the Existing Credit Agreement available to be drawn is
95.24% of the amount of the Fleet Takeout SLC.



     (b)  Except as specifically disclosed in Schedule 5.09 and, other than any
UCC filings made with any Secretary of State of the States of the United States
and the District of Columbia, the Borrowers have not made any filings,
recordings or registrations with any Governmental Authority in relation to any
property or asset of any Borrower in favor of any creditor named in the
Existing Credit Agreement.



     5.10 Environmental Compliance. Each of the Borrowers and each Subsidiary
conducts in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility
for violation of any Environmental Law on their respective businesses,
operations and properties, and as a result thereof each Borrower has reasonably
concluded that, except as specifically disclosed in Schedule 5.10, such
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     5.11 Insurance. The properties of each Borrower and each Subsidiary are
insured with financially sound and reputable insurance companies not Affiliates
of any Borrower, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where the applicable Borrower or
Subsidiary operates.



     5.12 Taxes. Each of the Borrowers and each Subsidiary files all Federal,
state and other material tax returns and reports required to be filed, and has
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against any Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.



     5.13 ERISA Compliance.



     (a)  Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of the Borrowers, nothing has occurred which would prevent, or
cause the loss of, such qualification. Each Borrower and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412
of the Code has been made with respect to any Plan.



     (b)  There are no pending or, to the best knowledge of the Borrowers,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan


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that could be reasonably be expected to
have a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.



     (c)  (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) none of the
Borrowers nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) none of
the Borrowers nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
none of the Borrowers nor any ERISA Affiliate has engaged in a transaction that
could be subject to Sections 4069 or 42 12(c) of ERISA.



     5.14 Subsidiaries.



     (a)  None of the Borrowers has any Subsidiaries other than those
specifically disclosed in Part (i) of Schedule 5.14 or has any equity
investments in any other corporation or entity other than those specifically
disclosed in Part (ii) of Schedule 5.14.



     (b)  As of the Closing Date, no Inoperative Subsidiary (a) has assets or
liabilities, in either case, exceeding the Specified Level in value or amount,
or (b) carries on any business or other operations of any kind.



     5.15 Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.



     (a)  None of the Borrowers is engaged nor will engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.
Following the application of the proceeds of each Loan or drawing under each
Letter of Credit, not more than 25% of the value of the assets (either of the
Company only or of the Company and its Subsidiaries on a consolidated basis)
subject to the provisions of Section 7.01 or Section 7.05 or subject to any
restriction contained in any agreement or instrument between the Borrower and
the Lender or any Affiliate of the Lender relating to Indebtedness and within
the scope of Section 8.01(e) will be margin stock.



     (b)  None of the Borrowers, any Person Controlling any Borrower, or any
Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding
Company Act of 1935, or (ii) is or is required to be registered as an
investment company” under the Investment Company Act of 1940.



     5.16 Disclosure. Each Borrower has disclosed to the Lender all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any
Loan Party to


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the Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.



     5.17 Compliance with Laws. Each of the Borrowers and each Subsidiary is
in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.



     5.18 Tax Shelter Regulations. No Borrower intends to treat the Loans
and/or Letters of Credit or related transactions as being a “reportable
transactions” (within the meaning of Treasury Regulation Section 1.6011-4). In
the event any Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Lender thereof. If a Borrower so
notifies the Lender, such Borrower acknowledges that the Lender may treat the
Loans and/or the Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and the Lender will maintain the lists
and other records required by such Treasury Regulation.



     5.19 Intellectual Property; Licenses, Etc. Each Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses
and other intellectual property rights (collectively, “IP Rights”) that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Borrowers, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any of the Borrowers or any Subsidiary infringes upon any rights
held by any other Person. Except as specifically disclosed in Schedule 5.19,
no claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrowers,
threatened, which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.




ARTICLE VI.

AFFIRMATIVE COVENANTS



     So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, in relation to the covenants set forth in Sections 6.01,
6.02 and 6.03 the Company shall, and in relation to the covenants set forth in
the remainder of this Article VI the Borrowers shall, and shall (except in the
case of the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause
each Subsidiary to:



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     6.01 Financial Statements. Deliver to the Lender, in form and detail
satisfactory to the Lender:



     (a)  as soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP consistently applied, audited and accompanied by a report
and opinion of an independent certified public accountant of nationally
recognized standing reasonably acceptable to the Lender (the “Audit Firm”),
which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit;



     (b)  as soon as available, but in any event within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of the Company’s fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of the Company
as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of the Company and its Subsidiaries in
accordance with GAAP consistently applied, subject only to normal year-end
audit adjustments and the absence of footnotes;



     (c)  as soon as available, but in any event within 60 days after the end of
each fiscal year of the Company, internally prepared financial projections for
the consolidated balance sheet of the Company and its Subsidiaries for the
following fiscal year on a quarterly basis, and for the related consolidated
statements of income or operations, shareholder’s equity and cash flow for such
following fiscal year on a quarterly basis; and



     (d)  as soon as available, but in any event before October 31 of each
calendar year, internally prepared consolidating balance sheets of the Company
and each of its Subsidiaries as at the end of the previous fiscal year, and the
related consolidating statements of income or operations, shareholder’s equity
and cash flow for such fiscal year, all in reasonable detail and prepared in
accordance with GAAP consistently applied.



     As to any information contained in materials furnished pursuant to Section
6.02(c), each Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of each Borrower to furnish the information and
materials described in subsections (a) and (b) above at the times specified
therein.



     6.02 Certificates; Other Information. Deliver to the Lender, in form and
detail satisfactory to the Lender:



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     (a)  concurrently with the delivery of the financial statements referred to
in Sections 6.01(a), (b) and (d), a duly completed Compliance Certificate
signed by a Responsible Officer of the Company;



     (b)  promptly upon receipt, copies of any management letters or written
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of the Company by the Audit Firm in connection with the
accounts or books of the Company or any Subsidiary, or any audit of any of
them;



     (c)  promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Company or any other Borrower, and copies of all annual,
regular, periodic and special reports and registration statements which the
Company or any other Borrower may file or be required to file with the SEC
under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not
otherwise required to be delivered to the Lender pursuant hereto;



     (d)  promptly after any Borrower has notified the Lender of any intention
by such Borrower to treat the Loans and/or Letters of Credit and related
transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886
or any successor form; and



     (e)  promptly, such additional information regarding the business,
financial or corporate affairs of any Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as the Lender may from time to time
reasonably request.



     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which any
Borrower posts such documents, or provides a link thereto on the applicable
Borrower’s website on the Internet at the website address listed on Schedule
9.02; provided that: (i) if the Lender so requests, the Borrowers shall deliver
paper copies of such documents to the
Lender until a written request to cease delivering paper copies is given by the
Lender and (ii) the Borrowers shall notify (which maybe by facsimile or
electronic mail) the Lender of the posting of any such documents.
Notwithstanding anything contained herein, in every instance the Borrowers
shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(a) to the Lender.



     6.03 Notices. Promptly notify the Lender:



     (a)  of the occurrence of any Default;



     (b)  of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including a Material Adverse Effect
resulting or reasonably expected to result from (i) a breach or non-performance
of, or any default under, a Contractual Obligation of any Borrower or any
Subsidiary; or (ii) any dispute, litigation, investigation, proceeding or
suspension between any Borrower or any Subsidiary and any Governmental
Authority;



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     (c)  the commencement of, or any material development in, any litigation or
proceeding involving an alleged liability of, or claims against or affecting
any Borrower or any Subsidiary, equal to or greater than $5,000,000 including
pursuant to any applicable Environmental Laws;



     (d)  of the existence of any actual or potential contingent liability of
any Borrower or any Subsidiary in an amount equal to or greater than
$2,000,000;



     (e)  of the occurrence of any ERISA Event; and



     (f)  of any material change in accounting policies or financial reporting
practices by any Borrower or any Subsidiary.



     Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company or other Borrower has
taken and proposes to take with respect thereto. Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all provisions of
this Agreement and any other Loan Document that have been breached.



     6.04 Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by such Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property; and (c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.



     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.



     6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.



     6.07 Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrowers, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in


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the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.



     6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writ, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.



     6.09 Books and Records. (a) Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of such Borrower or such Subsidiary, as the case may be;
and (b) maintain such books of record and account in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Borrower or such Subsidiary, as the case may be.



     6.10 Inspection Rights. Permit representatives and independent
contractors of the Lender to visit and inspect any of its properties, to
examine its corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, all at the expense
of the Borrowers and at such reasonable times during normal business hours and
as often as may be reasonably desired, upon reasonable advance notice to the
applicable Borrower; provided, however, that when an Event of Default exists
the Lender (or any of its representatives or independent contractors) may do
any of the foregoing at the expense of the Borrowers at any time during normal
business hours and without advance notice.



     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for
working capital, capital expenditures and other general corporate purposes not
in contravention of any Law or of any Loan Document.



     6.12 Additional Guarantors. Notify the Lender at the time that any Person,
other than a Borrower, becomes a Material Subsidiary, and promptly thereafter
(and in any event within 30 days), cause such Person to (a) become a Guarantor
by executing and delivering to the Lender a counterpart of the Guaranty or such
other document as the Lender shall deem appropriate for such purpose, and (b)
deliver to the Lender documents of the types referred to in clauses (iii) and
(iv) of Section 4.01(a) and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clause (a)), all in form,
content and scope reasonably satisfactory to the Lender.



     6.13 Existing Credit Agreement. To the extent not done or taken on or
before the Closing Date, take all such actions as may be necessary or otherwise
as required by the Lender to (a) repay any outstanding amounts owed by any
Borrower under the Existing Credit Agreement, and (b) terminate or otherwise
remove any Liens and any filings, recordings or registrations with any
Governmental Authority in relation to any property or asset of any Borrower in
favor of any creditor under the Existing Credit Agreement.



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ARTICLE VII.

NEGATIVE COVENANTS



     So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, none of the Borrowers shall, nor shall the Borrowers permit
any Subsidiary to, directly or indirectly:



     7.01
Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:



     (a)  Liens in favor of the Lender, and Liens pursuant to any Loan Document;



     (b)  Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that the property covered thereby is
not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.03(b);



     (c)  Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;



     (d)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;



     (e)  pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;



     (f)  deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than
bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;



     (g)  easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;



     (h)  Liens securing judgments for the payment of money not constituting an
Event of Default under Section 8.01(h) or securing appeal or other surety bonds
related to such judgments;



     (i)  Liens securing Indebtedness permitted under Section 7.03(e); provided
that (i) such Liens do not at any time encumber any property other than the
property financed by such


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Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition; and



     (j)  Liens consisting of pledges of cash collateral, and agreements to
provide such cash collateral, to secure any obligations of the Borrowers
relating to the provision of cash management services to the Borrowers by Fleet
National Bank and its Affiliates; provided that (i) such Liens may only be
granted in favor of Fleet National Bank and its Affiliates, (ii) such Liens are
not permitted to exist after November 30, 2003, and (iii) the aggregate amount
of cash so pledged shall not exceed $2,000,000 at any time.



     7.02 Investments. Make, have or maintain any Investments, except:



     (a)  Investments existing on the date hereof and listed on Schedule 7.02;



     (b)  Investments held by such Borrower or such Subsidiary in the form of
cash equivalents or short-term marketable debt securities in accordance with
the investment policy of the Company, as delivered to the Lender prior to the
Closing Date, and as amended from time to time with the prior approval of the
Lender;



     (c)  advances to officers, directors and employees of any Borrower and
Subsidiaries in an aggregate amount not to exceed $5,000,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;



     (d)  Investments of the Company made after the Benchmark Date in any
wholly-owned Subsidiary, in an aggregate amount, for all such Investments made
after the Benchmark Date in respect of all such Subsidiaries together, not to
exceed, on the date any such Investment is made, 5% of the consolidated total
assets of the Company and its Subsidiaries, as reflected in the then-most
recent annual or quarterly (as applicable) financial statements delivered
pursuant to Section 6.01(a) or (b);



     (e)  Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;



     (f)  Guarantees permitted by Section 7.03;



     (g)  unsecured loans or advances made by any Borrower or wholly-owned
Subsidiary in the ordinary course of business to any other Borrower or any
wholly-owned Subsidiary;



     (h)  Acquisitions of all or substantially all of the assets or business of
any other Person engaged in the same or similar business as such Borrower, or
the division of a Person engaged in such business, or of ownership or control
of at least a majority of all of the voting stock of such a Person (together,
an “Acquisition”); provided that



                         (i)  no Default or Event of Default exists or would exist before or
after giving effect to such Acquisition;





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	 	     (ii) the Board of Directors or other governing body of such Person
whose property or voting stock is being so acquired has approved the
terms of such Acquisition; and
	 
	 	     (iii) the aggregate consideration (including cash and non-cash
consideration and any assumption of Indebtedness, and including
consideration consisting of any capital stock of the Company, or cash
funded with the proceeds of the issuance of such capital stock, issued to
the seller in respect of such Acquisition) paid or payable by the
Borrowers in connection with all such Acquisitions between the
Closing Date and the Maturity Date shall not exceed $30,000,000; and



     (i)  other Investments (not including Acquisitions) made in any fiscal year
of the Company not exceeding, together with all other Investments made pursuant
to this subsection (i) in such fiscal year, $5,000,000 in the aggregate.



     7.03 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:



     (a)  Indebtedness under the Loan Documents;



     (b)  Indebtedness outstanding on the date hereof and listed on Schedule
7.03 and any refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder;



     (c)  Guarantees of any Borrower or any Guarantor in respect of Indebtedness
(i) otherwise permitted hereunder of any Borrower or any other Guarantor, or
(ii) of any Person other than any Loan Party, provided that the aggregate
principal amount of the Indebtedness guaranteed by such Guarantees under this
clause (ii) shall not at any time exceed $3,000,000;



     (d)  obligations (contingent or otherwise) of any Borrower or any
Subsidiary existing or arising under any Swap Contract, provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person, and not for purposes of speculation or taking a “market view;” and
(ii) such Swap Contract does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;



     (e)  unsecured Indebtedness incurred pursuant to loans or advances arising
under Section 7.02(g); and



     (f)  Indebtedness in respect of Capital Leases, Synthetic Lease Obligations
and purchase money obligations for fixed or capital assets within the
limitations set forth in Section 7.01(i); provided, however, that the aggregate
amount of all such Indebtedness at any one time outstanding shall not exceed 5%
of the Consolidated Tangible Net Worth at any time,


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as reflected in the
then-most recent annual or quarterly (as applicable) financial statements
delivered pursuant to Section 6.01(a) or (b).



     7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:



     (a)  any Subsidiary may merge with (i) any Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) with the
exception of the Borrowers, any one or more other Subsidiaries, provided that
when any Guarantor is merging with another Subsidiary, the Guarantor shall be
the continuing or surviving Person; and



     (b)  any Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to any Borrower or to another
Subsidiary; provided that if the transferor in such a transaction is a
Borrower, then the transferee must be another Borrower; and provided further
that if the transferor in such a transaction is a Guarantor, then the
transferee must either be a Borrower or a Guarantor.



     7.05 Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except:



     (a)  Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;



     (b)  Dispositions of inventory in the ordinary course of business;



     (c)  Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;



     (d)  Dispositions of property by any Subsidiary to any Borrower or to a
wholly-owned Subsidiary; provided that if the transferor of such property is a
Borrower, the transferee thereof must be another Borrower; and provided further
that if the transferor of such property is a Guarantor, the transferee thereof
must either be a Borrower or a Guarantor;



     (e)  Dispositions permitted by Section 7.04;



     (f)  non-exclusive licenses of IP Rights in the ordinary course of the Loan
Parties’ franchising business and substantially consistent with past practice
for terms not exceeding the term of the applicable franchise arrangement, and
any extensions thereof; and



     (g)  Dispositions by any Borrower and its Subsidiaries not otherwise
permitted under this Section 7.05; provided that (i) at the time of such
Disposition, no Default shall exist or would result from such Disposition and
(ii) the aggregate book value of all property Disposed of in reliance on this
clause (g) in any fiscal year shall not exceed $5,000,000;


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provided, however, that any Disposition pursuant to clauses (a) through (g)
shall be for fair market value.



     7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:



     (a)  each Subsidiary may make Restricted Payments to the Borrowers and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to any Borrower and any Subsidiary and to each
other owner of capital stock or other equity interests of such Subsidiary on a
pro rata basis based on their relative ownership interests);



     (b)  each Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common equity interests of such Person;



     (c)  each Borrower and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or other common equity interests or warrants
or options to acquire any such shares with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other
common equity interests; and



     (d)  the Company may (i) repurchase or redeem shares of, or options to
purchase shares of, capital stock of the Company from officers, directors and
employees (or the heirs of such Persons) of any Borrower or any Subsidiary
whose employment has terminated or who have died or retired or become disabled,
and (ii) make repurchases of capital stock deemed to occur upon the exercise of
employee stock options if such capital stock is surrendered in lieu of the
exercise price thereof; provided that the aggregate amount of all such
repurchases or redemptions made in reliance on this clause (d) in any fiscal
year shall not exceed $5,000,000.



     7.07 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by such
Borrower and its Subsidiaries on the date hereof or any business substantially
related or incidental thereto.



     7.08 Transactions with Affiliates. Enter into any transaction of any kind
with any Affiliate of the Borrowers, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
such Borrower or such Subsidiary as would be obtainable by such Borrower or
such Subsidiary at the time in a comparable arm’s length transaction with a
Person other than an Affiliate.



     7.09 Burdensome Agreements.
Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that (a) limits the ability (i) of any Subsidiary to make
Restricted Payments to any Borrower or any Guarantor or to otherwise transfer
property to any Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee
the Indebtedness of any Borrower or (iii) of any Borrower or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (iii) shall not prohibit any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted
under Section 7.03(f) solely to the extent any such negative pledge relates to
the property financed by or the subject of such Indebtedness; or (b) requires
the grant of a Lien to secure an obligation of such Person if a Lien is granted
to secure another obligation of such Person.



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     7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose.



     7.11 Financial Covenants.



     (a)  Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth at any time to be less than the sum of (a) an amount equal to 85% of
Consolidated Tangible Net Worth as of the Benchmark Date, (b) an amount equal
to 75% of the Consolidated Net Income earned in each fiscal quarter ending
after such date (with no deduction for a net loss in any such fiscal quarter)
and (c) an amount equal to 100% of the aggregate increases in Shareholders’
Equity of the Company and its Subsidiaries after such date by reason of the
issuance and sale of capital stock or other equity interests of the Company or
any Subsidiary (other than issuances to the Company or a wholly-owned
Subsidiary), including upon any conversion of debt securities of the Company
into such capital stock or other equity interests.



     (b)  Consolidated Asset Coverage Ratio. Permit the Consolidated Asset
Coverage Ratio at any time to be less than 1.00:1.00.



     (c)  Consolidated Adjusted Leverage Ratio. Permit the Consolidated
Adjusted Leverage Ratio at any time to be greater than 3.00:1.00.



     7.12 Capital Expenditures. Make or become legally obligated to make any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations), except for capital expenditures in the ordinary
course of business not exceeding, in the aggregate for the Company and its
Subsidiaries during each fiscal year set forth below, the amount set forth
opposite such fiscal year:




	 	 	 	 	 
	Fiscal Year Ending Nearest	 	Amount
	
	 	

	January 31, 2004
	 	$	40,000,000	 
	January 31, 2005
	 	$	50,000,000	 
	January 31, 2006
	 	$	60,000,000	 



     7.13 Inoperative Subsidiaries. From and after the Closing Date, (a)
transfer any assets or properties to any Inoperative Subsidiary, (b) suffer or
permit any Inoperative Subsidiary to otherwise have or acquire assets or
properties exceeding the Specified Level in value or amount, or (c) suffer or
permit any Inoperative Subsidiary to carry on any business or other operation
of any kind.




ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES



     8.01 Events of Default. Any of the following shall constitute an Event of
Default:



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     (a)  Non-Payment. Any Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan or
any L/C Obligation, or (ii) within three days after the same becomes due, any
interest on any Loan or on any L/C Obligation, or any facility, unused line or
other fee due hereunder, or (iii) within five days after the same becomes due,
any other amount payable hereunder or under any other Loan Document; or



     (b)  Specific Covenants. (i) The Company or any Borrower (as applicable)
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.03, 6.05, 6.10, 6.11 or 6.12 or Article VII; or (ii) the Company
fails to perform or observe any term, covenant or agreement contained in either
Section 6.01 or 6.02 and such failure continues for 5 days; or



     (c)  Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or



     (d)  Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of any
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading when made or deemed made; or



     (e)  Cross-Default. (i) Any Borrower or any Subsidiary (A) fails to make
any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts)
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than the Threshold Amount, or (B) fails
to observe or perform any other agreement or condition relating to any such
Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which any Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B)
any Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by such Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or



     (f)  Insolvency Proceedings, Etc. Any Loan Party or any of its
Subsidiaries voluntarily suspends its business for a period of more than three
Business Days in any 30-day period; or institutes or consents to the
institution of any proceeding under any Debtor Relief


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 Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or



     (g)  Inability to Pay Debts; Attachment. (i) Any Loan Party or any
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or



     (h)  Judgments. There is entered against any Loan Party or any Subsidiary
(i) a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (A) enforcement proceedings are commenced
by any creditor upon such judgment or order, or (B) there is a period of 10
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or



     (i)  ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in
an aggregate amount in excess of the Threshold Amount, or (ii) any
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of the Threshold Amount; or



     (j)  Invalidity of Loan Documents. Any Loan Document, at any time after
its execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or



     (k)  Change of Control. There occurs any Change of Control with respect to
the Company.



     8.02 Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, the Lender may take any or all of the following actions:



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     (a)  declare the Commitment to be terminated, whereupon the Commitment
shall be terminated;



     (b)  declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each of the Borrowers;



     (c)  require that the Borrowers Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and



     (d)  exercise all rights and remedies available to it under the Loan
Documents or applicable law;



provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Borrower under the Bankruptcy Code of the
United States, the Commitment shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of the
Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Lender.



     8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Lender in
such order as it elects in its sole discretion.




ARTICLE IX.

MISCELLANEOUS



     9.01 Amendments; Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by any
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Lender and the Borrowers or the applicable Loan Party, as
the case may be, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.



     9.02 Notices and Other Communications; Facsimile Copies.



     (a)  General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the address, facsimile number or (subject to subsection (c) below)
electronic mail address specified for notices to the applicable party on
Schedule 9.02; or to such other address, facsimile number or electronic mail
address as shall be designated by such party in a notice to the other party.
All notices and other communications expressly permitted hereunder to be given
by telephone shall be made to the telephone number specified for notices to the
applicable party on Schedule 9.02, or to such other telephone number as shall
be designated by such party in a notice to the other party. All such notices
and other communications shall be deemed to be given or made upon the earlier
to occur


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 of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of subsection (c)
below), when delivered; provided, however, that notices and other
communications to the Lender pursuant to Article II shall not be effective
until actually received by the Lender. In no event shall a voicemail message
be effective as a notice, communication or confirmation hereunder.



     (b)  Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties and the Lender. The Lender may also require that any such documents
and signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.



     (c)  Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such
as financial statements and other information as provided in Section 6.02, and
to distribute Loan Documents for execution by the parties thereto, and may not
be used for any other purpose.



     (d)  Reliance by Lender. The Lender shall be entitled to rely and act upon
any notices (including telephonic Loan Notices) purportedly given by or on
behalf of any Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by
the recipient, varied from any confirmation thereof. Each Borrower shall
indemnify the Lender, its Affiliates, and their respective officers, directors,
employees, agents and attorneys-in-fact from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of such Borrower. All telephonic notices to
and other communications with the Lender may be recorded by the Lender, and the
Borrowers hereby consent to such recording.



     9.03 No Waiver; Cumulative Remedies. No failure by the Lender to
exercise, and no delay by the Lender in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.



     9.04 Attorney Costs, Expenses and Taxes. Each Borrower agrees (a) to pay
or reimburse the Lender for all costs and expenses incurred in connection with
the development, preparation, negotiation and execution of this Agreement and
the other Loan Documents and any amendment, waiver, consent or other
modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the Lender
for all costs and expenses incurred in connection


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with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or the other Loan Documents (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Obligations
and during any legal proceeding, including any proceeding under any Debtor
Relief Law), including all Attorney Costs. The foregoing costs and expenses
shall include all search, filing, recording, title insurance and appraisal
charges and fees and taxes related thereto, and other out-of-pocket expenses
incurred by the Lender and the cost of independent public accountants and other
outside experts retained by the Lender. All amounts due under this Section
9.04 shall be payable within ten Business Days after demand therefor. The
agreements in this Section shall survive the termination of the Commitment and
repayment, satisfaction or discharge of all other Obligations.



     9.05 Indemnification by the Borrowers. Whether or not the transactions
contemplated hereby are consummated, each Borrower shall indemnify and hold
harmless the Lender, its Affiliates (including each L/C Issuer), and
their respective directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including Attorney Costs)
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against any such Indemnitee in any way relating to or arising
out of or in connection with (a) the execution, delivery, enforcement,
performance or administration of any Loan Document or any other agreement,
letter or instrument delivered in connection with the transactions contemplated
thereby or the consummation of the transactions contemplated thereby, (b) the
Commitment, any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the Lender to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(c) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnitee is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”), in all cases, whether or not
caused by or arising, in whole or in part, out of the negligence of the
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee. No Indemnitee shall have any liability for any
indirect or consequential damages relating to this Agreement or any other Loan
Document or arising out of its activities in connection herewith or therewith
(whether before or after the Closing Date). All amounts due under this Section
9.05 shall be payable within ten Business Days after demand therefor. The
agreements in this Section 9.05 shall survive the termination of the Commitment
and the repayment, satisfaction or discharge of all the other Obligations.



     9.06 Payments Set Aside. To the extent that any payment by or on behalf
of any Borrower is made to the Lender, or the Lender exercises its right of
set-off, and such payment or the proceeds of such set-off or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection


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with any proceeding under any Debtor Relief Law or
otherwise, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred.



     9.07 Successors and Assigns.



     (a)  The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the none of the Borrowers may assign or otherwise
transfer any rights or obligations hereunder without the prior written consent
of the Lender and the Lender may not assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in
accordance
with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (c) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (e) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). 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, Participants to the extent provided in subsection (c) of this
Section and, to the extent expressly contemplated hereby, the Indemnitees) any
legal or equitable right, remedy or claim under or by reason of this Agreement.



     (b)  The Lender may at any time assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of the Commitment, the Loans and L/C Obligations at the time
owing to it) pursuant to documentation acceptable to the Lender and the
assignee, it being understood and agreed that with respect to any Letters of
Credit outstanding at the time of any such assignment, the Lender may sell to
the assignee a ratable participation in such Letters of Credit. From and after
the effective date specified in such documentation, such Eligible Assignee
shall be a party to this Agreement and, to the extent of the interest assigned
by the Lender, have the rights and obligations of the Lender under this
Agreement, and the Lender shall, to the extent of the interest so assigned, be
released from its obligations under this Agreement (and, in the case of an
assignment of all of the Lender’s rights and obligations under this Agreement,
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.01, 3.04, 3.05, 9.04 and 9.05 with respect to facts and
circumstances occurring prior to the effective date of such assignment, and
shall continue to have all of the rights provided hereunder to the Lender in
its capacity as issuer of any Letters of Credit outstanding at the time of such
assignment). Upon request, each Borrower (at its expense) shall execute and
deliver new or replacement Notes to the Lender and the assignee, and shall
execute and deliver any other documents reasonably necessary or appropriate to
give effect to such assignment and to provide for the administration of this
Agreement after giving effect thereto.



     (c)  The Lender may at anytime, without the consent of, or notice to, any
of the Borrowers, sell participations to any Person (other than a natural
person or any of the Borrowers or any of the Borrowers’ Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of the Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the outstanding Letters of Credit and/or the Loans and/or
the reimbursement obligations in respect of Letters of Credit); provided that
(i) the Lender’s obligations under this


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Agreement shall remain unchanged, (ii)
the Lender shall remain solely responsible to the Borrowers for the performance
of such obligations and (iii) each Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender’s rights and obligations
under this Agreement. Any agreement or instrument pursuant to which the Lender
sells such a participation shall provide that the Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that the Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification that would
(i) postpone any date upon which any payment of money (other than a mandatory
prepayment) is scheduled to be made to such Participant, or (ii) reduce the
principal, interest, fees or other amounts payable to such Participant
(provided, however, that the Lender may, without the consent of the
Participant, (A) amend any financial covenant hereunder (or any defined term
used therein) even if the effect of such amendment would be to reduce the
rate of interest on any Loan or Letter of Credit reimbursement obligation or to
reduce any fee payable hereunder and (B) waive the right to be paid interest at
the Default Rate), or (iii) release any Guarantor from the Guaranty. Subject
to subsection (d) of this Section, the Borrowers agree that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same
extent as if it were the Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.09 as
though it were the Lender.



     (d)  A Participant shall not be entitled to receive any greater payment
under Section 3.01 or 3.04 than the 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 the Borrowers’ prior written
consent. A Participant that is not a “United States person” within the meaning
of Section 7701(a)(30) of the Code shall not be entitled to the benefits of
Section 3.01 unless the Borrowers are notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrowers,
to provide to the Lender such tax forms prescribed by the IRS as are necessary
or desirable to establish an exemption from, or reduction of, U.S. withholding
tax.



     (e)  The Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under the Note, if
any) to secure obligations of the Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.



     (f)  As used herein, the following terms have the following meanings:



     “Approved Fund” means any Fund that is administered or managed by (a) the
Lender or (b) an Affiliate of the Lender.



     “Eligible Assignee” means (a) an Affiliate of the Lender; (b) an Approved
Fund; and (c) any other Person (other than a natural person) approved by the
Borrowers (such approval not to be unreasonably withheld or delayed); provided
that no such approval shall be required if an Event of Default has occurred and
is continuing.



-57-







 


     “Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.



     9.08 Confidentiality. The Lender agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other
Loan Document or any action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantially the same as those
of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to any Borrower and its
obligations, (g) with the consent of the Borrowers or (h) to the extent such
“Information” (A) becomes publicly available other than as a result of a breach
of this Section or (B) becomes available to the Lender on a nonconfidential
basis from a source other than the Borrowers. For purposes of this Section,
“Information” means all information received from any Loan Party relating to
any Loan Party or any of their respective businesses, other than any such
information that is available to the Lender on a nonconfidential basis prior to
disclosure by any Loan Party, provided that, in the case of information
received from a Loan Party after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything herein to the contrary, “Information” shall not
include, and the Lender may disclose without limitation of any kind, any
information with respect to the “tax treatment” and “tax structure” (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Lender relating to
such tax treatment and tax structure; provided that with respect to any
document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transaction as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the Loans,
Letters of Credit and transactions contemplated hereby.



     9.09 Set-off. In addition to any rights and remedies of the Lender
provided by law, upon the occurrence and during the continuance of any Event of
Default, the Lender is authorized at any time and from time to time, without
prior notice to the Borrowers or any other Loan Party, any such notice being
waived by the Borrowers (on their own behalf and on behalf of each Loan Party)
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, the Lender to or for the
credit or the account of the respective


-58-







 




 Loan Parties against any and all
Obligations owing to the Lender hereunder or under any other Loan Document, now
or hereafter existing, irrespective of whether or not the Lender shall have
made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness. The Lender
agrees promptly to notify the Borrower after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.



     9.10 Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”). If the Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
applicable Borrower. In determining whether the interest contracted for,
charged, or received by the Lender exceeds the Maximum Rate, the Lender may, to
the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.



     9.11 Automatic Debits of Fees. With respect to any fee, or any other cost
or expense (including Attorney Costs) due and payable to the Lender or any of
its Affiliates under the Loan Documents, the Borrowers hereby irrevocably
authorize the Lender and its Affiliates to debit any deposit account of any
Borrower with the Lender or any of its Affiliates in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such
fee or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in the Lender’s sole discretion)
and such amount not debited shall be deemed unpaid. No such debit under this
Section 9.11 shall be deemed a set-off.



     9.12 Joint and Several Liability.



     (a)  Each Borrower shall be liable for all amounts due to the Lender, L/C
Issuer or any Indemnitee (collectively, “Lender Party”) under this Agreement,
regardless of which Borrower actually receives Loans or other extensions of
credit hereunder or the amount of such Loans received or the manner in which
the Lender accounts for such Loans or other Credit Extensions on its books and
records. Each Borrower’s Obligations with respect to Loans or other Credit
Extensions made to it, and each Borrower’s Obligations arising as a result of
the joint and several liability of the Borrowers hereunder, with respect to
Loans or other Credit Extensions made to any other Borrower hereunder, shall be
separate and distinct obligations, but all such Obligations shall be primary
obligations of each Borrower.



     (b)  Each Borrower’s Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
Credit Extensions made to the other Borrowers hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of any other
Borrower or of any promissory note or other document evidencing all or any part
of the


-59-







 




Obligations of any other Borrower, (ii) the absence of any attempt to
collect the Obligations from any other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the
same, (iii) the waiver, consent, extension, forbearance or granting of any
indulgence by the Lender Party with respect to any provision of any instrument
evidencing the Obligations of any other Borrower, or any part thereof, or any
other agreement now or hereafter executed by any other Borrower and delivered
to the Lender Party, (iv) the failure by
any Lender Party to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of any other Borrower, (v) the Lender Party’s election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364 of
the Bankruptcy Code, (vii) the disallowance of all or any portion of the Lender
Party’s claim(s) for the repayment of the Obligations of any other Borrower
under Section 502 of the Bankruptcy Code, or (viii) any other circumstances
which might constitute a legal or equitable discharge or defense of a guarantor
or of any other Borrower. With respect to the Borrower’s Obligations arising
as a result of the joint and several liability of the Borrowers hereunder with
respect to Loans or other Credit Extensions made to any of the other Borrowers
hereunder, each Borrower waives, until the Obligations shall have been paid in
full and the Agreement shall have been terminated, any right to enforce any
right of subrogation or any remedy which the Lender now has or may hereafter
have against such Borrower, any endorser or any guarantor of all or any part of
the Obligations, and any benefit of, and any right to participate in, any
security or collateral given to the Lender to secure payment of the Obligations
or any other liability of such Borrower to the Lender.



Upon any Event of Default, the Lender may proceed directly and at once, without
notice, against any Borrower to collect and recover the full amount, or any
portion of the Obligations, without first proceeding against any other Borrower
or any other Person, or against any security or collateral for the Obligations.
Each Borrower consents and agrees that the Lender shall be under no obligation
to marshal any assets in favor of such Borrower or against or in payment of any
or all of the Obligations.



     9.13 Contribution and Indemnification among the Borrowers. Each Borrower
is obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans or
L/C Obligations made to or incurred by another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an
“Accommodation Payment”), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower’s “Allocable Amount” (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the “Allocable Amount” of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder; provided
that, in relation to any Borrower that is a Domestic Subsidiary, such Allocable
Amount shall be equal to such maximum amount that could be asserted against
such Borrower hereunder without (a) rendering such Borrower “insolvent” within
the meaning of Section 101 (32) of the Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent


-60-







 




Conveyance Act (“UFCA”), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this Section shall be
subordinate in right of payment to the prior payment in full of the
Obligations. The provisions of this Section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.



     9.14 Agency of the Company for each other Borrower. Each Borrower hereby
irrevocably appoints the Company as its agent for all purposes relevant to this
Agreement, including the giving and receipt of notices and execution and
delivery of all documents, instruments and certificates contemplated herein and
all modifications hereto, including each Loan Notice and each Letter of Credit
Application. Any acknowledgement, consent, direction, certification or other
action which might otherwise be valid or effective only if given or taken by
all of the Borrowers or each acting singly, shall be valid and effective if
given or taken only by the Company, whether or not each other Borrower or any
of the other Borrowers joins therein.



     9.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.



     9.16 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Lender in any other Loan Document shall not be deemed
a conflict with this Agreement. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.



     9.17 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Lender,
regardless of any investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge of any Default
at the time of any Credit Extension, and shall continue in full force and
effect as long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied or any Letter of Credit shall remain outstanding.



     9.18 Severability.
If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which


-61-







 




comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.



     9.19 Governing Law.



     (a)  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.



     (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS AND THE LENDER EACH
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS AND THE LENDER EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH OF THE
BORROWERS AND THE LENDER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF
SUCH STATE.



     9.20 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.



     9.21 Time of the Essence. Time is of the essence of the Loan Documents.



     9.22 Entire Agreement. This Agreement and the other Loan Documents
represent the final agreement between the parties and may not be contradicted
by evidence of prior,


-62-







 




 contemporaneous, or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties.





-63-









 



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.




	 	 	 	 	 
	 	 	THE GYMBOREE CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE MANUFACTURING, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYM-MARK, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE RETAIL STORES, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	




Signature Page 1 to Agreement







 



	 	 	 	 	 
	 	 	THE GYMBOREE STORES, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE LOGISTICS PARTNERSHIP
	 	 	 	 	 
	 	 	
By:
	 	GYMBOREE RETAIL STORES, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE PLAY PROGRAMS, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE OPERATIONS, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	




Signature Page 2 to Agreement







 



	 	 	 	 	 
	 	 	GYMBOREE, INC. (CANADA)
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE INDUSTRIES LIMITED
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE U.K. LEASING LIMITED
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	

	 	 	 	 	 
	 	 	GYMBOREE OF IRELAND, LIMITED
	 	 	 	 	 
	 	 	
By:
	 	/s/ Myles McCormick
	 	 	 	 	

	 	 	
Name:
	 	Myles McCormick
	 	 	 	 	

	 	 	
Title:
	 	C.F.O.
	 	 	 	 	




Signature Page 3 to Agreement







 



	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Lisa M. Thomas
	 	 	 	 	

	 	 	
Name:
	 	Lisa M. Thomas
	 	 	 	 	

	 	 	
Title:
	 	Senior Vice President
	 	 	 	 	




Signature Page 4 to Agreement







 



SCHEDULE 1.01(e)




EXISTING LETTERS OF CREDIT





	1.	 	Standby letter of credit number GT201045/01 issued by Bank of America,
Dublin branch, expiry date October 1, 2003, in favor of Quarryvale Two
Limited in a face amount of EUR129,513.28.
	 
	2.	 	Standby letter of credit number 3057750 issued by Bank of America on July
29, 2003 in favor of Liberty Mutual Insurance in a face amount of
$100,000.
	 
	3.	 	Standby letter of credit number 3057779 issued by Bank of America on July
30, 2003 in favor of Royal Indemnity in a face amount of $1,635,000.
	 
	4.	 	Commercial letter of credit number 1120378 issued by Bank of America on
August 1, 2003 in favor of Cotton Craft Textiles in a face amount of
$237,757.50.
	 
	5.	 	Commercial letter of credit number 1120379 issued by Bank of America on
August 1, 2003 in favor of Cotton Craft Textiles in a face amount of
$10,347.40.
	 
	6.	 	Commercial letter of credit number 1120380 issued by Bank of America on
August 1, 2003 in favor of Cotton Craft Textiles in a face amount of
$6,597.85.
	 
	7.	 	Commercial letter of credit number TD605500023002-3 issued by Bank of
America on August 1, 2003 in favor of Merino Co., Limited in a face amount
of $58,684.50.
	 
	8.	 	Commercial letter of credit number TD605500023004-3 issued by Bank of
America on August 4, 2003 in favor of Li and Fung (Trading) Limited in a
face amount of $396,567.79.
	 
	9.	 	Commercial letter of credit number TD605500023005-3 issued by Bank of
America on August 4, 2003 in favor of Li and Fung (Trading) Limited in a
face amount of $8,326,685.71.
	 
	10.	 	Commercial letter of credit number TD605500023007-3 issued by Bank of
America on August 4, 2003 in favor of Li and Fung (Trading) Limited in a
face amount of $958,498.84.
	 
	11.	 	Commercial letter of credit number TD605500023001-3 issued by Bank of
America on August 4, 2003 in favor of Merino Co., Limited in a face amount
of $3,954.83.
	 
	12.	 	Commercial letter of credit number TD605500023003-3 issued by Bank of
America on August 6, 2003 in favor of Li and Fung (Trading) Limited in a
face amount of $456,622,05.
	 
	13.	 	Commercial letter of credit number TD605500023006-3 issued by Bank of
America on August 6, 2003 in favor of Li and Fung (Trading) Limited in a
face amount of $506,885,80.




Schedule 1.01(e)



Page 1







 





SCHEDULE 1.01(g)




GUARANTORS



None.




Schedule 1.01(g)



Page 1







 





SCHEDULE 5.05




SUPPLEMENT TO INTERIM FINANCIAL STATEMENTS





	1.	 	Commitments and Contingencies described in footnote 4 to the Company’s
Consolidated Financial Statements for the year ended February 1, 2003,
plus changes in the amounts of those commitments and contingencies in the
ordinary course of business for the fiscal quarter ended May 3, 2003.
	 
	2.	 	Contingent liabilities related to foreign currency exchange contracts
described in Item 3 to the Company’s Form 10-Q for the period ended May 3,
2003.




Schedule 5.05



Page 1







 





SCHEDULE 5.06




LITIGATION



None.




Schedule 5.06



Page 1







 





SCHEDULE 5.09




EXISTING CREDIT AGREEMENT LIEN FILINGS





	1.	 	Filings with the US Patent and Trademark Office pursuant to the
Trademark and Trademark Applications Security Agreement by and between
Fleet Retail Finance, Inc. and Gym-Mark, Inc., dated as of August 24,
2000.
	 
	2.	 	Charges registered with the Governmental Authorities in Alberta,
British Columbia, Manitoba, Ontario pursuant to the General Security
Agreement by and between Fleet Retail Finance, Inc. and Gymboree, Inc.,
dated as of August 24, 2000.
	 
	3.	 	Charges registered with the U.K. Companies Registrar pursuant to
(a) the Guarantee and Debenture by and between Gymboree U.K., Limited
and Fleet Retail Finance, Inc., et al., dated as of August 24, 2000,
and (b) the Guarantee and Debenture by and between Gymboree U.K.
Leasing Limited and Fleet Retail Finance, Inc., et al., dated as of
August 24, 2000.
	 
	4.	 	Charges registered with the Irish Companies Registrar pursuant to
(a) the Guarantee by and between Gymboree of Ireland Limited and
Gymboree Ireland Leasing Limited, on the one hand, and Fleet Retail
Finance, Inc., dated as of August 24, 2000; (b) the Debenture by and
between Gymboree of Ireland Limited and Fleet Retail Finance, Inc.,
dated as of August 24, 2000; and (c) the Debenture by and between
Gymboree Ireland Leasing Limited and Fleet Retail Finance, Inc., dated
as of August 24, 2000.




Schedule 5.09



Page 1







 





SCHEDULE 5.10




ENVIRONMENTAL MATTERS



None.




Schedule 5.10



Page 1







 





SCHEDULE 5.14




SUBSIDIARIES

AND OTHER EQUITY INVESTMENTS




	 	 	 
	Part (i)	 	
Subsidiaries.
	 	 	 
	 	 	
1. Gymboree Manufacturing, Inc.
	 	 	 
	 	 	
2. Gym-Mark, Inc.
	 	 	 
	 	 	
3. Gymboree Retail Stores, Inc.
	 	 	 
	 	 	
4. The Gymboree Stores, Inc.
	 	 	 
	 	 	
5. Gymboree Logistics Partnership
	 	 	 
	 	 	
6. Gymboree Play Programs, Inc.
	 	 	 
	 	 	
7. Gymboree Operations, Inc.
	 	 	 
	 	 	
8. Gymboree, Inc. (Canada)
	 	 	 
	 	 	
9. Gymboree Industries Holdings Limited
	 	 	 
	 	 	
10. Gymboree Industries Limited
	 	 	 
	 	 	
11. Gymboree Ireland Leasing, Limited
	 	 	 
	 	 	
12. Gymboree U.K. Leasing Limited
	 	 	 
	 	 	
13. Gymboree U.K. Limited
	 	 	 
	 	 	
14. Gymboree of Ireland, Limited
	 	 	 
	 	 	
15. Gymboree Japan K.K.
	 	 	 
	Part (ii)	 	
Other Equity Investments.
	 	 	 
	 	 	
None.





Schedule 5.14



Page 1







 





SCHEDULE 5.19




INTELLECTUAL PROPERTY MATTERS



None.




Schedule 5.19



Page 1







 





SCHEDULE 7.01




EXISTING LIENS





	1.	 	Gymboree U.K. Leasing Limited
	 
	 	 	Charge registered with the U.K. Companies Registrar dated July 13, 1998
in favor of Whiteley Wuidart Interiors Limited under the terms of a lease
in an amount of £164,500.
	 
	2.	 	Gymboree U.K., Limited
	 
	 	 	Charge registered with the U.K. Companies Registrar dated October 8, 1997
in favor of Lloyds Bank plc over Lloyds bank account number 7875149.
	 
	3.	 	The Gymboree Corporation
	 
		 	a. CA UCC-1 number 9616660135 filed 6/11/96, in favor of California State
Board of Equalization, securing a tax lien relating to the property of
the Company in the amount of $1,356.68.
	 
		 	b. CA UCC-1 number 9827360784 filed 9/25/98, in favor of Clarklift Power
Team relating to certain equipment of the Company.
	 
		 	c. CA UCC-1 number 9827360789 filed 9/25/98, in favor of Clarklift Power
Team, relating to certain equipment of the Company.
	 
		 	d. CA UCC-1 number 9900760993 filed 1/6/99, in favor of Transamerica
Business Credit Corporation relating to the equipment, machinery,
furniture, furnishings and fixtures of the Company operated or used in
the operations of the Company at the Dixon, CA distribution center. *
	 
		 	e. CA UCC-1 number 008160979 filed 3/16/00, in favor of Wells Fargo
Equipment Finance Inc. relating to certain equipment of the Company.
	 
		 	f. CA UCC-1 number 0012960790 filed 5/2/00, in favor of El Camino
Resources, Limited relating to equipment Master Lease No. 4386 between
the Company and El Camino Resources, Limited and the equipment leased
thereunder.
	 
		 	g. CA UCC-1 number 0023060228 filed 8/15/00, in favor of Comdisco, Inc.
relating to an equipment Master Lease Agreement between the Company and
Comdisco, Inc. and the equipment leased thereunder.
	 
		 	h. CA UCC-1 number 01187600068 filed 6/29/01, in favor of Caltronics
Business Systems, Inc. relating to an equipment lease and the equipment
leased thereunder.
	 
		 	i. DE UCC-1 number 20897524 filed 3/22/02, in favor of Comdisco.




Schedule 7.01



Page 1







 






	4.	 	Gymboree Logistics Partnership
	 
	 	 	CA UCC-1 number 9900761002 filed 1/6/99, in favor of Transamerica
Business Credit Corporation. *
	 
	5.	 	Gymboree Manufacturing, Inc.
	 
	 	 	CA UCC-1 number 9900761008 filed 1/6/99, in favor of Transamerica
Business Credit Corporation over the equipment, machinery, furniture,
furnishings and fixtures of the Company operated or used in the
operations of the Company at the Dixon, CA distribution center. *
	 
	6.	 	The Borrowers have granted an interest in a Cash Collateral Account to
Fleet Retail Finance, Inc. pursuant to a waiver letter dated July 29, 3003
among the Borrowers and Fleet Retail Finance, Inc.
	 
	* 	 	 Liens relating to obligations of the Borrowers that have otherwise been
satisfied as of the Closing Date. The Borrowers are in the process of
terminating these Liens, and will do so no later than October 31, 2003.




Schedule 7.01



Page 2







 





SCHEDULE 7.02




EXISTING INVESTMENTS





	1.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree
Manufacturing, Inc.
	 
	2.	 	The Gymboree Corporation owns 100% of the common stock of Gym-Mark, Inc.
	 
	3.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree Retail
Stores, Inc.
	 
	4.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree
Stores, Inc.
	 
	5.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree Play
Programs, Inc.
	 
	6.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree
Operations, Inc.
	 
	7.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree, Inc.
(Canada).
	 
	8.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree
Industries Holdings Limited.
	 
	9.	 	Gymboree Industries Holdings Limited owns 100% of the common stock of
Gymboree Industries Limited.
	 
	10.	 	Gymboree Retail Stores, Inc. owns a 99% interest in Gymboree Logistics
Partnership.
	 
	11.	 	Gymboree Stores, Inc. owns a 1% interest in Gymboree Logistics
Partnership.
	 
	12.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree of
Ireland Limited.
	 
	13.	 	The Gymboree Corporation owns 100% of the common stock of GOFI96 Limited.
	 
	14.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree U.K.
Limited.
	 
	15.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree U.K.
Leasing Limited.
	 
	16.	 	The Gymboree Corporation owns 100% of the common stock of Gymboree Japan
K.K.




Schedule 7.02



Page 1







 





SCHEDULE 7.03




EXISTING INDEBTEDNESS





	1.	 	Intercompany Indebtedness due from Gymboree U.K. Leasing
Limited to Gymboree U.K. Limited in the amount of GBP933,203.
	 
	2.	 	Intercompany Indebtedness due from Gymboree of Ireland
Limited (formerly Gymboree Ireland Leasing Limited) to GOFI96
Limited (formerly Gymboree of Ireland Limited) in the amount of
EUR368,839.
	 
	3.	 	Intercompany Indebtedness due from The Gymboree Corporation
to Gymboree Industries Holding Limited in the amount of EUR25,000.
	 
	4.	 	Intercompany Indebtedness due from The Gymboree Corporation
to Gymboree Japan K.K. in the amount of YEN68,224,396.




Schedule 7.03



Page 1







 





SCHEDULE 9.02




NOTICE ADDRESSES AND LENDING OFFICE



THE GYMBOREE CORPORATION:

1700 Airport Boulevard, Suite 200

Burlingame, CA 94010

Attention: Lynda Gustafson

Telephone: (650) 373 7122

Facsimile: (650) 579 1733

Electronic Mail: lynda_gustafson@gymboree.com

Website Address: www.gymboree.com


LENDER


Lending Office for Loans, payments with

respect thereto and payment offers other than

Letter of Credit fees:


BANK OF AMERICA, N.A.

Bank of America, N.A.

Commercial Contact Center

Mailcode: CA7-701-02-54

275 Valencia Avenue

Brea CA 92823-6340

ABA# 111000012

Attn: Susan M. Montes

Telephone: (888) 841 8159 ext 61742

Facsimile: (888) 8418160

Electronic Mail: susan.montes@bankofamerica.com


Lending Office for Letters of Credit and

payments with respect thereto, including

Letter of Credit fees:


BANK OF AMERICA, N.A.

Trade Operations-Los Angeles #22621

333 S. Beaudry Avenue, 19th Floor

Mail Code: CA9-703-19-23

Los Angeles, CA 90017-1466

Attn: Jay Mendon

Telephone: (213) 345 6614

Facsimile: (213) 345 9665

Electronic Mail: Jay.Mendon@BankofAmerica.com



Schedule 9.02



Page 1






 





Notices (other than Requests for Credit Extensions):


BANK OF AMERICA, N.A.

315 Montgomery Street

13th Floor

San Francisco CA 94104

Attn: Lisa Thomas

Senior Vice President

Telephone: (415) 953 1069

Facsimile: (415) 622 1878

Electronic Mail: lisa.thomas@bankofamerica.com



Schedule 9.02



Page 2







 





EXHIBIT A




FORM OF LOAN NOTICE




Date:______________




	 	 	 
	To:	 	
Bank of America, N.A.
	 	 	
315 Montgomery Street
	 	 	
13th Floor
	 	 	
San Francisco CA 94104
	 	 	
Attn: Lisa Thomas
	 	 	
          Senior Vice President





Ladies and Gentlemen:



     Reference is made to that certain Credit Agreement, dated as of August 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), among The Gymboree Corporation, a Delaware
corporation, the additional co-borrowers named therein and Bank of America,
N.A.



     The undersigned hereby requests on behalf of the applicable Borrower
indicated below (or, if no such Borrower is indicated, on its own behalf)
(select one):




	 	 	 	 	 	 	 
	[   ]	 	
A Loan
	 	[   ]
	 	A Conversion or Continuation of a Loan





	1.	 	The applicable Borrower is     
	 
	2.	 	On      (a Business Day).
	 
	3.	 	In the amount of $     
	 
	4.	 	Comprised of      

[Type of Loan requested]
	 
	5.	 	For a Eurodollar Rate Loan: with an Interest Period of     months.



     The borrowing requested herein complies with the proviso to the first
sentence of Section 2.01 of the Agreement.




	 	 	 	 	 
	 	 	THE GYMBOREE CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	




A-1







 



EXHIBIT B




FORM OF NOTE




	 	 	 
	$60,000,000	 	
     , 2003



     FOR VALUE RECEIVED, the undersigned (the “Borrowers”) hereby promise to
pay to the order of BANK OF AMERICA, N.A. (the “Lender”), on the Maturity Date
(as defined in the Credit Agreement referred to below) the principal amount of
     Dollars ($     ), or such lesser principal amount of Loans
(as defined in such Credit Agreement) due and payable by the Borrowers to the
Lender on the Maturity Date under that certain Credit Agreement, dated as of
August 11, 2003 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among the Borrowers and the
Lender.



     The Borrowers promise to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and at such times as are specified in the
Agreement. All payments of principal and interest shall be made to the Lender
in Dollars in immediately available funds at the Lender’s Lending Office. If
any amount is not paid in full when due hereunder, such unpaid amount shall
bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per
annum rate set forth in the Agreement.



     Each Borrower shall be liable for all amounts due to the Lender under this
Note, regardless of which Borrower actually receives Loans or the amount of
such Loans received or the manner in which the Lender accounts for such Loans
on its books and records. Each Borrower’s obligations with respect to Loans
made to it, and each Borrower’s obligations arising as a result of the joint
and several liability of the Borrowers hereunder, shall be separate and
distinct obligations, but all such obligations shall be primary obligations of
each Borrower.



     Each Borrower’s obligations arising as a result of the joint and several
liability of the Borrowers hereunder shall, to the fullest extent permitted by
law, be unconditional irrespective of (i) the validity or enforceability,
avoidance or subordination of the obligations of any other Borrower or of any
promissory note or other document evidencing all or any part of the obligations
of any other Borrower, (ii) the absence of any attempt to collect the
obligations from any other Borrower, any other guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance or granting of any indulgence by the
Lender with respect to any provision of any instrument evidencing the
Obligations of any other Borrower, or any part thereof, or any other agreement
now or hereafter executed by any other Borrower and delivered to the Lender,
(iv) the failure by the Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights to, any security
or collateral for the obligations of any other Borrower, (v) the Lender’s
election, in any


B-1







 




proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of the Lender’s claim(s) for the repayment of the obligations of any
other Borrower under Section 502 of the Bankruptcy Code, or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of any other Borrower.



     With respect to the Borrower’s obligations arising as a result of the
joint and several liability of the Borrowers hereunder, each Borrower waives,
until the obligations shall have been paid in full and the Agreement shall have
been terminated, any right to enforce any right of subrogation or any remedy
which the Lender now has or may hereafter have against such Borrower, any
endorser or any guarantor of all or any part of the obligations, and any
benefit of, and any right to participate in, any security or collateral given
to the Lender to secure payment of the obligations or any other liability of
such Borrower to the Lender.



     This Note is one of the Notes referred to in the Agreement, is entitled to
the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. This Note is also entitled to the
benefits of the Guaranties. Upon the occurrence and continuation of one or
more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. The Lender may
proceed directly and at once, without notice, against any Borrower to collect
and recover the full amount, or any portion of any Borrower’s obligations, as
and when due, without first proceeding against any other Borrower or any other
person, or against any security or collateral for such obligations. Each
Borrower consents and agrees that the Lender shall be under no obligation to
marshal any assets in favor of such Borrower or against or in payment of any or
all of any Borrower’s obligations.



     Loans made by the Lender shall be evidenced by one or more loan accounts
or records maintained by the Lender in the ordinary course of business. The
Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of the Loans and payments with respect thereto.



     The Borrowers, for themselves, their successors and assigns, hereby waive
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.



B-2







 


     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA.




	 	 	 	 	 
	 	 	THE GYMBOREE CORPORATION

GYMBOREE MANUFACTURING, INC.

GYM-MARK, INC.

GYMBOREE RETAIL STORES, INC.

THE GYMBOREE STORES, INC.

GYMBOREE LOGISTICS PARTNERSHIP

GYMBOREE PLAY PROGRAMS, INC.

GYMBOREE OPERATIONS, INC.

GYMBOREE, INC. (CANADA)

GYMBOREE INDUSTRIES LIMITED

GYMBOREE U.K. LEASING LIMITED

GYMBOREE OF IRELAND, LIMITED
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	




B-3







 



LOANS AND PAYMENTS WITH RESPECT THERETO




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Amount of	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Principal	 	Outstanding	 	 	 	 
	 	 	Type of	 	Amount of	 	End of	 	or Interest	 	Principal	 	 	 	 
	 	 	Loan	 	Loan	 	Interest	 	Paid This	 	Balance This	 	Notation
	Date	 	Made	 	Made	 	Period	 	Date	 	Date	 	Made By
	
	 	
	 	
	 	
	 	
	 	
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





B-4









 




EXHIBIT C




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:___________




	 	 	 	 	 
	To:	 	Bank of America, N.A.
	 	 	315 Montgomery Street
	 	 	13th Floor
	 	 	San Francisco CA 94104
	 	 	
Attn:
	 	Lisa Thomas
	 	 	 	 	Senior Vice President



Ladies and Gentlemen:



     Reference is made to that certain Credit Agreement, dated as of August 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), between The Gymboree Corporation, a Delaware
corporation (the “Company”), the additional co-borrowers named therein and Bank
of America, N.A. (the “Lender”).



     The undersigned Responsible Officer hereby certifies as of the date hereof
that he/she is the      of the Company, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Lender on the behalf
of the Company, and that:



     [Use following paragraph 1 for fiscal year-end audited financial
statements]



     1.     Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
the Company ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.



     [Use following paragraph 1 for fiscal quarter-end financial statements]



     1.     Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of the
Company ended as of the above date. Such financial statements fairly present
the financial condition, results of operations and cash flows of the Company
and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.



     2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Company during the accounting period covered by the attached financial
statements.



C-1







 


     3.     A review of the activities of the Company during such fiscal period has
been made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Company performed and observed all its
Obligations under the Loan Documents, and




[select one:]



[to the best knowledge of the undersigned during such fiscal period, the
Company performed and observed each covenant and condition of the Loan
Documents applicable to it,]




—or—



[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]



     4.     The representations and warranties of the Company and each Borrower
contained in Article V of the Agreement, or which are contained in any document
furnished at any time under or in connection with the Loan Documents, are true
and correct on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01 of the Agreement, including the
statements in connection with which this Compliance Certificate is delivered.



     5.     The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this
Certificate.



     [Use following paragraph 1 only for fiscal year-end consolidating
financial statements]



     1. Attached hereto as Schedule 1 are the year-end consolidating financial
statements required by Section 6.01(d) of the Agreement for the fiscal year of
the Company ended as of the above date.



C-2







 


     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
     ,      .




	 	 	 	 	 
	 	 	
THE GYMBOREE CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	




C-3







 



For the Quarter/Year ended ___________ (“Statement Date”)




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 	 	 
	I.	 	
Section
7.11(a) —
Consolidated
Tangible
Net Worth	 	 
	 	 	
A.
	 	85% Consolidated Tangible Net Worth at Benchmark Date:
	 	$
	 	 	 	 	 	 	

	 	 	
B.
	 	75% of Consolidated Net Income for each full fiscal quarter
ending after Benchmark Date (no reduction for losses):
	 	$
	 	 	 	 	 	 	

	 	 	
C.
	 	100% of increases in Shareholders’ Equity after Benchmark
Date from issuance and sale of capital stock or other
equity interests (including from conversion of debt securities):
	 	$
	 	 	 	 	 	 	

	 	 	
D.
	 	Minimum required Consolidated Tangible Net Worth	 	 
	 	 	 	 	(Lines l.A +I.B + I.C):
	 	$
	 	 	 	 	 	 	

	 	 	
E.
	 	Actual Consolidated Tangible Net Worth at Statement Date:	 	 
	 	 	 	 	1.    Shareholders’ Equity:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	2.    Intangible Assets:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	3.    Consolidated Tangible Net Worth (I.E.1 less I.E.2):
	 	$
	 	 	 	 	 	 	

	 	 	
F.
	 	Excess (deficient) for covenant compliance (Line I.E.3 less I.D):
	 	$
	 	 	 	 	 	 	

	II.	 	
Section
7.11 (b) —
Consolidated
Asset
Coverage
Ratio	 	 	 	 
	 	 	
A.
	 	Current Assets determined as of Statement Date:	 	 
	 	 	 	 	1.    Cash:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	2.    Marketable Securities:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	3.    Trade Accounts Receivable:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	4.    Inventory:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	5.    Current Assets (II.A.1 + 2 + 3 + 4):
	 	$
	 	 	 	 	 	 	

	 	 	
B.
	 	Current Liabilities as of Statement Date
	 	$
	 	 	 	 	 	 	

	 	 	
C.
	 	Outstanding Amounts as of Statement Date (without duplication
to II.B):
	 	$
	 	 	 	 	 	 	

	 	 	
D.
	 	Consolidated Asset Coverage Ratio (II.A.5 ÷ (II.B + II.C):
	 	     to 1.00
	 	 	 	 	Minimum Required: 1.00:1.00	 	 



C-4







 



	 	 	 	 	 	 	 
	III.	 	
Section
7.11(c) —
Consolidated
Adjusted
Leverage
Ratio	 	 
	 	 	
A.
	 	Consolidated EBITDA for four consecutive fiscal
quarters ending on above date (“Subject Period”):	 	 
	 	 	 	 	1.    Consolidated Net Income for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	2.    Consolidated Interest Charges for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	3.    Provision for income taxes payable during Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	4.    Depreciation expense for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	5.    Amortization expense for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	6.    Consolidated EBITDA (III.A.1 + 2 + 3 + 4 + 5):
	 	$
	 	 	 	 	 	 	

	 	 	
B.
	 	1.    Lease Expenses for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	 	 	2.    Consolidated Adjusted EBITDAR (III.A.6 + III.B.1):
	 	$
	 	 	 	 	 	 	

	 	 	
C.
	 	Consolidated Funded Indebtedness at Statement Date:
	 	$
	 	 	 	 	 	 	

	 	 	
D.
	 	Lease Expenses for Subject Period:
	 	$
	 	 	 	 	 	 	

	 	 	
E.
	 	6 x III.D:
	 	$
	 	 	 	 	 	 	

	 	 	
F.
	 	Consolidated Leverage Ratio ((III.C+III.E) ÷ III.B.2):
	 	     to 1.00
	 	 	 	 	Maximum permitted. 3.00:1.00	 	 
	IV.	 	
Section
7.12 —
Capital
Expenditures	 	 
	 	 	
A.
	 	Capital expenditures made during fiscal year to date:
	 	$
	 	 	 	 	 	 	

	 	 	
B.
	 	Maximum permitted capital expenditures for fiscal year:
	 	$
	 	 	 	 	 	 	

	 	 	
C.
	 	Excess (deficient) for covenant compliance	 	 
	 	 	 	 	(Line IV.B less IV.A):
	 	$
	 	 	 	 	 	 	




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EXHIBIT D




FORM OF GUARANTY



     THIS GUARANTY AGREEMENT (this “Guaranty”), dated as of [     ],
200     , is made by each Guarantor named in the signature pages hereof (each a
“Guarantor” and, collectively, the “Guarantors”) in favor of Bank of America,
N.A., (the “Lender”).



     WHEREAS, The Gymboree Corporation, a Delaware corporation (the “Company”),
certain Subsidiaries of the Company as co-borrowers and the Lender are parties
to a Credit Agreement dated as of August 11, 2003 (as amended, modified,
renewed or extended from time to time, the “Credit Agreement”).



     WHEREAS, it is a condition precedent to the Loans and issuances of Letters
of Credit under the Credit Agreement that each Guarantor guarantee the
indebtedness and other obligations of the Borrowers to the Lender under or in
connection with the Credit Agreement as set forth herein. Each Guarantor, as a
Subsidiary of the Company, will derive substantial direct and indirect benefits
from the making of the Loans to, and issuances of Letters of Credit for the
account of, the Company and the other Borrowers pursuant to the Credit
Agreement (which benefits are hereby acknowledged by each Guarantor).



     NOW, THEREFORE, to induce the Lender to enter into the Credit Agreement,
and in consideration thereof, each Guarantor hereby agrees as follows:



     SECTION 1 Definitions; Interpretation.



     (a)  Terms Defined in Credit Agreement. All capitalized terms used in this
Guaranty (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.



     (b)  Certain Defined Terms. As used in this Guaranty (including in the
recitals hereof), the following terms shall have the following meanings:



     “Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. §101, et seq.).



     “Guaranteed Obligations” has the meaning set forth in Section 2.



     “Guarantor Documents” means this Guaranty and all other certificates,
documents, agreements and instruments delivered to the Lender under or in
connection with this Guaranty and the Loan Documents.



     “Insolvency Proceeding” means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling
of assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in either case
undertaken under Debtor Relief Laws.



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     “Other Taxes” has the meaning set forth in Section 9(c).



     “Solvent” means, as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person’s
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code and, in the alternative, for purposes of the
UFTA or UFCA; (b) the present fair saleable value of the property of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c)
such Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
unreasonably small capital.



     “Subordinated Debt” has the meaning set forth in Section 7(a).



     “Subordinated Debt Payments” has the meaning set forth in Section 7(b).



     “Taxes” has the meaning set forth in Section 9(b).



     “UFCA” means the Uniform Fraudulent Conveyance Act as in effect in the
applicable jurisdiction.



     “UFTA” means the Uniform Fraudulent Transfer Act as in effect in the
applicable jurisdiction.



     (c)  Interpretation. The rules of interpretation set forth in Sections
1.02 to 1.05 of the Credit Agreement shall be applicable to this Guaranty and
are incorporated herein by this reference.



     SECTION 2 Guaranty.



     (a)  Guaranty. Each Guarantor hereby unconditionally and irrevocably
guarantees to the Lender, and its respective successors, endorsees, transferees
and assigns, the full and prompt payment when due (whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise) and
performance of the indebtedness, liabilities and other obligations of the
Borrowers to the Lender under or in connection with the Credit Agreement, the
Notes and the other Loan Documents, including all unpaid principal of the
Loans, all amounts owing in respect of the L/C Obligations, all interest
accrued thereon, all fees due under the Credit Agreement and all other amounts
payable by the Borrowers to the Lender thereunder or in connection therewith.
The terms “indebtedness,” “liabilities” and “obligations” are used herein in
their most comprehensive sense and include any and all advances, debts,
obligations and liabilities, now existing or hereafter arising, whether
voluntary or involuntary and whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether recovery
upon such indebtedness, liabilities and obligations may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under any Debtor
Relief Law, and

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including interest that accrues after the commencement by or against the
Borrowers or any Affiliate thereof of any proceeding under any Debtor Relief
Laws naming such Person as the debtor in such proceeding. The foregoing
indebtedness, liabilities and other obligations of the Borrowers, and all other
indebtedness, liabilities and obligations to be paid or performed by the
Guarantors in connection with this Guaranty (including any and all amounts due
under Section 15), shall hereinafter be collectively referred to as the
“Guaranteed Obligations.”



     (b)  Limitation of Guaranty. To the extent that any court of competent
jurisdiction shall impose by final judgment under applicable law (including the
UFTA and §§544 and 548 of the Bankruptcy Code) any limitations on the amount of
any Guarantor’s liability with respect to the Guaranteed Obligations which the
Lender can enforce under this Guaranty, the Lender by its acceptance hereof
accepts such limitation on the amount of such Guarantor’s liability hereunder
to the extent needed to make this Guaranty and the Guarantor Documents fully
enforceable and nonavoidable.



     SECTION 3 Liability of Guarantors. The liability of the Guarantors under
this Guaranty shall be irrevocable, absolute, independent and unconditional,
and shall not be affected by any circumstance which might constitute a
discharge of a surety or guarantor other than the indefeasible payment and
performance in full of all Guaranteed Obligations. In furtherance of the
foregoing and without limiting the generality thereof, each Guarantor agrees as
follows:



     (i)  such Guarantor’s liability hereunder shall be the immediate, direct,
and primary obligation of such Guarantor and shall not be contingent upon the
Lender’s exercise or enforcement of any remedy it may have against the
Borrowers or any other Person;



     (ii)  this Guaranty is a guaranty of payment when due and not merely of
collectibility;



     (iii)  such Guarantor’s payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge such
Guarantor’s liability for any portion of the Guaranteed Obligations remaining
unsatisfied; and



     (iv)  such Guarantor’s liability with respect to the Guaranteed Obligations
shall remain in full force and effect without regard to, and shall not be
impaired or affected by, nor shall such Guarantor be exonerated or discharged
by, any of the following events:



     (A)  any Insolvency Proceeding with respect to any Borrower, such
Guarantor, any other Loan Party or any other Person;



     (B)  any limitation, discharge, or cessation of the liability of any
Borrower, such Guarantor, any other Loan Party or any other Person for any
Guaranteed Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of any of the Guaranteed
Obligations or the Loan Documents;



     (C)  any merger, acquisition, consolidation or change in structure of any
Borrower, such Guarantor or any other Loan Party or Person, or any sale, lease,
transfer or other disposition of any or all of the assets or shares of any
Borrower, such Guarantor, any other Loan Party or other Person;

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     (D)  any assignment or other transfer, in whole or in part, of the Lender’s
interests in and rights under this Guaranty or the other Loan Documents,
including the Lender’s right to receive payment of the Guaranteed Obligations;



     (E)  any claim, defense, counterclaim or set-off, other than that of prior
performance, that any Borrower, such Guarantor, any other Loan Party or other
Person may have or assert, including any defense of incapacity or lack of
corporate or other authority to execute any of the Loan Documents;



     (F)  the Lender’s amendment, modification, renewal, extension, cancellation
or surrender of any Loan Document or any Guaranteed Obligations;



     (G)  the Lender’s vote, claim, distribution, election, acceptance, action
or inaction in any Insolvency Proceeding related to the Guaranteed Obligations;
and



     (H)  any other guaranty, whether by such Guarantor or any other Person, of
all or any part of the Guaranteed Obligations or any other indebtedness,
obligations or liabilities of any Borrower to the Lender.



     SECTION 4 Consents of Guarantors. Each Guarantor hereby unconditionally
consents and agrees that, without notice to or further assent from such
Guarantor:



     (i)  the principal amount of the Guaranteed Obligations may be increased or
decreased and additional Obligations of the Loan Parties under the Loan
Documents may be incurred, by one or more amendments, modifications, renewals
or extensions of any Loan Document or otherwise;



     (ii)  the time, manner, place or terms of any payment under any Loan
Document may be extended or changed, including by an increase or decrease in
the interest rate on any Guaranteed Obligation or any fee or other amount
payable under such Loan Document, by an amendment, modification or renewal of
any Loan Document or otherwise;



     (iii)  the time any Borrower’s (or any other Person’s) performance of or
compliance with any term, covenant or agreement on its part to be performed or
observed under any Loan Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as the Lender
may deem proper;



     (iv)  the Lender may discharge or release, in whole or in part, any other
Loan Party or any other Person liable for the payment and performance of all or
any part of the Guaranteed Obligations, and may permit or consent to any such
action or any result of such action, nor shall the Lender be liable to the
Guarantors for any failure to collect or enforce payment or performance of the
Guaranteed Obligations from any Person;



     (v)  the Lender may take and hold security (legal or equitable) of any
kind, at any time, as collateral for the Guaranteed Obligations, and may, from
time to time, in whole or in part, exchange, sell, surrender, release,
subordinate, modify, waive, rescind, compromise or

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extend such security and may permit or consent to any such action or the
result of any such action, and may apply such security and direct the order or
manner of sale thereof;



     (vi)  the Lender may request and accept other guaranties of the Guaranteed
Obligations and any other indebtedness, obligations or liabilities of the
Borrowers to the Lender and may, from time to time, in whole or in part,
surrender, release, subordinate, modify, waive, rescind, compromise or extend
any such guaranty and may permit or consent to any such action or the result of
any such action; and



     (vii)  the Lender may exercise, or waive or otherwise refrain from
exercising, any other right, remedy, power or privilege (including the right to
accelerate the maturity of any Loan and any power of sale) granted by any Loan
Document or other security document or agreement, or otherwise available to the
Lender, with respect to the Guaranteed Obligations, even if the exercise of
such right, remedy, power or privilege affects or eliminates any right of
subrogation or any other right of the Guarantors against the Borrowers;



     all as the Lender may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.



     SECTION 5 Guarantor Waivers.



     (a)  Certain Waivers. Each Guarantor waives and agrees not to assert:



     (i)  any right to require the Lender to marshal assets in favor of any
Borrower, such Guarantor, any other Loan Party or any other Person, to proceed
against any Borrower, any other Loan Party or any other Person, or to pursue
any other right, remedy, power or privilege of the Lender whatsoever;



     (ii)  the defense of the statute of limitations in any action hereunder or
for the collection or performance of the Guaranteed Obligations;



     (iii)  any defense arising by reason of any lack of corporate or other
authority or any other defense of any Borrower, such Guarantor or any other
Person;



     (iv)  any defense based upon the Lender’s errors or omissions in the
administration of the Guaranteed Obligations;



     (v)  any rights to set-offs and counterclaims;



     (vi)  any defense based upon an election of remedies (including, if
available, an election to proceed by nonjudicial foreclosure) which destroys or
impairs the subrogation rights of such Guarantor or the right of such Guarantor
to proceed against any Borrower or any other obligor of the Guaranteed
Obligations for reimbursement; and



     (vii)  without limiting the generality of the foregoing, to the fullest
extent permitted by law, any defenses or benefits that may be derived from or
afforded by applicable law limiting the liability of or exonerating guarantors
or sureties, or which may conflict with the terms of this Guaranty.





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     (b)  Additional Waivers. Each Guarantor waives any and all notice of the
acceptance of this Guaranty, and any and all notice of the creation, renewal,
modification, extension or accrual of the Guaranteed Obligations, or the
reliance by the Lender upon this Guaranty, or the exercise of any right, power
or privilege hereunder. The Guaranteed Obligations shall conclusively be
deemed to have been created, contracted, incurred and permitted to exist in
reliance upon this Guaranty. Each Guarantor waives promptness, diligence,
presentment, protest, demand for payment, notice of default, dishonor or
nonpayment and all other notices to or upon any Borrower, such Guarantor or any
other Person with respect to the Guaranteed Obligations.



     (c)  Independent Obligations. The obligations of each Guarantor hereunder
are independent of and separate from the obligations of any Borrower and any
other Loan Party and upon the occurrence and during the continuance of any
Default or event of Default, a separate action or actions may be brought
against such Guarantor, whether or not such Borrower or any such other Loan
Party is joined therein or a separate action or actions are brought against any
Borrower or any such other Loan Party.



     (d)  Financial Condition of the Borrowers. No Guarantor shall have any
right to require the Lender to obtain or disclose any information with respect
to: (i) the financial condition or character of any Borrower or the ability of
any Borrower to pay and perform the Guaranteed Obligations; (ii) the Guaranteed
Obligations; (iii) the existence or nonexistence of any other guarantees of all
or any part of the Guaranteed Obligations; (iv) any action or inaction on the
part of the Lender or any other Person; or (v) any other matter, fact or
occurrence whatsoever.



     SECTION 6 Subrogation. Until the Guaranteed Obligations shall be
satisfied in full and the Commitment shall be terminated, no Guarantor shall
have, and no Guarantor shall directly or indirectly exercise, (i) any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
hereunder or otherwise, (ii) any rights of contribution, indemnification,
reimbursement or similar suretyship claims arising out of this Guaranty or
(iii) any other right which it might otherwise have or acquire (in any way
whatsoever) which could entitle it at any time to share or participate in any
right, remedy or security of the Lender as against any Borrower or other Loan
Parties, whether in connection with this Guaranty, any of the other Loan
Documents or otherwise. If any amount shall be paid to any Guarantor on
account of the foregoing rights at any time when all the Guaranteed Obligations
shall not have been paid in full, such amount shall be held in trust for the
benefit of the Lender and shall forthwith be paid to the Lender to be credited
and applied to the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.



     SECTION 7 Subordination.



     (a)  Subordination to Payment of Guaranteed Obligations. All payments on
account of all indebtedness, liabilities and other obligations of the Borrowers
to each Guarantor, whether created under, arising out of or in connection with
any documents or instruments evidencing any Credit Extensions to the Borrowers
or otherwise, including all principal on any such Credit Extensions, all
interest accrued thereon, all fees and all other amounts payable by any
Borrower to such Guarantor in connection therewith, whether now existing or
hereafter arising, and



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whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined (the “Subordinated Debt”) shall be
subject, subordinate and junior in right of payment and exercise of remedies,
to the extent and in the manner set forth herein, to the prior payment in full
in cash or cash equivalents of the Guaranteed Obligations.



     (b)  No Payments. As long as any of the Guaranteed Obligations shall
remain outstanding and unpaid, no Guarantor shall accept or receive any payment
or distribution by or on behalf of any Borrower, directly or indirectly, of
assets of any Borrower of any kind or character, whether in cash, property or
securities, including on account of the purchase, redemption or other
acquisition of Subordinated Debt, as a result of any collection, sale or other
disposition of collateral, or by set-off, exchange or in any other manner, for
or on account of the Subordinated Debt (“Subordinated Debt Payments”), except
that if no Default or Event of Default exists, a Guarantor shall be entitled to
accept and receive regularly scheduled payments and other payments in the
ordinary course on the Subordinated Debt, in accordance with the terms of the
documents and instruments governing the Subordinated Debt and other
Subordinated Debt Payments in respect of Subordinated Debt not evidenced by
documents or instruments, in each case to the extent permitted under Article
VII of the Credit Agreement. During the existence of a Default or Event of
Default (or if any Default or Event of Default would exist immediately after
the making of a Subordinated Debt Payment), and until such Default or Event of
Default is cured or waived, such Guarantor shall not make, accept or receive
any Subordinated Debt Payment. In the event that, notwithstanding the
provisions of this Section 7, any Subordinated Debt Payments shall be received
in contravention of this Section 7 by any Guarantor before all Guaranteed
Obligations are paid in full in cash or cash equivalents, such Subordinated
Debt Payments shall be held in trust for the benefit of the Lender and shall be
paid over or delivered to the Lender for application to the payment in full in
cash or cash equivalents of all Guaranteed Obligations remaining unpaid to the
extent necessary to give effect to this Section 7, after giving effect to any
concurrent payments or distributions to the Lender in respect of the Guaranteed
Obligations.



     (c)  Subordination of Remedies. As long as any Guaranteed Obligations
shall remain outstanding and unpaid, no Guarantor shall, without the prior
written consent of the Lender:



     (i)  accelerate, make demand or otherwise make due and payable prior to the
original stated maturity thereof any Subordinated Debt or bring suit or
institute any other actions or proceedings to enforce its rights or interests
under or in respect of the Subordinated Debt;



     (ii)  exercise any rights under or with respect to (A) any guaranties of
the Subordinated Debt, or (B) any collateral held by it, including causing or
compelling the pledge or delivery of any collateral, any attachment of, levy
upon, execution against, foreclosure upon or the taking of other action against
or institution of other proceedings with respect to any collateral held by it,
notifying any account debtors of any Borrower or asserting any claim or
interest in any insurance with respect to any collateral, or attempt to do any
of the foregoing;



     (iii)  exercise any rights to set-offs and counterclaims in respect of any
indebtedness, liabilities or obligations of such Guarantor to any Borrower
against any of the Subordinated Debt; or

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     (iv)  commence, or cause to be commenced, or join with any creditor other
than the Lender in commencing, any Insolvency Proceeding.



     (d)  Subordination Upon Any Distribution of Assets of the Borrowers. In
the event of any payment or distribution of assets of any Borrower of any kind
or character, whether in cash, property or securities, upon any Insolvency
Proceeding with respect to or involving such Borrower, (i) all amounts owing on
account of the Guaranteed Obligations, including all interest accrued thereon
at the contract rate both before and after the initiation of any such
proceeding, whether or not an allowed claim in any such proceeding, shall first
be paid in full in cash, or payment provided for in cash or in cash
equivalents, before any Subordinated Debt Payment is made; and (ii) to the
extent permitted by applicable law, any Subordinated Debt Payment to which such
Guarantor would be entitled except for the provisions hereof, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution
directly to the Lender for application to the payment of the Guaranteed
Obligations in accordance with clause (i).



     (e)  Authorization to the Lender. If, while any Subordinated Debt is
outstanding, any Insolvency Proceeding is commenced by or against any Borrower
or its property:



     (i)  the Lender is hereby irrevocably authorized and empowered (in the name
of the Lender or in the name of any Guarantor or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including
voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Lender; and



     (ii)  each Guarantor shall promptly take such action as the Lender may
reasonably request (A) to collect the Subordinated Debt for the account of the
Lender and to file appropriate claims or proofs of claim in respect of the
Subordinated Debt, (B) to execute and deliver to the Lender, such powers of
attorney, assignments and other instruments as it may request to enable it to
enforce any and all claims with respect to the Subordinated Debt, and (C) to
collect and receive any and all Subordinated Debt Payments.



     SECTION 8 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination relating to any Guaranteed Obligations, including
Guaranteed Obligations which may exist continuously or which may arise from
time to time under successive transactions, and the Guarantors expressly
acknowledge that this Guaranty shall remain in full force and effect
notwithstanding that there may be periods in which no Guaranteed Obligations
exist. This Guaranty shall continue in effect and be binding upon the
Guarantors until termination of the Commitment and payment and performance in
full of the Guaranteed Obligations.



     SECTION 9 Payments.



     (a)  Payments. Each Guarantor hereby agrees, in furtherance of the
foregoing provisions of this Guaranty and not in limitation of any other right
which the Lender or any other Person may have against such Guarantor by virtue
hereof, upon the failure of any Borrower to


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 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 §362(a) of the Bankruptcy Code),
such Guarantor shall forthwith pay, or cause to be paid, in cash, to the Lender
an amount equal to the amount of the Guaranteed Obligations then due as
aforesaid (including interest which, but for the filing of a petition in any
Insolvency Proceeding with respect to such Borrower, would have accrued on such
Guaranteed Obligations, whether or not a claim is allowed against such Borrower
for such interest in any such Insolvency Proceeding). Each Guarantor shall
make each payment hereunder, unconditionally in full without set-off,
counterclaim or other defense, on the day when due in Dollars, in immediately
available funds, to the Lender at such office of the Lender and to such account
as are specified in the Credit Agreement.



     (b)  Any and all payments by any Guarantor to or for the account of the
Lender under any Guarantor Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding, in the case of
the Lender, taxes imposed on or measured by its overall net income, and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which the
Lender is organized or maintains a lending office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as “Taxes”). If any
Guarantor shall be required by any Laws to deduct any Taxes from or in respect
of any sum payable under any Guarantor Document to the Lender then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 9(b)), the Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Guarantor shall make
such deductions, (iii) such Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within 30 days after the date of such payment, such Guarantor
shall furnish to the Lender the original or a certified copy of a receipt
evidencing payment thereof.



     (c)  In addition, each Guarantor agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any
Guarantor Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Guarantor Document
(hereinafter referred to as “Other Taxes”).



     (d) If any Guarantor shall be required to deduct or pay any Taxes or
Other Taxes from or in respect of any sum payable under any Guarantor Document
to the Lender, such Guarantor shall also pay to the Lender, at the time
interest is paid, such additional amount that the Lender specifies is necessary
to preserve the after-tax yield (after factoring in all taxes, including taxes
imposed on or measured by net income) that the Lender would have received if
such Taxes or Other Taxes had not been imposed.



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     (e)  Each Guarantor agrees to indemnify the Lender for (i) the full amount
of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 9(e)) paid
by the Lender, (ii) amounts payable under Section 9(d) and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. Payment under this subsection (e) shall be made within
30 days after the date the Lender makes a demand therefor.



     (f)  Any payments by any Guarantor hereunder the application of which is
not otherwise provided for herein, shall be applied in the order specified in
Section 8.03 of the Credit Agreement



     (g)  The agreements in this Section 9 shall survive the payment of all
Guaranteed Obligations.



     SECTION 10 Representations and Warranties. Each Guarantor represents and
warrants to the Lender that:



     (a)  Organization and Powers. Each Guarantor is (i) duly organized or
formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (A) own its assets and carry on its business and (B) to
execute, deliver, and perform its obligations under this Guaranty and the other
Guarantor Documents to which it is a party, (iii) is duly qualified and is
licensed and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license, and (iv) is in compliance with all
Laws, except in each case referred to in clause (ii)(A), clause (iii) or clause
(iv), to the extent that failure to do so individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.



     (b)  Authorization; No Conflict. The execution, delivery and performance
by each Guarantor of this Guaranty and any other Guarantor Documents have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (i) contravene the terms of any of such Guarantor’s
Organization Documents; (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
to which such Guarantor is a party or any order, injunction, writ or decree of
any Governmental Authority or arbitral award to which such Guarantor or its
property is subject; or (iii) violate any Law applicable to such Guarantor.



     (c)  Binding Obligation. This Guaranty has been, and the other Guarantor
Documents, when executed and delivered against each Guarantor that is party
thereto, will have been, duly executed and delivered by each such Guarantor
that is party thereto. This Guaranty constitutes, and each other Guarantor
Document when so executed and delivered will constitute, a legal, valid and
binding obligation of such Guarantor, enforceable against each Guarantor that
is party thereto in accordance with its terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency, reorganization and
other similar laws affecting creditors’ rights


D-10







 




 generally, and except that the remedy of specific performance or similar
equitable relief is available only at the discretion of the court before which
enforcement is sought.



     (d)  Governmental Consents. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or
any other Person is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, any Guarantor of this
Guaranty or any other Guarantor Documents.



     (e)  No Prior Assignment. No Guarantor has previously assigned any
interest in the Subordinated Debt or any collateral relating thereto, no Person
other than a Guarantor owns an interest in any of the Subordinated Debt or any
such collateral (whether as joint holders of the Subordinated Debt,
participants or otherwise), and the entire Subordinated Debt is owing only to
the Guarantors.



     (f)  Solvency. Immediately prior to and after and giving effect to the
incurrence of each Guarantor’s obligations under this Guaranty such Guarantor
is and will be Solvent.



     (g)  Consideration. Each Guarantor has received at least “reasonably
equivalent value” (as such phrase is used in §548 of the Bankruptcy Code, in
§3439.04 of the California Uniform Fraudulent Transfer Act and in comparable
provisions of other applicable law) and more than sufficient consideration to
support its obligations hereunder in respect of the Guaranteed Obligations.



     (h)  Independent Investigation. Each Guarantor hereby acknowledges that it
has undertaken its own independent investigation of the financial condition of
the Borrowers and all other matters pertaining to this Guaranty and further
acknowledges that it is not relying in any manner upon any representation or
statement of the Lender with respect thereto. Each Guarantor represents and
warrants that it has received and reviewed copies of the Loan Documents and
that it is in a position to obtain, and it hereby assumes full responsibility
for obtaining, any additional information concerning the financial condition of
the Borrowers and any other matters pertinent hereto that any Guarantor may
desire. No Guarantor is relying upon or expecting the Lender to furnish to
such Guarantor any information now or hereafter in the Lender’s possession
concerning the financial condition of the Borrowers or any other matter.



     SECTION 11 Reporting Covenant. So long as any Guaranteed Obligations
shall remain unsatisfied, each Guarantor agrees that it shall furnish to the
Lender: (a) prompt written notice of any condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; and (b) such other information respecting the operations, properties,
business or condition (financial or otherwise) of such Guarantor or its
Subsidiaries as the Lender may from time to time reasonably request.



     SECTION 12 Additional Affirmative Covenants. So long as any Guaranteed
Obligations shall remain unsatisfied, each Guarantor agrees that:



     (a)  Preservation of Existence, Etc. Each Guarantor shall (i) preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization, except in a
transaction permitted by Section 7.04 or 7.05 of the Credit Agreement; and (ii)
take all reasonable action to maintain all rights, privileges, permits,


D-11







 




 licenses and franchises necessary or desirable in the normal conduct of
its business, except to the extent that failure to do so individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.



     (b)  Further Assurances and Additional Acts. Each Guarantor shall
execute, acknowledge, deliver, file, notarize and register at its own expense
all such further agreements, instruments, certificates, documents and
assurances and perform such acts as the Lender shall deem necessary or
appropriate to effectuate the purposes of this Guaranty and the other Guarantor
Documents, and promptly provide the Lender with evidence of the foregoing
satisfactory in form and substance to the Lender.



     (c)  Credit Agreement Covenants. Each Guarantor shall observe, perform and
comply with all covenants applicable to such Guarantor set forth in Articles VI
and VII of the Credit Agreement, which by their terms the Borrowers are
required to cause such Guarantor to observe, perform and comply with, as if
such covenants were set forth in full herein.



     (d)  Governmental Consents. Each Guarantor shall maintain all
authorizations, consents, approvals, licenses, exemptions of, or filings or
registrations with, any Governmental Authority, or approvals or consents of any
other Person, required in connection with this Guaranty or any other Guarantor
Documents.



     SECTION 13 Notices. Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission) and mailed, faxed, emailed (subject to
the provisions of the final sentence of this Section 13) or delivered, in the
case of any Guarantor, to the address or facsimile number or email address
specified on the signature page hereof, and in the case of the Lender, to the
address or facsimile number or email address specified in the Credit Agreement,
or to such other address, facsimile number or email address as shall be
designated by such party in a notice to the other parties. All such notices
and other communications shall be deemed to be given or made upon the earlier
to occur of (i) actual receipt by the intended recipient and (ii) (A) if
delivered by hand or by courier, when signed for by the intended recipient; (B)
if delivered by mail, four Business Days after deposit in the mails, postage
prepaid; (C) if delivered by facsimile, when sent and receipt has been
confirmed by telephone, when delivered; and (D) if delivered by electronic mail
(which form of delivery is subject to the provisions of the final sentence of
this Section 13), when delivered. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder. Electronic mail
and Internet and intranet websites may be used only to distribute routine
communications, and to distribute documents for execution by the parties
thereto, and may not be used for any other purpose.



     SECTION 14 No Waiver; Cumulative Remedies. No failure by the Lender to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or under any other Guarantor Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein or therein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.



D-12







 


     SECTION 15 Costs and Expenses; Indemnification.



     (a)  Costs and Expenses. Each Guarantor shall: (i) pay or reimburse the
Lender for all costs and expenses incurred in connection with the development,
preparation, negotiation and execution of this Guaranty and the other Guarantor
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs
(including the allocated cost of internal legal services and all disbursements
of internal counsel); and (ii) pay or reimburse the Lender for all costs and
expenses incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Guaranty or the other
Guarantor Documents (including all such costs and expenses incurred during any
“workout” or restructuring in respect of the Guaranteed Obligations and during
any legal proceeding, including any proceeding under any Debtor Relief Law),
including all Attorney Costs. The foregoing costs and expenses shall include
all search, filing, recording, title insurance and appraisal charges and fees
and taxes related thereto, and other out-of-pocket expenses incurred by the
Lender and the cost of independent public accountants and other outside experts
retained by the Lender.



     (b) Indemnification. Whether or not the transactions contemplated hereby
are consummated, each Guarantor shall indemnify, save and hold harmless the
Lender and its respective Affiliates, directors, officers, employees, counsel,
agents and attorneys-in-fact (collectively the “Indemnitees”) from and against
any and all liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Indemnitee in any
way relating to or arising out of or in connection with (i) the execution,
delivery, enforcement, performance or administration of any Guarantor Document
or any other agreement, letter or instrument delivered in connection with the
transactions contemplated thereby or the consummation of the transactions
contemplated thereby, (ii) any Commitment, Loan or Letter of Credit or the use
or proposed use of the proceeds therefrom (including any refusal by the L/C
Issuer to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any
investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
No Indemnitee shall have any liability for any indirect or consequential
damages relating to this Guaranty, the Credit Agreement or any other Guaranty
Document or Loan Document or arising out of its activities in connection
herewith or therewith (whether before or after the Closing Date).



D-13







 


     (c)  Defense. At the election of any Indemnitee, a Guarantor shall defend
such Indemnitee using legal counsel satisfactory to such Indemnitee in such
Person’s sole discretion, at the sole cost and expense of such Guarantor.



     (d)  Interest. Any amounts payable by any Guarantor under this Section 15
or otherwise under this Guaranty if not paid upon demand shall bear interest
from the date of such demand until paid in full, at a fluctuating interest rate
per annum at all times equal to the Default Rate applicable to Base Rate Loans
to the fullest extent permitted by applicable Law. Any such interest shall be
due and payable upon demand and shall be calculated on the basis of a year of
365 or 366 days, as the case may be, and the actual number of days elapsed.



     (e)  Payment. All amounts due under this Section 15 shall be payable within
ten Business Days after demand therefor.



     (f)  Survival. The agreements in this Section 15 shall survive the
termination of the Commitment and repayment of all Guaranteed Obligations.



     SECTION 16 Right of Set-Off. In addition to any rights and remedies of
the Lender provided by law, upon the occurrence and during the continuance of
any Default or Event of Default, the Lender is authorized at any time and from
time to time, without prior notice to any Guarantor, any such notice being
waived by such Guarantor to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by the
Lender to or for the credit or the account of such Guarantor against any and
all Obligations owing to the Lender, now or hereafter existing, irrespective of
whether or not the Lender shall have made demand under this Guaranty or any
other Guarantor Document and although such Obligations may be contingent or
unmatured or denominated in a currency different from that of the applicable
deposit or indebtedness. The Lender agrees (by its acceptance hereof) promptly
to notify such Guarantor after any such set-off and application made by the
Lender; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.



     SECTION 17 Marshalling; Payments Set Aside. The Lender shall not be under
any obligation to marshal any assets in favor of any Guarantor or any other
Person or against or in payment of any or all of the Guaranteed Obligations.
To the extent that any Guarantor makes a payment to the Lender, or the Lender
exercises its right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such set-off
had not occurred.



     SECTION 18 Benefits of Guaranty. This Guaranty is entered into for the
sole protection and benefit of the Lender and its respective successors and
assigns, and no other Person (other than any Indemnitee specified herein) shall
be a direct or indirect beneficiary of, or shall have any direct or indirect
cause of action or claim in connection with, this Guaranty. The Lender, by


D-14







 




 its acceptance of this Guaranty, shall not have any obligations under this
Guaranty to any Person other than the Guarantors, and such obligations shall be
limited to those expressly stated herein.



     SECTION 19 Binding Effect; Assignment.



     (a)  Binding Effect. This Guaranty shall be binding upon each Guarantor
and its successors and assigns, and inure to the benefit of and be enforceable
by the Lender and its respective successors, endorsees, transferees and
assigns.



     (b)  Assignment. Except to the extent otherwise provided in the Credit
Agreement, no Guarantor shall have the right to assign or transfer its rights
and obligations hereunder or under any other Guarantor Documents without the
prior written consent of the Lender. The Lender may, without notice to or
consent by any Guarantor, sell, assign, transfer or grant participations in all
or any portion of the Lender’s rights and obligations hereunder and under the
other Guarantor Documents in connection with any sale, assignment, transfer or
grant of a participation by the Lender in accordance with Section 10.07 of the
Credit Agreement of or in its rights and obligations thereunder and under the
other Loan Documents. In the event of any grant of a participation, the
participant (A) shall be deemed to have a right of set-off under Section 16 in
respect of its participation, and (B) shall also be entitled to the benefits of
Section 15.



     SECTION 20 Governing Law and Jurisdiction.



     (a)  THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.



     (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER GUARANTOR DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR AND THE LENDER (BY
ITS ACCEPTANCE HEREOF) CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS GUARANTY OR ANY OTHER GUARANTOR DOCUMENT. EACH GUARANTOR AND THE LENDER
(BY ITS ACCEPTANCE HEREOF) WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF
SUCH STATE.



     (c)  Each Guarantor hereby irrevocably appoints the Company, with an office
as listed in Section 9.02 of the Credit Agreement, as its authorized agent (in
such capacity, the “Process Agent”) with all powers necessary to receive on its
behalf service of copies of the summons and


D-15







 




 complaint and any other process which may be served in any action or
proceeding arising out of or relating to this Guaranty and the other Guarantor
Documents in any of the courts in and of the State of California. Such service
may be made by mailing or delivering a copy of such process to each Guarantor
in care of the Process Agent at the Process Agent’s address and such Guarantor
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf and agrees that the failure of the Process Agent to give
any notice of any such service to such Guarantor shall not impair or affect the
validity of such service or of any judgment rendered in any action or
proceeding based thereon. As an alternative method of service, such Guarantor
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such Guarantor
at its address specified on the signature page hereof. If for any reason the
Company shall cease to act as Process Agent, such Guarantor shall appoint
forthwith, in the manner provided for herein, a successor Process Agent
qualified to act as an agent for service of process with respect to all courts
in and of the State of California and acceptable to the Lender.



     (d)  Nothing in this Section 20 shall affect the right of the Lender to
serve legal process in any other manner permitted by law or limit the right of
the Lender to bring any action or proceeding against any Guarantor or its
property in the courts of other jurisdictions.



     SECTION 21 Waiver of Jury Trial. EACH GUARANTOR AND THE LENDER (BY ITS
ACCEPTANCE HEREOF) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE GUARANTOR DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES OR ANY OF THEM WITH RESPECT TO THE GUARANTOR DOCUMENTS, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH
GUARANTOR AND THE LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.



     SECTION 22 Entire Agreement; Amendments and Waivers. This Guaranty
together with the other Guarantor Documents embodies the entire agreement of
the Guarantors with respect to the matters set forth herein and supersedes all
prior or contemporaneous agreements and understandings of such Persons, verbal
or written, relating to the subject matter hereof and thereof and shall not be
amended except by written agreement of the Guarantors and the Lender. No
waiver of any rights of the Lender under any provision of this Guaranty or
consent to any departure by any Guarantor therefrom shall be effective unless
in writing and signed by the Lender. Any such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.



     SECTION 23 Severability. If any provision of this Guaranty or the other
Guarantor Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Guaranty and the other Guarantor Documents


D-16







 




 shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.



     SECTION 24 Confidentiality. By its acceptance hereof, the Lender agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to the Credit Agreement, (e) in connection with the exercise of any remedies
hereunder or thereunder or any suit, action or proceeding relating to the
Credit Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 24, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under the Credit Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Loan Party and its obligations, (g) with the
consent of the Guarantor, or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 24 or
(ii) becomes available to the Lender on a nonconfidential basis from a source
other than any Borrower or any Guarantor. For the purposes of this Section 24,
“Information” means all information received from any Guarantor relating to
such Guarantor or its business, other than any such information that is
available to the Lender on a nonconfidential basis prior to disclosure by such
Guarantor (or other Loan Party); provided that, in the case of information
received from any Guarantor after the date hereof, such information is clearly
identified in writing at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section 24 shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Notwithstanding anything herein to the contrary,
“Information” shall not include, and the Lender may disclose without limitation
of any kind, any information with respect to the “tax treatment” and “tax
structure” (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the Lender
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated by the Credit
Agreement.



     SECTION 25 Judgment Currency. If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder or any other
Guarantor Document in one currency into another currency, the rate of exchange
used shall be that at which in accordance with normal banking procedures the
Lender could purchase the first currency with such other currency on the
Business Day preceding that on which final judgment is given. The obligation


D-17







 




 of any Guarantor in respect of any such sum due from it to the Lender
hereunder or under the other Guarantor Documents shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in which such
sum is denominated in accordance with the applicable provisions of the Credit
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Lender of any sum adjudged to be so
due in the Judgment Currency, the Lender may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency. If the
amount of the Agreement Currency so purchased is less than the sum originally
due to the Lender from such Guarantor in the Agreement Currency, such Guarantor
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Lender against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Lender in
such currency, the Lender (by its acceptance hereof) agrees to return the
amount of any excess to such Guarantor (or to any other Person who may be
entitled thereto under applicable law). The agreements in this Section 25 shall
survive the termination of the Commitment and repayment of all Guaranteed
Obligations.



     SECTION 26 Future Guarantors. At such time following the date hereof as
any Subsidiary of the Company (an “Acceding Subsidiary”) is required to accede
hereto pursuant to the terms of Section 6.12 of the Credit Agreement, such
Acceding Subsidiary shall execute and deliver to the Lender an accession
agreement substantially in the form of Annex 1 (the “Accession Agreement’),
signifying its agreement to be bound by the provisions of this Guaranty as a
Guarantor to the same extent as if such Acceding Subsidiary had originally
executed this Guaranty as of the date hereof.



     SECTION 27 Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.



D-18







 


     IN WITNESS WHEREOF, each Guarantor has executed this Guaranty, as of the
date first above written.




	 	 	 	 	 	 	 
	 	 	
[GUARANTOR]
	 	 	By	 	 
	 	 	 	 	
	 	 
	 	 	Title	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 	 	c/o	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Attn.:	 	 
	 	 	 	 	
	 	 
	 	 	Fax No.:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	[GUARANTOR]	 	 
	 	 	By	 	 
	 	 	 	 	
	 	 
	 	 	Title	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 	 	c/o	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Attn.:	 	 
	 	 	 	 	
	 	 
	 	 	Fax No.:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	[GUARANTOR]	 	 
	 	 	By	 	 
	 	 	 	 	
	 	 
	 	 	Title	 	 
	 	 	 	 	

	 	 
	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 	 	c/o	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Attn.:	 	 
	 	 	 	 	
	 	 
	 	 	Fax No.:	 	 
	 	 	 	 	
	 	 



D-19







 



Annex 1

to the Guaranty




FORM OF ACCESSION AGREEMENT




	 	 	 	 	 
	To:	 	
Bank of America, N.A.	 	 
	 	 	 	 	 
	Re:	 	 	 	 
	 	 	


	 	 
	     	 	 	 	 



     Ladies and Gentlemen:



          This Accession Agreement is made and delivered pursuant to Section 26 of
that certain Guaranty dated as of [     ], 200     (as amended, modified,
renewed or extended from time to time, the “Guaranty”), made by each Guarantor
named in the signature pages thereof (each a “Guarantor”) in favor of Bank of
America, N.A., (the “Lender”). All capitalized terms used in this Accession
Agreement and not otherwise defined herein shall have the meanings assigned to
them in either the Guaranty or the Credit Agreement.



          The Gymboree Corporation (the “Company”) is party to that certain Credit
Agreement dated as of August 11, 2003 (the “Credit Agreement”) by and among the
Company, certain subsidiaries of the Company as co-borrowers and the Lender.



          The undersigned,      [insert name of acceding
Guarantor], a      [corporation, partnership, limited
liability company, etc.], is a Subsidiary of the Company and hereby
acknowledges for the benefit of the Lender that it shall be a “Guarantor” for
all purposes of the Guaranty effective from the date hereof. The undersigned
confirms that the representations and warranties set forth in Section 10 of the
Guaranty are true and correct as to the undersigned as of the date hereof.



          Without limiting the foregoing, the undersigned hereby agrees to perform
all of the obligations of a Guarantor under, and to be bound in all respects by
the terms of, the Guaranty, including Section 11 and Section 12 thereof, to the
same extent and with the same force and effect as if the undersigned were an
original signatory thereto.



          This Accession Agreement shall constitute a Loan Document under the Credit
Agreement.



          THIS ACCESSION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.



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



D-20







 



	 	 	 	 	 	 	 
	 	 	[GUARANTOR]
	 	 	By
	 	 	 	 	

	 	 
	 	 	Title
	 	 	 	 	

	 	 
	 	 	 	 	 	 	 
	 	 	Address for Notices:
	 	 	c/o
	 	 	 	 	

	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Attn.:
	 	 	 	 	

	 	 
	 	 	Fax No.:
	 	 	 	 	

	 	 



D-21







 



EXHIBIT E




OPINION MATTERS



     The matters contained in the following Sections of the Credit Agreement
should be covered by the legal opinion relating to the Company and the
additional Borrowers incorporated in the United States:





	 	•	 	Section 5.01(a), (b) and (c)
	 
	 	•	 	Section 5.02
	 
	 	•	 	Section 5.03
	 
	 	•	 	Section 5.04
	 
	 	•	 	Section 5.06
	 
	 	•	 	Section 5.15(b)



     The matters contained in the following Sections of the Credit Agreement
should be covered by the legal opinions to be delivered by foreign counsel
relating to the Borrowers incorporated in the United Kingdom, the Republic of
Ireland and Canada:





	 	•	 	Section 5.01(a), (b) and (c)
	 
	 	•	 	Section 5.02
	 
	 	•	 	Section 5.03
	 
	 	•	 	Section 5.04



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EXHIBIT F




FORM OF REQUEST TO INCREASE COMMITMENT




Date: _____________




	 	 	 	 	 
	To:	 	Bank of America, N.A.  
	 	 	315 Montgomery Street
	 	 	13th Floor
	 	 	San Francisco CA 94104
	 	 	
Attn:
	 	Lisa Thomas
	 	 	
 
	 	Senior Vice President



Ladies and Gentlemen:



     Reference is made to that certain Credit Agreement, dated as of August 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), between The Gymboree Corporation, a Delaware
corporation (the “Company”), the additional co-borrowers named therein and Bank
of America, N.A. (the “Lender”).



     Pursuant to Section 2.12 of the Agreement, on behalf of the Company, the
undersigned Responsible Officer hereby requests the Lender to increase the
Commitment on a one-time basis by [$10,000,000], with effect from [     ].



     The undersigned Responsible Officer hereby certifies as of the date hereof
that he/she is the      of the Company, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Lender on the behalf
of the Company, and that:



     1.     Attached hereto is a true, correct and complete copy of resolutions
authorizing the Company to increase the Commitment adopted by the Board of
Directors of the Company at a meeting duly called, convened and held on
[     ] at which a quorum was present and acting throughout. Such
resolutions have not been amended, rescinded or modified since their adoption
and are in full force and effect as of this date.



     2.     Each of the Loan Parties has, by all necessary corporate or other
organizational action, approved or consented to the increase of the Commitment
by the amount stated herein, and such approvals or consents are in full force
and effect as of this date.



     3.     Attached hereto as Schedule 1 is the duly executed Consent and
Agreement of the Borrowers to the delivery of this request and to the increase
in the Commitment.



     4.     Before and after giving effect to the increase of the Commitment,

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     (a)  the representations and warranties of the Company and each Borrower
contained in Article V of the Agreement, or which are contained in any document
furnished at any time under or in connection with the Loan Documents, are and
shall be true and correct on and as of the date hereof, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are and shall be true and correct as of such earlier date,
and except that for purposes of this Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 of the
Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01 of the
Agreement; and



     (b)  as of the date hereof, no Default or Event of Default exists.



     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
     ,      .




	 	 	 	 	 	 	 
	 	 	
THE GYMBOREE CORPORATION
	 	 	 	 	 	 	 
	 	 	
By:
	 	 	 	 	

	 	 
	 	 	
Name:
	 	 	 	 	

	 	 
	 	 	
Title:
	 	 	 	 	

	 	 



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SCHEDULE 1




CONSENT AND AGREEMENT OF BORROWERS



     Reference is made to that certain Credit Agreement, dated as of August 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), between The Gymboree Corporation, a Delaware
corporation (the “Company”), the additional co-borrowers named therein (the
“Borrowers”) and Bank of America, N.A. (the “Lender”). Pursuant to Section
2.12 of the Agreement, the Company has requested the Lender to increase the
Commitment on a one-time basis by [$10,000,000], with effect from [     ].
The Borrowers hereby acknowledge and consent to the delivery by the Company of
the request to increase the Commitment by [$10,000,000] and to such increase in
the Commitment.



GYMBOREE MANUFACTURING, INC.

GYM-MARK, INC.

GYMBOREE RETAIL STORES, INC.

THE GYMBOREE STORES, INC.

GYMBOREE LOGISTICS PARTNERSHIP

GYMBOREE PLAY PROGRAMS, INC.

GYMBOREE OPERATIONS, INC.

GYMBOREE, INC. (CANADA)

GYMBOREE INDUSTRIES LIMITED.

GYMBOREE U.K. LEASING LIMITED

GYMBOREE OF IRELAND, LIMITED



	 	 	 	 	 
	By:	 	 	 	 
	 	 	


	 	 
	Name:	 	 	 	 
	 	 	


	 	 
	Title:	 	 	 	 
	 	 	


	 	 





F-3