exv10w17






Exhibit 10.17




REVOLVING CREDIT




AND



SECURITY AGREEMENT



PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)




WITH




VALUEVISION MEDIA, INC.

VALUEVISION INTERACTIVE, INC.

VVI FULFILLMENT CENTER, INC.

VALUEVISION MEDIA ACQUISITIONS, INC.

VALUEVISION RETAIL, INC.




(BORROWERS)




November 25, 2009










 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	Page
	I. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1. Accounting Terms
	 	 	1	 
	1.2. General Terms
	 	 	1	 
	1.3. Uniform Commercial Code Terms
	 	 	27	 
	1.4. Certain Matters of Construction
	 	 	27	 
	1.5. Fiscal Periods
	 	 	28	 
	 
	 	 	 	 
	II. ADVANCES, PAYMENTS
	 	 	28	 
	 
	 	 	 	 
	2.1. Revolving Advances
	 	 	28	 
	2.2. Procedure for Revolving Advances Borrowing
	 	 	29	 
	2.3. Disbursement of Advance Proceeds
	 	 	31	 
	2.4. Intentionally Omitted
	 	 	32	 
	2.5. Maximum Advances
	 	 	32	 
	2.6. Repayment of Advances
	 	 	32	 
	2.7. Repayment of Excess Advances
	 	 	32	 
	2.8. Statement of Account
	 	 	33	 
	2.9. Letters of Credit
	 	 	33	 
	2.10. Issuance of Letters of Credit
	 	 	33	 
	2.11. Requirements For Issuance of Letters of Credit
	 	 	34	 
	2.12. Disbursements, Reimbursement
	 	 	34	 
	2.13. Repayment of Participation Advances
	 	 	36	 
	2.14. Documentation
	 	 	36	 
	2.15. Determination to Honor Drawing Request
	 	 	36	 
	2.16. Nature of Participation and Reimbursement Obligations
	 	 	37	 
	2.17. Indemnity
	 	 	38	 
	2.18. Liability for Acts and Omissions
	 	 	38	 
	2.19. Additional Payments
	 	 	40	 
	2.20. Manner of Borrowing and Payment
	 	 	40	 
	2.21. Mandatory Prepayments
	 	 	41	 
	2.22. Use of Proceeds
	 	 	41	 
	2.23. Defaulting Lender
	 	 	42	 
	 
	 	 	 	 
	III. INTEREST AND FEES
	 	 	43	 
	 
	 	 	 	 
	3.1. Interest
	 	 	43	 
	3.2. Letter of Credit Fees
	 	 	43	 
	3.3. Closing Fee and Facility Fee
	 	 	44	 
	3.4. Collateral Evaluation Fee, Collateral Monitoring Fee and Appraisal Fee
	 	 	44	 
	3.5. Computation of Interest and Fees
	 	 	45	 
	3.6. Maximum Charges
	 	 	45	 
	3.7. Increased Costs
	 	 	45	 
	3.8. Basis For Determining Interest Rate Inadequate or Unfair
	 	 	46	 
	3.9. Capital Adequacy
	 	 	47	 






i









 






	 	 	 	 	 
	 	 	 	Page
	3.10. Gross Up for Taxes
	 	 	47	 
	3.11. Withholding Tax Exemption
	 	 	47	 
	 
	 	 	 	 
	IV. COLLATERAL: GENERAL TERMS
	 	 	48	 
	 
	 	 	 	 
	4.1. Security Interest in the Collateral
	 	 	48	 
	4.2. Perfection of Security Interest
	 	 	49	 
	4.3. Disposition of Collateral
	 	 	49	 
	4.4. Preservation of Collateral
	 	 	49	 
	4.5. Ownership of Collateral
	 	 	50	 
	4.6. Defense of Agent’s and Lenders’ Interests
	 	 	50	 
	4.7. Books and Records
	 	 	51	 
	4.8. Financial Disclosure
	 	 	51	 
	4.9. Compliance with Laws
	 	 	51	 
	4.10. Inspection of Premises
	 	 	51	 
	4.11. Insurance
	 	 	52	 
	4.12. Failure to Pay Insurance
	 	 	52	 
	4.13. Payment of Taxes
	 	 	53	 
	4.14. Payment of Leasehold Obligations
	 	 	53	 
	4.15. Receivables
	 	 	53	 
	4.16. Inventory
	 	 	56	 
	4.17. Maintenance of Equipment
	 	 	56	 
	4.18. Exculpation of Liability
	 	 	56	 
	4.19. Environmental Matters
	 	 	56	 
	4.20. Financing Statements
	 	 	58	 
	 
	 	 	 	 
	V. REPRESENTATIONS AND WARRANTIES
	 	 	58	 
	 
	 	 	 	 
	5.1. Authority
	 	 	58	 
	5.2. Formation and Qualification
	 	 	59	 
	5.3. Survival of Representations and Warranties
	 	 	59	 
	5.4. Tax Returns
	 	 	59	 
	5.5. Financial Statements
	 	 	59	 
	5.6. Entity Names
	 	 	60	 
	5.7. OSHA and Environmental Compliance
	 	 	60	 
	5.8. Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance
	 	 	61	 
	5.9. Patents, Trademarks, Copyrights and Licenses
	 	 	62	 
	5.10. Licenses and Permits
	 	 	62	 
	5.11. Default of Indebtedness
	 	 	63	 
	5.12. No Default
	 	 	63	 
	5.13. No Burdensome Restrictions
	 	 	63	 
	5.14. No Labor Disputes
	 	 	63	 
	5.15. Margin Regulations
	 	 	63	 
	5.16. Investment Company Act
	 	 	63	 
	5.17. Disclosure
	 	 	63	 
	5.18. Intentionally Omitted
	 	 	63	 
	5.19. Swaps
	 	 	64	 
	5.20. Conflicting Agreements
	 	 	64	 
	5.21. Application of Certain Laws and Regulations
	 	 	64	 






ii









 






	 	 	 	 	 
	 	 	 	Page
	5.22. Business and Property of Borrowers
	 	 	64	 
	5.23. Section 20 Subsidiaries
	 	 	64	 
	5.24. Anti-Terrorism Laws
	 	 	64	 
	5.25. Trading with the Enemy
	 	 	65	 
	5.26. Federal Securities Laws
	 	 	65	 
	5.27. Equity Interests
	 	 	65	 
	5.28. Credit Card Arrangements
	 	 	65	 
	5.29. Inactive Subsidiaries
	 	 	66	 
	 
	 	 	 	 
	VI. AFFIRMATIVE COVENANTS
	 	 	66	 
	 
	 	 	 	 
	6.1. Payment of Fees
	 	 	66	 
	6.2. Conduct of Business and Maintenance of Existence and Assets
	 	 	66	 
	6.3. Violations
	 	 	66	 
	6.4. Government Receivables
	 	 	66	 
	6.5. Financial Covenants
	 	 	66	 
	6.6. Execution of Supplemental Instruments
	 	 	67	 
	6.7. Payment of Indebtedness
	 	 	67	 
	6.8. Standards of Financial Statements
	 	 	67	 
	6.9. Federal Securities Laws
	 	 	68	 
	6.10. Post Closing Matters
	 	 	68	 
	 
	 	 	 	 
	VII. NEGATIVE COVENANTS
	 	 	68	 
	 
	 	 	 	 
	7.1. Merger, Consolidation, Acquisition and Sale of Assets
	 	 	68	 
	7.2. Creation of Liens
	 	 	69	 
	7.3. Guarantees
	 	 	69	 
	7.4. Investments
	 	 	69	 
	7.5. Loans
	 	 	69	 
	7.6. Capital Expenditures
	 	 	69	 
	7.7. Dividends
	 	 	69	 
	7.8. Indebtedness
	 	 	70	 
	7.9. Nature of Business
	 	 	70	 
	7.10. Transactions with Affiliates
	 	 	70	 
	7.11. Leases
	 	 	70	 
	7.12. Subsidiaries
	 	 	70	 
	7.13. Fiscal Year and Accounting Changes
	 	 	70	 
	7.14. Pledge of Credit
	 	 	70	 
	7.15. Amendment of Articles of Incorporation, By-Laws
	 	 	70	 
	7.16. Compliance with ERISA
	 	 	71	 
	7.17. Prepayment of Indebtedness
	 	 	71	 
	7.18. Anti-Terrorism Laws
	 	 	71	 
	7.19. Trading with the Enemy Act
	 	 	72	 
	7.20. Credit Card Arrangements
	 	 	72	 
	7.21. Inactive Subsidiaries
	 	 	72	 
	7.22. Direct TV Payment
	 	 	72	 
	 
	 	 	 	 
	VIII. CONDITIONS PRECEDENT
	 	 	72	 
	 
	 	 	 	 
	8.1. Conditions to Initial Advances
	 	 	72	 






iii









 






	 	 	 	 	 
	 	 	 	Page
	8.2. Conditions to Each Advance
	 	 	75	 
	 
	 	 	 	 
	IX. INFORMATION AS TO BORROWERS
	 	 	75	 
	 
	 	 	 	 
	9.1. Disclosure of Material Matters
	 	 	76	 
	9.2. Schedules
	 	 	76	 
	9.3. Environmental Reports
	 	 	76	 
	9.4. Litigation
	 	 	76	 
	9.5. Material Occurrences
	 	 	76	 
	9.6. Government Receivables
	 	 	77	 
	9.7. Annual Financial Statements
	 	 	77	 
	9.8. Quarterly Financial Statements
	 	 	77	 
	9.9. Monthly Financial Statements
	 	 	77	 
	9.10. Other Reports
	 	 	78	 
	9.11. Additional Information
	 	 	78	 
	9.12. Projected Operating Budget
	 	 	78	 
	9.13. Variances From Operating Budget
	 	 	78	 
	9.14. Notice of Suits, Adverse Events
	 	 	78	 
	9.15. ERISA Notices and Requests
	 	 	78	 
	9.16. Additional Documents
	 	 	79	 
	 
	 	 	 	 
	X. EVENTS OF DEFAULT
	 	 	79	 
	 
	 	 	 	 
	10.1. Nonpayment
	 	 	79	 
	10.2. Breach of Representation
	 	 	79	 
	10.3. Financial Information
	 	 	80	 
	10.4. Judicial Actions
	 	 	80	 
	10.5. Noncompliance
	 	 	80	 
	10.6. Judgments
	 	 	80	 
	10.7. Bankruptcy
	 	 	80	 
	10.8. Inability to Pay
	 	 	80	 
	10.9. Affiliate Bankruptcy
	 	 	80	 
	10.10. Material Adverse Effect
	 	 	81	 
	10.11. Lien Priority
	 	 	81	 
	10.12. Intentionally Omitted
	 	 	81	 
	10.13. Cross Default
	 	 	81	 
	10.14. Breach of Guaranty or Pledge Agreement
	 	 	81	 
	10.15. Change of Ownership
	 	 	81	 
	10.16. Invalidity
	 	 	81	 
	10.17. Licenses
	 	 	81	 
	10.18. Seizures
	 	 	81	 
	10.19. Pension Plans
	 	 	82	 
	10.20. Direct TV
	 	 	82	 
	 
	 	 	 	 
	XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT
	 	 	82	 
	 
	 	 	 	 
	11.1. Rights and Remedies
	 	 	82	 
	11.2. Agent’s Discretion
	 	 	83	 
	11.3. Setoff
	 	 	84	 
	11.4. Rights and Remedies not Exclusive
	 	 	84	 






iv









 






	 	 	 	 	 
	 	 	 	Page
	11.5. Allocation of Payments After Event of Default
	 	 	84	 
	 
	 	 	 	 
	XII. WAIVERS AND JUDICIAL PROCEEDINGS
	 	 	85	 
	 
	 	 	 	 
	12.1. Waiver of Notice
	 	 	85	 
	12.2. Delay
	 	 	85	 
	12.3. Jury Waiver
	 	 	85	 
	 
	 	 	 	 
	XIII. EFFECTIVE DATE AND TERMINATION.
	 	 	85	 
	 
	 	 	 	 
	13.1. Term
	 	 	85	 
	13.2. Termination
	 	 	86	 
	 
	 	 	 	 
	XIV. REGARDING AGENT
	 	 	86	 
	 
	 	 	 	 
	14.1. Appointment
	 	 	86	 
	14.2. Nature of Duties
	 	 	87	 
	14.3. Lack of Reliance on Agent and Resignation
	 	 	87	 
	14.4. Certain Rights of Agent
	 	 	88	 
	14.5. Reliance
	 	 	88	 
	14.6. Notice of Default
	 	 	88	 
	14.7. Indemnification
	 	 	88	 
	14.8. Agent in its Individual Capacity
	 	 	88	 
	14.9. Delivery of Documents
	 	 	89	 
	14.10. Borrowers’ Undertaking to Agent
	 	 	89	 
	14.11. No Reliance on Agent’s Customer Identification Program
	 	 	89	 
	14.12. Other Agreements
	 	 	89	 
	 
	 	 	 	 
	XV. BORROWING AGENCY
	 	 	89	 
	 
	 	 	 	 
	15.1. Borrowing Agency Provisions
	 	 	89	 
	15.2. Waiver of Subrogation
	 	 	90	 
	 
	 	 	 	 
	XVI. MISCELLANEOUS
	 	 	90	 
	 
	 	 	 	 
	16.1. Governing Law
	 	 	90	 
	16.2. Entire Understanding
	 	 	91	 
	16.3. Successors and Assigns; Participations; New Lenders
	 	 	93	 
	16.4. Application of Payments
	 	 	95	 
	16.5. Indemnity
	 	 	95	 
	16.6. Notice
	 	 	96	 
	16.7. Survival
	 	 	98	 
	16.8. Severability
	 	 	98	 
	16.9. Expenses
	 	 	98	 
	16.10. Injunctive Relief
	 	 	98	 
	16.11. Consequential Damages
	 	 	98	 
	16.12. Captions
	 	 	98	 
	16.13. Counterparts; Facsimile Signatures
	 	 	99	 
	16.14. Construction
	 	 	99	 
	16.15. Confidentiality; Sharing Information
	 	 	99	 
	16.16. Publicity
	 	 	99	 
	16.17. Certifications From Banks and Participants; USA PATRIOT Act
	 	 	99	 






v









 






LIST OF EXHIBITS AND SCHEDULES




	 	 	 

	Exhibits
	 	 
	 
	 	 
	Exhibit 1

	 	Certificate of Designation
	Exhibit 1.2

	 	Borrowing Base Certificate
	Exhibit 2.1(a)

	 	Revolving Credit Note
	Exhibit 4.15(d)(ii)

	 	Credit Card Notifications
	Exhibit 8.1(i)

	 	Financial Condition Certificate
	Exhibit 16.3

	 	Commitment Transfer Supplement
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 1.2

	 	Permitted Encumbrances
	Schedule 4.5

	 	Equipment and Inventory Locations
	Schedule 4.15(h)

	 	Deposit and Investment Accounts
	Schedule 4.19

	 	Real Property
	Schedule 5.1

	 	Consents
	Schedule 5.2(a)

	 	States of Qualification and Good Standing
	Schedule 5.2(b)

	 	Subsidiaries
	Schedule 5.4

	 	Federal Tax Identification Number
	Schedule 5.6

	 	Prior Names
	Schedule 5.7

	 	Environmental
	Schedule 5.8(b)

	 	Litigation
	Schedule 5.8(d)

	 	Plans
	Schedule 5.9

	 	Intellectual Property, Source Code Escrow Agreements
	Schedule 5.10

	 	Licenses and Permits
	Schedule 5.14

	 	Labor Disputes
	Schedule 5.27

	 	Equity Interests
	Schedule 5.28

	 	Credit Card Arrangements
	Schedule 7.3

	 	Guarantees







vi











 





REVOLVING CREDIT




AND



SECURITY AGREEMENT


Revolving Credit and Security Agreement dated as of November 25, 2009 among ValueVision Media,
Inc., a Minnesota corporation (“ValueVision”); ValueVision Interactive, Inc., a
Minnesota corporation; VVI Fulfillment Center, Inc., a Minnesota corporation;
ValueVision Media Acquisitions, Inc., a Delaware corporation; ValueVision Retail,
Inc., a Delaware corporation (each a “Borrower”, and collectively “Borrowers”), the financial
institutions which are now or which hereafter become a party hereto (collectively, the “Lenders”
and each individually a “Lender”) and PNC Bank, National Association (“PNC”), as agent for
Lenders (PNC, in such capacity, the “Agent”).




     IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders
and Agent hereby agree as follows:


I. DEFINITIONS.




     1.1. Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this Agreement, accounting
terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined
in Section 1.2 to the extent not defined, shall have the respective meanings given to them under
GAAP; provided, however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms shall be defined in
accordance with GAAP as applied in preparation of the audited financial statements of Borrowers for
the fiscal year ended January 31, 2009.



     1.2. General Terms. For purposes of this Agreement the following terms shall have the
following meanings:



     “Accountants” shall have the meaning set forth in Section 9.7 hereof.



     “Advance Rates” shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.



     “Advances” shall mean and include the Revolving Advances, Letters of Credit.



     “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with such Person, or (b) any Person who
is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the Equity Interests having ordinary voting power for the election of directors of such
Person or other Persons performing similar functions for any such Person, or (y) to direct or cause
the direction of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.



 









 





     “Agent” shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.



     “Agreement” shall mean this Revolving Credit and Security Agreement, as the same may
be amended, restated, supplemented or otherwise modified from time to time.



     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the higher of
(i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day
plus one half of one-percent (1/2 of 1%), and (iii) the sum of the Daily LIBOR Rate in
effect on such day plus one percent (1.0%), so long as a Daily LIBOR Rate is offered,
ascertainable and not unlawful.



     “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable
Laws may from time to time be amended, renewed, extended, or replaced).



     “Applicable Law” shall mean all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Other Document or contract in question, including all applicable
common law and equitable principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental
Body, and all orders, judgments and decrees of all courts and arbitrators.



     “Applicable Margin” for Revolving Advances and the Unused Line Fee shall mean, as of
the Closing Date through April 30, 2011, the applicable percentage specified below:



	 	 	 	 	 	 	 	 	 
	APPLICABLE MARGINS	 	APPLICABLE MARGINS	 	APPLICABLE MARGIN FOR
	FOR DOMESTIC RATE LOANS	 	FOR EURODOLLAR RATE LOANS	 	UNUSED LINE FEE
	Revolving Advances

	 	Revolving Advances
	 	 	 	 
	3.50%

	 	 	4.50	%	 	 	.50	%






     (a) If on April 30, 2011 or the last day of any fiscal quarter thereafter, Borrowers’ Ninety
(90) Day Average Undrawn Availability is greater than $20,000,000 (as evidenced by a Compliance
Certificate acceptable to Agent), then effective: (i) with respect to the fiscal quarter ending
April 30, 2011, as of the first Business Day following receipt by Agent of the annual financial
statements of Borrowers on a Consolidated Basis for the fiscal year ending January 29, 2011
required under Section 9.7; and (ii) with respect to any fiscal quarter thereafter, upon receipt of
the quarterly financial statements of Borrowers on a Consolidated Basis required under Section 9.8
for such fiscal quarter (each day of such delivery, an “Adjustment Date”), the Applicable
Margin for Revolving Advances and the Unused Line Fee shall be adjusted, if necessary, to the
applicable percent per annum set forth in the pricing table set forth below corresponding to the
Ninety (90) Average Undrawn Availability:



2









 





	 	 	 	 	 	 	 	 	 	 	 
	NINETY (90) AVERAGE	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS
	UNDRAWN AVAILABILITY	 	FOR BASE RATE RATE LOANS	 	FOR EURODOLLAR RATE LOANS	 	FOR UNUSED LINE FEE
	 

	 	Revolving Advances
	 	Revolving Advances
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater than $20,000,000

	 	 	3.00	%	 	 	4.00	%	 	.50% to be reduced
to .375% if the
average outstanding
balance of
Revolving Advances
during such quarter
are greater than
$10,000,000






     (b) If on April 30, 2011 or the last day of any fiscal quarter thereafter, Borrowers’ Ninety
(90) Day Average Undrawn Availability is less than $20,000,000 (as evidenced by a Compliance
Certificate acceptable to Agent), then effective on the next Adjustment Date, the Applicable Margin
for Revolving Advances and the Unused Line Fee shall be adjusted, if necessary, to the applicable
percent per annum set forth in the pricing table set forth below corresponding to the Fixed Charge
Coverage Ratio for the trailing twelve month period ending on the last day of the most recently
completed fiscal quarter prior to the applicable Adjustment Date:



	 	 	 	 	 	 	 
	FIXED CHARGE	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS
	COVERAGERATIO	 	FOR BASE RATE RATE LOANS	 	FOR EURODOLLAR RATE LOANS	 	FOR UNUSED LINE FEE
	 
	 	Revolving Advances	 	Revolving Advances	 	 
	 
	 	 	 	 	 	 
	Less than 1.10 to 1.00
	 	4.00%	 	5.00%	 	.50%  to be reduced
	 
	 	 	 	 	 	to .375% if the
	 
	 	 	 	 	 	average outstanding
	 
	 	 	 	 	 	balance of
	 
	 	 	 	 	 	Revolving Advances
	 
	 	 	 	 	 	during such quarter
	 
	 	 	 	 	 	are greater than






3









 






	 	 	 	 	 	 	 
	FIXED CHARGE	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS	 	APPLICABLE MARGINS
	COVERAGERATIO	 	FOR BASE RATE RATE LOANS	 	FOR EURODOLLAR RATE LOANS	 	FOR UNUSED LINE FEE
	 
	 	 	 	 	 	$10,000,000
	Greater than or equal
	 	3.50%	 	4.50%	 	.50%  to be reduced
	to 1.10 to 1.00 but
	 	 	 	 	 	to .375% if the
	less than 1.50 to
	 	 	 	 	 	average outstanding
	1.00
	 	 	 	 	 	balance of
	 
	 	 	 	 	 	Revolving Advances
	 
	 	 	 	 	 	during such quarter
	 
	 	 	 	 	 	are greater than
	 
	 	 	 	 	 	$10,000,000
	Greater than or equal
	 	3.00%	 	4.00%	 	.50%  to be reduced
	to 1.50 to 1.00
	 	 	 	 	 	to .375% if the
	 
	 	 	 	 	 	average outstanding
	 
	 	 	 	 	 	balance of
	 
	 	 	 	 	 	Revolving Advances
	 
	 	 	 	 	 	during such quarter
	 
	 	 	 	 	 	are greater than
	 
	 	 	 	 	 	$10,000,000






     (c) If the Borrowers shall fail to deliver the financial statements, certificates and/or other
information required under Sections 9.7 or 9.8 by the dates required pursuant to such sections or
fails to deliver the information required to determine the Ninety (90) Day Average Undrawn
Availability, each Applicable Margin shall be conclusively presumed to equal the highest Applicable
Margin specified in the pricing tables set forth above until the date of delivery of such financial
statements, certificates and/or other information, at which time the rate will be adjusted based
upon the Ninety (90) Average Undrawn Availability or Fixed Charge Coverage Ratio, as applicable,
reflected in such certificates and/or statements.



     (d) If, as a result of any restatement of, or other adjustment to, the certificates or
financial statements of Borrowers on a Consolidated Basis or for any other reason, the Agent
determines that (a) the Ninety (90) Day Average Undrawn Availability or Fixed Charge Coverage Ratio
as previously calculated as of any applicable date was inaccurate, and (b) a proper calculation of
the Ninety (90) Day Average Undrawn Availability or Fixed Charge Coverage Ratio would have resulted
in different pricing for any period, then (i) if the proper calculation of the Ninety (90) Day
Average Undrawn Availability or Fixed Charge Coverage Ratio would have resulted in higher pricing
for such period, the Borrowers shall automatically and retroactively be delegated to pay to the
Agent, promptly upon demand by the Agent, an amount equal to the excess of the amount of interest
and the Unused Line Fee that should have been paid for such period over the amount of interest and
the Unused Line Fee actually paid for such period; and (ii) if the proper calculation of the Ninety
(90) Day Average Undrawn Availability or Fixed Charge Coverage Ratio would have resulted in lower
pricing for such



4









 




period, Lenders shall have no obligation to repay interest or the Unused Line Fee to the
Borrowers; provided, that, if as a result of any restatement or other event a proper calculation of
the Ninety (90) Day Average Undrawn Availability or Fixed Charge Coverage Ratio would have resulted
in higher pricing for one or more periods and lower pricing for one or more other periods (due to
the shifting of income or expenses from one period to another period or any similar reason), then
the amount payable by the Borrowers pursuant to clause (i) above shall be based upon the excess, if
any, of the amount of interest and the Unused Line Fee that should have been paid for all
applicable periods over the amounts of interest and the Unused Line Fee actually paid for such
periods.




     “Authority” shall have the meaning set forth in Section 4.19(d) hereof.



     “Availability Block” shall mean Ten Million Dollars ($10,000,000) or such lesser
amounts agreed to by Agent in its sole discretion after delivery of Borrowers’ audited financial
statements as required by Section 9.7 hereof; provided that Agent shall not consider any reduction
of the Availability Block until such time as Borrowers’ achieve positive net income on an annual
basis.



     “Average FICO Score” shall mean, on any date of determination, the average FICO Score
of all Persons participating in the Value Pay Plan for whom a FICO score has been obtained, as
determined by Borrowing Agent in accordance with its practices in the Ordinary Course of Business
in effect on the Closing Date.



     “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced
to be in effect from time to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest is determined from time to time
by PNC as a means of pricing some loans to its customers and is neither tied to any external rate
of interest or index nor does it necessarily reflect the lowest rate of interest actually charged
by PNC to any particular class or category of customers of PNC.



     “Benefited Lender” shall have the meaning set forth in Section 2.20(d) hereof.



     “Blocked Accounts” shall have the meaning set forth in Section 4.15(h) hereof.



     “Blocked Account Bank” shall have the meaning set forth in Section 4.15(h) hereof.



     “Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.



     “Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such Persons.



     “Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with
GAAP of the accounts or other items of the Borrowers and their respective Subsidiaries.



     “Borrowers’ Account” shall have the meaning set forth in Section 2.8 hereof.



     “Borrowing Agent” shall mean ValueVision.



5









 





     “Borrowing Base Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the President, Chief Financial Officer or Controller of the Borrowing
Agent and delivered to the Agent, appropriately completed, by which such officer shall certify to
Agent the Formula Amount and calculation thereof as of the date of such certificate.



     “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in East
Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans,
such day must also be a day on which dealings are carried on in the London interbank market.



     “Capital Expenditures” shall mean expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital
expenditures.



     “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented
by obligations under a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.



     “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.



     “Change of Ownership” shall mean (a) 100% of the Equity Interests of any Borrower
(other than ValueVision) is no longer owned or controlled by ValueVision (including for the
purposes of the calculation of percentage ownership, any Equity Interests into which any Equity
Interests of any Borrower held by ValueVision are convertible or for which any such Equity
Interests of any Borrower or of any other Person may be exchanged and any Equity Interests issuable
to ValueVision upon exercise of any warrants, options or similar rights which may at the time of
calculation be held by ValueVision), (b) (i) any person or group of persons (within the meaning of
Section 13(d) or 14(a) of the Exchange Act) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of 20% or more of the voting
Equity Interest of ValueVision; or (ii) from and after the date hereof, individuals who on the date
hereof constitute the Board of Directors of ValueVision (together with any new directors whose
election by such Board of Directors or whose nomination for election by the shareholders of
ValueVision was approved by a vote of a majority of the directors then still in office who were
either directors on the date hereof or whose election or nomination for election was previously
approved) cease for any reason to constitute a majority of the board of directors of ValueVision
then in office; or (c) any merger, consolidation or sale of substantially all of the property or
assets of any Borrower or any direct or indirect Subsidiary of any Borrower except as permitted by
Section 7.1; provided however it shall not be deemed to be a Change of Ownership under (a) section
(b)(i) of this definition, if (1) any person or group of persons (within the meaning of Section
13(d) or 14(a) of the Exchange Act) acquires beneficial ownership of (within the meaning of Rule
13d-3 promulgated by the SEC under the Exchange Act) 20% or more of the voting Equity Interest of
ValueVision and Agent provides prior written consent, which consent shall not be unreasonably
withheld or delayed or (2) the entity or entities acquiring the voting Equity Interests are one or
more of the “Restricted Parties” as defined in the



6









 




Shareholder Agreement, or (b) section (b)(ii) of this definition, if the change in the
individuals constituting the Board of Directors of ValueVision results from the designation of
directors by the holders of Series B Redeemable Preferred Stock pursuant to the ValueVision
Certificate of Designation or by GE Capital Equity Investments, Inc. pursuant to the Shareholder
Agreement.




     “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including all net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other
authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any
environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates.



     “Closing Date” shall mean November 25, 2009 or such other date as may be agreed to by
the parties hereto.



     “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.



     “Collateral” shall mean and include:



          (a) all Receivables (including Credit Card Receivables);




          (b) all Equipment;




          (c) all General Intangibles;




          (d) all Inventory;




          (e) all Investment Property;




          (f) all Subsidiary Stock;




          (g) all of each Borrower’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located; (i) its respective goods and other property including, but not
limited to, all merchandise returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims, relating to any goods
securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have
been earned under a contract right, instruments (including promissory notes), documents, chattel
paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit
and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if
and when obtained by any Borrower, all real and personal property of third parties in which such
Borrower has been granted a lien or security interest as security for






7









 







the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not
the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and
(x) any other goods, personal property or real property now owned or hereafter acquired in which
any Borrower has expressly granted a security interest or may in the future grant a security
interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;




          (h) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books
of account, business papers, computers, computer software (owned by any Borrower or in which it has
an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e),
(f) or (g) of this paragraph; and




          (i) all proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h) in whatever form,
including, but not limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.



Notwithstanding the foregoing, “Collateral” shall expressly exclude, and the Borrowers shall not be
deemed to have granted a security interest in, any Excluded Collateral.




     “Commitment Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender
pursuant to Section 16.3(c) or (d) hereof.



     “Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3
hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the
Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances
under this Agreement.



     “Compliance Certificate” shall mean a compliance certificate to be signed by the Chief
Financial Officer or Controller of Borrowing Agent, which shall state that, based on an examination
sufficient to permit such officer to make an informed statement, no Default or Event of Default
exists, or if such is not the case, specifying such Default or Event of Default, its nature, when
it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such
default and, such certificate shall have appended thereto calculations which set forth Borrowers’
compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8,
7.10 and 7.11.



     “Consents” shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic
or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a
conflict or breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the Other Documents,
including any Consents required under all applicable federal, state or other Applicable Law.



8









 





     “Consigned Inventory” shall mean Inventory of any Borrower that is in the possession
of another Person on a consignment, sale or return, or other basis that does not constitute a final
sale and acceptance of such Inventory.



     “Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.



     “Credit Card Notifications” shall have meaning set forth in Section 4.15(d)(ii)
hereof.



     “Credit Card Receivables” means each “Account” (as defined in the UCC) together with
all income, payments and proceeds thereof, owed by a major credit or debit card issuer (including,
but not limited to, Visa, Mastercard and American Express and such other issuers approved by the
Agent in its sole discretion) to a Borrower resulting from charges by a Customer of a Borrower on
credit or debit cards issued by such issuer in connection with the sale of goods by a Borrower in
the Ordinary Course of Business.



     “Customer” shall mean and include the account debtor with respect to any Receivable
and/or the prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any contract or other
arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property
or perform any services.



     “Customs” shall have the meaning set forth in Section 2.11(b) hereof.



     “Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by
the Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the
Reserve Percentage.



     “Debt Payments” shall mean and include (a) all cash actually expended by any Borrower
to make interest payments on any Advances hereunder, plus (b) accrued but unpaid interest
on account of Eurodollar Rate Loans, plus (c) all cash actually expended by any Borrower to
make payments for all fees, commissions and charges set forth herein and with respect to any
Advances, plus (d) all cash actually expended by any Borrower to make payments on
Capitalized Lease Obligations, plus (e) all cash actually expended by any Borrower to make
payments with respect to any other Indebtedness for borrowed money.



     “Default” shall mean an event, circumstance or condition which, with the giving of
notice or passage of time or both, would constitute an Event of Default.



     “Default Rate” shall have the meaning set forth in Section 3.1 hereof.



     “Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof.



     “Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof.



     “Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof.



9









 





     “Direct TV” shall mean DIRECTV, Inc., a California corporation.



     “Direct TV Agreement” shall mean that certain letter agreement dated July 1, 1999,
among Direct TV, CNBC, Inc., MSNBC Cable, L.L.C., National Broadcasting Company, Inc. and
ValueVision, as amended by that certain letter agreement dated April 13, 2001, that certain letter
agreement dated September 23, 2004, that certain letter agreement dated November 22, 2005 and that
certain letter agreement dated October 22, 2009.



     “Direct TV Reserve” shall mean (i) commencing on November 1, 2010, $978,919
plus an additional $978,919 on the first day of each of December 2010 and January 2011 (for
a total reserve as of January 1, 2011 of $2,936,757) which shall be reduced to Zero Dollars ($0)
upon Borrowers delivery of evidence to Agent that the $5,873,518 due February 2011 to Direct TV
under the Direct TV Agreement has been paid by Borrowers and (ii) commencing on October 1, 2011,
$1,564,796 plus an additional $1,564,796 on the first day of each of November 2011,
December 2011, January 2012, February 2012 and March 2012 (for a total reserve of $9,388,766) which
shall be reduced to Zero Dollars ($0) upon Borrowers delivery of evidence to Agent that the
$18,777,552 due March 2012 to Direct TV under the Direct TV Agreement has been paid by
Borrowers. For the avoidance of doubt, the reserves identified above shall commence on the first
date noted above, shall increase on the first day of each subsequent month noted therein and shall
be in effect for every day during such period (as increased) until the applicable payment required
under the Agreement has been made.



     “Direct TV Security Documents” shall mean, collectively, that certain (i) Mortgage and
Security Agreement and Fixture Financing Statement executed by ValueVision in favor of Direct TV
dated, and as in effect only, as of the Closing Date and (ii) Mortgage and Security Agreement
executed by Norwell Television, LLC in favor of Direct TV dated, and as in effect only, as of the
Closing Date.



     “Documents” shall have the meaning set forth in Section 8.1(c) hereof.



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



     “Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.



     “Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof.



     “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.



     “Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net
income (or loss) of Borrowers on a Consolidated Basis for such period (excluding extraordinary
gains and losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis for
such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for
such period for federal, state and local taxes.



     “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes
for such period, plus (ii) depreciation expenses for such period, plus (iii)
amortization expenses for such period, plus (iv) non-cash impairment charges and
write-downs for such period, plus




10











 




(vi) non-cash equity based compensation expenses incurred by Borrowers for such period
in an amount not to exceed to $4,500,000 (only to the extent deducted in calculating net income),
plus (vii) non recurring restructuring and chief executive office transition costs incurred
by Borrowers within one hundred twenty (120) days of the Closing Date in an amount not to exceed
$3,000,000 (only to the extent deducted in calculating net income), plus (viii) strategic
transaction and restructuring costs actually incurred by Borrowers for such period in an amount not
to exceed $2,750,000 in any twelve (12) month period (only to the extent deducted in calculating
net income).




     “Eligible Consumer Receivables” shall mean and include with respect to each Borrower,
each Receivable of such Borrower arising in the Ordinary Course of Business under the Value Pay
Plan and which Agent, in its sole credit judgment, shall deem to be an Eligible Consumer
Receivable, based on such considerations as Agent may from time to time deem appropriate. A
Receivable shall not be deemed eligible unless such Receivable is subject to Agent’s first priority
perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced
by an invoice or other documentary evidence satisfactory to Agent. In addition, no Receivable shall
be an Eligible Consumer Receivable if:



          (a) if the Customer fails to make two or more payments due under the Value Pay Plan;




          (b) any covenant, representation or warranty contained in this Agreement with respect to such
Receivable has been breached;




          (c) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case or
proceeding under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other
law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any
petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;




          (d) the sale is to a Customer outside the continental United States of America or Canada;




          (e) the Receivables of the Customer exceed a credit limit determined by Agent, in its sole
discretion, to the extent such Receivable exceeds such limit;




          (f) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim (to
the extent of such offset, deduction, defense or counterclaim);




          (g) any return, rejection or repossession of the merchandise has occurred;




          (h) such Receivable is not payable to a Borrower; or






11









 








          (j) such Receivable is not otherwise satisfactory to Agent as determined in good faith by
Agent in the exercise of its discretion in a reasonable manner.




     “Eligible Inventory” shall mean and include Inventory, excluding work in process, with
respect to each Borrower, valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in Agent’s opinion, obsolete, slow moving or unmerchantable
and which Agent, in its sole discretion, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and no other Lien (other
than a Permitted Encumbrance). In addition, Inventory shall not be Eligible Inventory if it (i)
does not conform to all standards imposed by any Governmental Body which has regulatory authority
over such goods or the use or sale thereof, (ii) is in transit, (iii) is located outside the
continental United States or at a location that is not otherwise in compliance with this Agreement,
(iv) constitutes Consigned Inventory, (v) is the subject of an Intellectual Property Claim; (vi) is
subject to a License Agreement or other agreement that limits, conditions or restricts any
Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party
to a Licensor/Agent Agreement with the Licensor under such License Agreement; (vii) is situated at
a location not owned by a Borrower unless the owner or occupier of such location has executed in
favor of Agent a Lien Waiver Agreement; or (viii) or if the sale of such Inventory would result in
an ineligible Receivable.



     “Eligible Credit Card Receivables” shall mean and include with respect to each
Borrower, each Credit Card Receivable of such Borrower arising in the Ordinary Course of Business
and which Agent, in its sole credit judgment, shall deem to be an Eligible Credit Card Receivable,
based on such considerations as Agent may from time to time deem appropriate. A Credit Card
Receivable shall not be deemed eligible unless such Credit Card Receivable is subject to Agent’s
first priority perfected security interest and no other Lien (other than Permitted Encumbrances),
and is evidenced by an invoice or other documentary evidence satisfactory to Agent. In addition, no
Credit Card Receivable shall be an Eligible Credit Card Receivable if:



          (a) such Credit Card Receivable is outstanding for more than five (5) Business Days from the
date of sale;




          (b) such Borrower does not have good, valid and marketable title, free and clear of any Lien
(other than a Permitted Encumbrance) with respect to such Credit Card Receivables;




          (c) such Credit Card Receivable is not subject to a first priority security interest in favor
of the Agent (it being the intent that chargebacks in the ordinary course by the credit card
processors shall not be deemed violative of this clause);




          (d) such Credit Card Receivable is in dispute, is with recourse to such Borrower, or subject
to a claim, counterclaim, offset or chargeback (to the extent of such claim, counterclaim, offset
or chargeback);







12









 








          (e) such Credit Card Receivable is subject a repurchase obligation by any Borrower in favor of
the credit card processor;




          (f) such Credit Card Receivable is due from an issuer or payment processor of the applicable
credit card which is the subject of any bankruptcy or insolvency proceedings;




          (g) such Credit Card Receivable is not a valid, legally enforceable obligation of the
applicable issuer with respect thereto;




          (h) such Credit Card Receivable does not conform to all representations, warranties or other
provisions in this Agreement or the Other Documents relating to Credit Card Receivables;




          (i) such Credit Card Receivable is evidenced by “chattel paper” or an “instrument” of any kind
unless such “chattel paper” or “instrument” is in the possession of the Agent, and to the extent
necessary or appropriate, endorsed to the Agent; or




          (j) Agent has determined in its sole discretion that such Credit Card Receivable is uncertain
of collection.




     “Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof.




     “Environmental Laws” shall mean all federal, state and local environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating
to the protection of the environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with respect thereto.



     “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods
(other than Inventory) whether now owned or hereafter acquired and wherever located including all
equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions thereto.



     “Equity Interests” of any Person shall mean any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how designated) equity of such
Person, whether voting or nonvoting, including common stock, preferred stock, convertible
securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder.



     “Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the interest rate per annum determined by Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page



13









 




that displays rates at which US dollar deposits are offered by leading banks in the London
interbank deposit market), or the rate which is quoted by another source selected by Agent which
has been approved by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the
London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time,
two (2) Business Days prior to the commencement of such Interest Period as the London interbank
offered rate for U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or if there shall at any time,
for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate
Source, a comparable replacement rate determined by Agent at such time (which determination shall
be conclusive absent manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage.
The Eurodollar Rate may also be expressed by the following formula:




	 	 	 	 	 	 	 	 	 

	 	 	 	 	Average of London interbank offered rates quoted
by Bloomberg or appropriate Successor as shown on
	 
	 	 	 	 	 	 	 	 
	 

	 	Eurodollar Rate = 
	 	Bloomberg Page BBAM1
 

	 	 	 	 
	 

	 	 	 	1.00 — Reserve Percentage	 	 	 	 






     The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is
outstanding on the effective date of any change in the Reserve Percentage as of such effective
date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as
determined or adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.



     “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on
the Eurodollar Rate.



     “Event of Default” shall have the meaning set forth in Article X hereof.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



     “Excluded Collateral” shall mean



          (i) Borrowers’ Real Property located at 6740 Shady Oak Road, Eden Prairie, Minnesota and 2
Bert Drive #4, West Bridgewater, Massachusetts and all of Borrowers’ fixtures, machinery and
Equipment located at each of the foregoing locations, which shall be subject to the Direct TV
Security Documents, but in no event shall Excluded Collateral include any of Borrowers’
Receivables, Inventory, General Intangibles, Investment Property, Documents, or any of the
property identified in subsection (g), (h) or (i) of the definition of Collateral




          (ii) any contract in which Borrowers have any right, title or interest if and to the extent
such contract includes a provision containing a restriction on assignment such that the creation of
a security interest in the right, title or interest of such Borrower therein would be prohibited
and would, in and of itself, cause or result in a default thereunder enabling another person party
to such contract to enforce any remedy with respect thereto; provided, however, that






14









 







the foregoing exclusion shall not apply if (i) such prohibition has been waived or such other
person has otherwise consented to the creation hereunder of a security interest in such contract,
instrument or chattel paper, or (ii) such prohibition would be rendered ineffective pursuant to
Sections 9-407(a) or 9-408(a) of the UCC, as applicable, or any other applicable provision of the
UCC and as then in effect in any relevant jurisdiction, or any other applicable law (including
applicable bankruptcy and insolvency law) or principles of equity; provided further that
immediately upon the ineffectiveness, lapse or termination of any such provision, the term
“Collateral” shall include, and Borrowers shall be deemed to have granted a security interest in,
all its rights, title and interests in and to such contract as if such provision had never been in
effect; and provided further that the foregoing exclusion shall in no way be construed so as to
limit, impair or otherwise affect the Agent’s unconditional continuing security interest in and to
all rights, title and interests of Borrowers in or to any payment obligations or other rights to
receive monies due or to become due under any such contract and in any such monies and other
proceeds of such contract.




     “Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.



     “Fanbuzz” shall mean Fanbuzz, Inc., a Delaware corporation.



     “Fanbuzz Retail” shall mean Fanbuzz Retail, Inc., a Delaware corporation.



     “Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day,
the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.



     “Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year
of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP
North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day
opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate),
or as set forth on such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on
the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall
at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or
any Alternate Source, a comparable replacement rate determined by the PNC at such time (which
determination shall be conclusive absent manifest error); provided however, that if such day is not
a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of
interest with respect to any advance to which



15









 




the Federal Funds Open Rate applies will change automatically without notice to the Borrowers,
effective on the date of any such change.




     “Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA, minus Unfunded Capital Expenditures made during such
period, minus distributions (including tax distributions made during such period) and
dividends made during such period, minus cash taxes paid during such period to (b) all Debt
Payments made during such period.



     “Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is
not organized or incorporated in the United States or any State or territory thereof.



     “Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.



     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.



     “General Intangibles” shall mean and include as to each Borrower all of such
Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment
intangibles, all choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations, manufacturing
procedures, quality control procedures, trademarks, trademark applications, service marks, trade
secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes,
records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or other security held
by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other
than to the extent covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).



     “Governmental Acts” shall have the meaning set forth in Section 2.17 hereof.



     “Governmental Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining to a government.



     “Guarantor” shall mean any Person who may hereafter guarantee payment or performance
of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons.



     “Guarantor Security Agreement” shall mean any security agreement executed by any
Guarantor in favor of Agent securing the Obligations or the Guaranty of such Guarantor, in form and
substance satisfactory to Agent.



     “Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in favor
of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory
to Agent.



     “Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof.



16









 





     “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 5101, et seq.), RCRA or any other applicable Environmental Law
and in the regulations adopted pursuant thereto.



     “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.



     “Hedge Liabilities” shall have the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.



     “Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations
of such Person whether direct or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually shall have been created, assumed or incurred
by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of
any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually
so created, assumed or incurred.



     “Ineligible Security” shall mean any security which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.



     “Intellectual Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret
or license or other right to use any of the foregoing.



     “Intellectual Property Claim” shall mean the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property
or other property or asset is violative of any ownership of or right to use any Intellectual
Property of such Person.



     “Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant
to Section 2.2(b).



     “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered into by any
Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such
Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of
interest applicable to Indebtedness.



17









 





     “Inventory” shall mean and include as to each Borrower all of such Borrower’s now
owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower’s business or used in selling
or furnishing such goods, merchandise and other personal property, and all documents of title or
other documents representing them.



     “Inventory Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii)
hereof.



     “Investment Property” shall mean and include as to each Borrower, all of such
Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and commodities accounts.



     “Iosota” shall mean Iosota, Inc., a Minnesota corporation.



     “Issuer” shall mean any Person who issues a Letter of Credit and/or accepts a draft
pursuant to the terms hereof.



     “Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a transferee, successor or
assign of any Lender.



     “Lender Default” shall have the meaning set forth in Section 2.23(a) hereof.



     “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which the Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer
Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the
provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for
hedging (rather than speculative) purposes. The liabilities of any Borrower to the provider of any
Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder,
guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security
Agreement and otherwise treated as Obligations for purposes of each of the Other Documents. The
Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents.



     “Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.



     “Letter of Credit Borrowing” shall have the meaning set forth in Section 2.12(d)
hereof.



     “Letter of Credit Sublimit” shall mean Ten Million Dollars ($10,000,000).



     “Letters of Credit” shall have the meaning set forth in Section 2.9 hereof.



     “License Agreement” shall mean any agreement between any Borrower and a Licensor
pursuant to which such Borrower is authorized to use any Intellectual Property in connection



18









 




with the manufacturing, marketing, sale or other distribution of any Inventory of such
Borrower or otherwise in connection with such Borrower’s business operations.




     “Licensor” shall mean any Person from whom any Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such
Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in
connection with such Borrower’s business operations.



     “Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor, in
form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis
such Licensor, to enforce Agent’s Liens with respect to and to dispose of any Borrower’s Inventory
with the benefit of any Intellectual Property applicable thereto, irrespective of such Borrower’s
default under any License Agreement with such Licensor.



     “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.



     “Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises at which any Collateral may be located from time to time and
by which such Person shall waive any Lien that such Person may ever have with respect to any of the
Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or
remove the Collateral from such premises or to use such premises to store or dispose of such
Inventory.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, properties or prospects of any
Borrower or any Guarantor, (b) any Borrower’s ability to duly and punctually pay or perform the
Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens
on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits
of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.



     “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit,
the face amount of such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become effective.



     “Maximum Revolving Advance Amount” shall mean Twenty Million Dollars ($20,000,000).



     “Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit,
the amount of such Letter of Credit that is or may become available to be drawn, including all
automatic increases provided for in such Letter of Credit, whether or not any such automatic
increase has become effective.



19









 





     “Modified Commitment Transfer Supplement” shall have the meaning set forth in Section
16.3(d) hereof.



     “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37)
and 4001(a)(3) of ERISA to which contributions are required by any Borrower or any member of the
Controlled Group.



     “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of whom are not under
common control, as such a plan is described in Section 4064 of ERISA.



     “Ninety (90) Day Average Undrawn Availability” shall mean, as of any date of
determination, the sum of Borrowers’ Undrawn Availability (Modified) for each of the previous
ninety (90) days divided by ninety (90).



     “Non-Defaulting Lender” shall have the meaning set forth in Section 2.23(b) hereof.



     “Obligations” shall mean and include any and all loans (including without limitation,
all Advances), advances, debts, liabilities, obligations, covenants and duties owing by any
Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or
any Lender of any kind or nature, present or future (including any interest or other amounts
accruing thereon, and any costs and expenses of any Person payable by Borrower and any
indemnification obligations payable by Borrower arising or payable after maturity, or after the
filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowable or allowed in such proceeding), whether or not evidenced by
any note, guaranty or other instrument, whether arising under any agreement, instrument or
document, (including this Agreement and the Other Documents) whether or not for the payment of
money, whether arising by reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future, option or other similar
agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts
or electronic funds transfers (whether through automated clearing houses or otherwise) or out of
the Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made
whole in connection with depository transfer check or other similar arrangements, whether direct or
indirect (including those acquired by assignment or participation), absolute or contingent, joint
or several, due or to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what
agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of any Borrower’s Indebtedness and/or liabilities under
this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any
Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent
and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform
acts or refrain from taking any action.



20









 





     “Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary
course of such Borrower’s business as conducted on the Closing Date.



     “Other Documents” shall mean the Revolving Credit Note, the Perfection Certificates,
any Guaranty, any Guarantor Security Agreement, the Credit Card Notifications, any Pledge
Agreement, any Lender-Provided Interest Rate Hedge and any and all other agreements, instruments
and documents, including intercreditor agreements, guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.



     “Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b).



     “Parent” of any Person shall mean a corporation or other entity owning, directly or
indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons performing similar
functions for any such Person.



     “Participant” shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.



     “Participation Advance” shall have the meaning set forth in Section 2.12(d) hereof.



     “Participation Commitment” shall mean each Lender’s obligation to buy a participation
of the Letters of Credit issued hereunder.



     “Payee” shall have the meaning set forth in Section 3.10 hereof.



     “Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New
Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to
Borrowing Agent and to each Lender to be the Payment Office.



     “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.



     “Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i)
is maintained or to which contributions are required by any member of the Controlled Group for
employees of any member of the Controlled Group; or (ii) has at any time within the preceding five
years been maintained or to which contributions have been required by any entity which was at such
time a member of the Controlled Group for employees of any entity which was at such time a member
of the Controlled Group.



     “Perfection Certificates” shall mean collectively, the Perfection Certificates and the
responses thereto provided by each Borrower and delivered to Agent.



21









 





     “Permitted Acquisitions” shall mean acquisitions of the assets or Equity Interests of
another Person so long as: (a) the total costs and liabilities (including without limitation, all
assumed liabilities, all earn-out payments, deferred payments and the value of any other stock or
assets transferred, assigned or encumbered with respect to such acquisitions) of all such
acquisitions do not exceed $100,000 for any single acquisition; (b) with respect to the acquisition
of Equity Interests, such acquired company shall be added as a Borrower to this Agreement and be
jointly and severally liable for all Obligations; (c) the acquired company or property is used or
useful in the same or a similar line of business as the Borrowers were engaged in on the Closing
Date (or any reasonable extensions or expansions thereof); (d) Agent shall have received a
first-priority security interest in all acquired assets and Equity Interests, subject to
documentation satisfactory to Agent; (e) if such acquisition includes general partnership interests
or any other Equity Interest that does not have a corporate (or similar) limitation on liability of
the owners thereof, then such acquisition shall be effected by having such Equity Interests
acquired by a corporate holding company directly or indirectly wholly-owned by a Borrower and newly
formed for the sole purpose of effecting such acquisition; and (f) no Default or Event of Default
shall have occurred or will occur after giving pro forma effect to such acquisition.



     “Permitted Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or
being Properly Contested; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the
rendition, entry or issuance against Borrower or any Subsidiary, or any property of Borrower or any
Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien (I) is in
existence for less than 20 consecutive days after it first arises or is being Properly Contested
and (II) is at all times junior in priority to any Liens in favor of Agent; (g) mechanics’,
workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business with respect
to obligations which are not due or which are being Properly Contested; (h) Liens placed upon fixed
assets hereafter acquired to secure a portion of the purchase price thereof, provided that (I) any
such lien shall not encumber any other property of Borrower and (II) the aggregate amount of
Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year
shall not exceed the amount provided for in Section 7.6; (i) easements, rights-of-way, zoning
restrictions, minor defects or irregularities in title and other charges or encumbrances, in each
case, which do not interfere in any material respect with the Ordinary Course of Business of the
Borrowers and their Subsidiaries; (j) Liens granted to Direct TV pursuant to the Direct TV Security
Documents and (k) Liens disclosed on Schedule 1.2 provided that such Liens shall secure
only those obligations which they secure on the Closing Date and shall not subsequently apply to
any other property or assets of any Borrower other than the property and assets to which they apply
as of the Closing Date.



     “Permitted Redemption Payments” shall mean any payments made pursuant to Sections
V(a)(iii) and (iv) of the ValueVision Certificate of Designation.



22









 





     “Person” shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit corporation, joint
venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).



     “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Benefit Plan and a Multiemployer Plan), maintained for employees of any
Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member
of the Controlled Group is required to contribute.



     “Pledge Agreement” shall mean that certain Collateral Pledge Agreement executed by
ValueVision in favor of Agent dated as of the Closing Date and any other pledge agreements executed
subsequent to the Closing Date by any other Person to secure the Obligations.



     “PNC” shall have the meaning set forth in the preamble to this Agreement and shall
extend to all of its successors and assigns.



     “Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof.



     “Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b)
hereof.



     “Properly Contested” shall mean, in the case of any Indebtedness or Lien, as
applicable, of any Person (including any taxes) that is not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the
amount thereof: (i) such Indebtedness or Lien, as applicable, is being properly contested in good
faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has
established appropriate reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the
forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets
with respect to such Indebtedness unless such Lien is at all times junior and subordinate in
priority to the Liens in favor of the Agent (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is stayed during the
period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or
Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a
Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment,
writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such
contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such
Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in
connection therewith.



     “Projections” shall have the meaning set forth in Section 5.5(b) hereof.



     “Published Rate” shall mean the rate of interest published each Business Day in the
Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a
one month period (or, if no such rate is published therein for any reason, then the Published Rate



23









 




shall be the Eurodollar Rate for a one month period as published in another publication
selected by the Agent).




     “Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.



     “Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.



     “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time.



     “Real Property” shall mean all of each Borrower’s right, title and interest in and to
the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or
leased by any Borrower.



     “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s
accounts, contract rights, instruments (including those evidencing indebtedness owed to such
Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general
intangibles relating to accounts, drafts and acceptances, credit card receivables and all other
forms of obligations owing to such Borrower arising out of or in connection with the sale or lease
of Inventory or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.



     “Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.



     “Register” shall have the meaning set forth in Section 16.3(e) hereof.



     “Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b) hereof.



     “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.



     “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.



     “Required Lenders” shall mean Lenders holding at least fifty one percent (51%) of the
Advances and, if no Advances are outstanding, shall mean Lenders holding fifty one percent (51%) of
the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders, Required
Lenders shall mean all Lenders.



     “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”.



     “Revolving Advances” shall mean Advances made other than Letters of Credit.



24









 





     “Revolving Credit Note” shall mean, collectively, the promissory notes referred to in
Section 2.1(a) hereof.



     “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum
of the Alternate Base Rate plus the Applicable Margin with respect to Domestic Rate Loans
and (b) the sum of the Applicable Margin plus the greater of one percent (1.00%) or the
Eurodollar Rate with respect to Eurodollar Rate Loans.



     “SEC” shall mean the Securities and Exchange Commission or any successor thereto.



     “Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to
underwrite and deal in certain Ineligible Securities.



     “Securities Act” shall mean the Securities Act of 1933, as amended.



     “Series B Redeemable Preferred Stock” shall have the meaning set forth in the
ValueVision Certificate of Designation.



     “Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of
each week or more frequently if Agent deems appropriate unless such day is not a Business Day in
which case it shall be the next succeeding Business Day.



     “Shareholder Agreement” shall mean that certain Amended and Restated Shareholder
Agreement dated February 25, 2009 among ValueVision, GE Capital Equity Investments, Inc. and NBC
Universal, Inc.



     “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other Persons performing similar functions for such entity, are owned, directly or indirectly,
by such Person.



     “Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of
any Subsidiary owned by any Borrower (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary).



     “Tangible Net Worth” shall mean, at a particular date, (a) the aggregate amount of all
assets of Borrowers on a Consolidated Basis as may be properly classified as such in accordance
with GAAP consistently applied excluding such other assets as are properly classified as intangible
assets under GAAP, less (b) the aggregate amount of all liabilities of Borrowers on a
Consolidated Basis.



     “Term” shall have the meaning set forth in Section 13.1 hereof.



     “Termination Event” shall mean (i) a Reportable Event with respect to any Plan; (ii)
the withdrawal of any Borrower or any member of the Controlled Group from a Plan during a plan year
in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of




25











 




ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate
a Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the
partial or complete withdrawal within the meaning of Section 4203 or 4205 of ERISA, of any Borrower
or any member of the Controlled Group from a Multiemployer Plan.




     “Thirty (30) Day Average Undrawn Availability” shall mean, as of any date of
determination, the sum of Borrowers’ Undrawn Availability for each of the previous thirty (30) days
divided by thirty (30).



     “Toxic Substance” shall mean and include any material present on the Real Property or
the Leasehold Interests which has been shown to have significant adverse effect on human health or
which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et
seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter
enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.



     “Trading with the Enemy Act” shall mean the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.



     “Transferee” shall have the meaning set forth in Section 16.3(d) hereof.



     “Undrawn Availability” at a particular date shall mean an amount equal to (a) the
lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount less the
Maximum Undrawn Amount of all outstanding Letters of Credit, minus (b) the sum of (i) the
outstanding amount of Advances, plus (ii) all amounts due and owing to any Borrower’s trade
creditors which are sixty (60) days beyond the due date thereof, plus (iii) fees and
expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’
Account.



     “Undrawn Availability (Modified)” at a particular date shall mean an amount equal to
(a) the Formula Amount minus (b) the sum of (i) the outstanding amount of Advances,
plus (ii) all amounts due and owing to any Borrower’s trade creditors which are sixty (60)
days beyond the due date thereof, plus (iii) fees and expenses for which Borrowers are
liable but which have not been paid or charged to Borrowers’ Account.



     “Unfunded Capital Expenditures” shall mean Capital Expenditures made through Revolving
Advances or out of Borrowers’ own funds other than through equity contributed subsequent to the
Closing Date or purchase money or other financing or lease transactions permitted hereunder.



     “Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.



     “Unused Line Fee” shall have the meaning set forth in Section 3.3(b) hereof.



26









 





     “USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.



     “Value Pay Plan” shall mean that certain purchase plan offered by Borrowers to
consumer Customers pursuant to which a consumer Customer may be approved to purchase Inventory
through a payment plan of up to six (6) payments over five (5) months.



     “ValueVision” shall have the meaning set forth in the preamble to this Agreement.



     “ValueVision Certificate of Designation” shall mean the ValueVision Series B
Redeemable Preferred Stock Certificate of Designation, as filed with the State of Minnesota on
February 25, 2009 and as attached hereto as Exhibit 1.



     “Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.



     1.3. Uniform Commercial Code Terms. All terms used herein and defined in the Uniform
Commercial Code as adopted in the State of Illinois from time to time (the “Uniform Commercial
Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting the
foregoing, the terms “accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general
intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”,
“investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”,
“inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall
have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the
extent the definition of any category or type of collateral is expanded by any amendment,
modification or revision to the Uniform Commercial Code, such expanded definition will apply
automatically as of the date of such amendment, modification or revision.



     1.4. Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in
the context, terms used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. Unless otherwise provided, all references to any instruments
or agreements to which Agent is a party, including references to any of the Other Documents, shall
include any and all modifications, supplements or amendments thereto, any and all restatements or
replacements thereof and any and all extensions or renewals thereof. All references herein to the
time of day shall mean the time in New York, New York. Unless otherwise provided, all financial
calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the
words “including” or “include” shall be used, such words shall be understood to mean “including,
without limitation” or “include, without limitation”. A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or



27









 




Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default,
is cured within any period of cure expressly provided for in this Agreement; and an Event of
Default shall “continue” or be “continuing” until such Event of Default has been waived in writing
by the Required Lenders or all Lenders, as applicable. Any Lien referred to in this Agreement or
any of the Other Documents as having been created in favor of Agent, any agreement entered into by
Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds
received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents,
or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be
created, entered into, made or received, or taken or omitted, for the benefit or account of Agent
and Lenders. Wherever the phrase “to the best of Borrowers’ knowledge” or words of similar import
relating to the knowledge or the awareness of any Borrower are used in this Agreement or Other
Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any
Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good
faith and diligent performance of his duties, including the making of such reasonably specific
inquiries as may be necessary of the employees or agents of such Borrower and a good faith attempt
to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants
hereunder shall be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an exception to, or
otherwise within the limitations of, another covenant shall not avoid the occurrence of a default
if such action is taken or condition exists. In addition, all representations and warranties
hereunder shall be given independent effect so that if a particular representation or warranty
proves to be incorrect or is breached, the fact that another representation or warranty concerning
the same or similar subject matter is correct or is not breached will not affect the incorrectness
of a breach of a representation or warranty hereunder.




     1.5. Fiscal Periods. For purposes hereunder, whenever a provision of this Agreement
refers to a quarter ending April 30, July 31, October 31 or January 31 or a fiscal year ending
January 31, such references shall mean the actual date which corresponds with the end of Borrower’s
fiscal quarter or fiscal year based on Borrower’s accounting cycle.



II. ADVANCES, PAYMENTS.




     2.1. Revolving Advances.



          (a) Amount of Revolving Advances. Subject to the terms and conditions set forth in
this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make
Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate
Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of:




               (i) up to 50%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance
Rate”), of Eligible Consumer Receivables and Eligible Credit Card Receivables, plus







28









 








               (ii) up to the lesser of (A) 50%, subject to the provisions of Section 2.1(b) and (c) hereof,
of the value of the Eligible Inventory (“Inventory Advance Rate” and together with the Receivables
Advance Rate, collectively, the “Advance Rates”), (B) 85% of the appraised net orderly liquidation
value of Eligible Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its
sole discretion exercised in good faith), minus



               (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus



               (iv) the Availability Block, minus



               (v) the Direct TV Reserve, minus



               (vi) such reserves as Agent may reasonably deem proper and necessary from time to time.



     The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii) minus (y)
Sections 2.1(a)(y)(iii), (iv), (v) and (vi) at any time and from time to time shall be referred to
as the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached
hereto as Exhibit 2.1(a).



          (b) Discretionary Rights. The Advance Rates may be increased or decreased by Agent at
any time and from time to time in the exercise of its reasonable discretion. Each Borrower
consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or
increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent. Agent
shall give Borrowing Agent five (5) days prior written notice of its intention to decrease the
Advance Rates. The rights of Agent under this subsection are subject to the provisions of Section
16.2(b).




          (c) Sublimit for Revolving Advances made against Eligible Inventory. The aggregate
amount of Revolving Advances made to Borrowers against Eligible Inventory shall not exceed in the
aggregate, at any one time outstanding, the an amount equal to fifty percent (50%) of the
outstanding aggregate amount of all Revolving Advances made hereunder.




     2.2. Procedure for Revolving Advances Borrowing.



          (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a
Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should
any amount required to be paid as interest hereunder, or as fees or other charges under this
Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate
Loan as of the date such payment is due, in the amount required to pay in full such interest, fee,
charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.




          (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires
to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written






29









 







notice by no later than 10:00 a.m. on the day which is three (3) Business Days prior to the
date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing
(which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such
Advance to be borrowed, which amount shall be in a minimum amount of $1,000,000 and in integral
multiples of $100,000 thereafter, and (iii) the duration of the first Interest Period therefor.
Interest Periods for Eurodollar Rate Loans shall be for one, two or three months; provided, if an
Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding
Business Day unless such day falls in the next succeeding calendar month in which case the Interest
Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made
available to any Borrower during the continuance of a Default or an Event of Default. After giving
effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic
Rate Loan under Section 2.2(d), there shall not be outstanding more than four (4) Eurodollar Rate
Loans, in the aggregate.




          (c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar
Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in
subsection (b)(iii) above provided that the exact length of each Interest Period shall be
determined in accordance with the practice of the interbank market for offshore Dollar deposits and
no Interest Period shall end after the last day of the Term.




     Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan
by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion
given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last
day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not
receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be
deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.



          (d) Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent
may, on the last Business Day of the then current Interest Period applicable to any outstanding
Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such
loan into a loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to
convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on
the day which is three (3) Business Days’ prior to the date on which such conversion is to occur
with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the
day which is one (1) Business Day prior to the date on which such conversion is to occur with
respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each
case, the date of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.




          (e) At its option and upon written notice given prior to 10:00 a.m. (New York time) at least
three (3) Business Days’ prior to the date of such prepayment, any Borrower may






30









 







prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with
accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall
specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such
prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on
a date other than the last Business Day of the then current Interest Period with respect thereto,
such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.




               (f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from
and against any and all losses or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.



          (g) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any
Lender and the office or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and
Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request
from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar
Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate
Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar
Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect
of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited
to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in
order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be
conclusive absent manifest error.




     2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with any and all other
Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s
books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been
requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving
Advances to the extent Lenders make such Revolving Advances, be made available to the applicable
Borrower on the day so requested by way of



31









 




credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may
designate following notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to have been requested by
any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to
such deemed request.




     2.4. Intentionally Omitted.



     2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding at any
time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount less the Maximum
Undrawn Amount of all issued and outstanding Letters of Credit or (b) the Formula Amount.



     2.6. Repayment of Advances.



          (a) The Advances shall be due and payable in full on the last day of the Term subject to
earlier prepayment as herein provided.




          (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the
date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as
of the next Business Day following Agent’s receipt of those items of payment, each Borrower agrees
that, in computing the charges under this Agreement, all items of payment shall be deemed applied
by Agent on account of the Obligations one (1) Business Day after (i) the Business Day following
Agent’s receipt of such payments via wire transfer or electronic depository check or (ii) in the
case of payments received by Agent in any other form, the Business Day such payment constitutes
good funds in Agent’s account. Agent is not, however, required to credit Borrowers’ Account for
the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’
Account for the amount of any item of payment which is returned to Agent unpaid.




          (c) All payments of principal, interest and other amounts payable hereunder, or under any of
the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (New York
time) on the due date therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to effectuate payment on
any and all Obligations due and owing hereunder by charging Borrowers’ Account or by making
Advances as provided in Section 2.2 hereof.




          (d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.




     2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding at
any time in excess of the maximum amount of Advances permitted hereunder shall be



32









 




immediately due and payable without the necessity of any demand, at the Payment Office,
whether or not a Default or Event of Default has occurred.




     2.8. Statement of Account. Agent shall maintain, in accordance with its customary
procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall be
recorded the date and amount of each Advance made by Agent and the date and amount of each payment
in respect thereof; provided, however, the failure by Agent to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing
Agent a statement showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Agent and Borrowers during such month. The monthly
statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and
shall constitute an account stated between Lenders and Borrowers unless Agent receives a written
statement of Borrowers’ specific exceptions thereto within thirty (30) days after such statement is
received by Borrowing Agent. The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and
of payments applicable thereto.



     2.9. Letters of Credit. Subject to the terms and conditions hereof, Agent shall issue
or cause the issuance of standby and/or trade letters of credit (“Letters of Credit”) for the
account of any Borrower; provided, however, that Agent will not be required to issue or cause to be
issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of
(i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding
Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount minus the
Maximum Undrawn Amount of all outstanding Letters of Credit or (y) the Formula Amount. The Maximum
Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the
Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be
deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the
Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon
shall not bear interest.



     2.10. Issuance of Letters of Credit.



          (a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m. (New York
time), at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of
Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of
Agent; and, such other certificates, documents and other papers and information as Agent may
reasonably request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable letter of credit
and security agreement, any applicable letter of credit reimbursement agreement and/or any other
applicable agreement, any letter of credit and the disposition of documents, disposition of any
unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of
Credit.




          (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances of usance drafts






33









 







when presented for honor thereunder in accordance with the terms thereof and when accompanied
by the documents described therein and (ii) have an expiry date not later than twelve (12) months
after such Letter of Credit’s date of issuance and in no event later than the last day of the Term.
Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of Commerce at the time
a Letter of Credit is issued (the “UCP”) or the International Standby Practices
(ISP98-International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”), and any
subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by
Agent, and each trade Letter of Credit shall be subject to the UCP.




          (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent
for a Letter of Credit hereunder.




          (d) Nothing contained in this Agreement shall be construed under any circumstances as an
agreement by Agent and/or Lenders to extend the Term or require or obligate in any way Agent,
Lenders and/or Issuer to make any Revolving Advances or to issue any new Letters of Credit (or
extend or renew any existing Letters of Credit) on or after the last day of the Term.




     2.11. Requirements For Issuance of Letters of Credit.



          (a) Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as
the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any
Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all
instruments, documents, and other writings and property received by the Issuer pursuant to the
Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit, the application therefor or any
acceptance therefor.




          (b) In connection with all Letters of Credit issued or caused to be issued by Agent under this
Agreement, each Borrower hereby appoints Agent, or its designee, as its attorney, with full power
and authority if an Event of Default shall have occurred, (i) to sign and/or endorse such
Borrower’s name upon any warehouse or other receipts, letter of credit applications and
acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to clear Inventory through
the United States of America Customs Department (“Customs”) in the name of such Borrower or Agent
or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of
such Borrower for such purpose; and (iv) to complete in such Borrower’s name or Agent’s, or in the
name of Agent’s designee, any order, sale or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except
for Agent’s or its attorney’s willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.




     2.12. Disbursements, Reimbursement.



34









 





          (a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such
Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment
Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing,
respectively.




          (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or
transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent
shall have received such notice, the Borrowers shall reimburse (such obligation to reimburse Agent
shall sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 Noon, New York
time on each date that an amount is paid by Agent under any Letter of Credit (each such date, a
“Drawing Date”) in an amount equal to the amount so paid by Agent. In the event Borrowers fail to
reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 Noon, New
York time, on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers shall
be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by
the Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount
of the unutilized portion of the lesser of (i) the Maximum Revolving Advance Amount, less the
Maximum Undrawn Amount of all outstanding Letters of Credit, or (ii) the Formula Amount and, in
each case, subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section
2.12(b) may be oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of such notice.




          (c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent an
amount in immediately available funds equal to its Commitment Percentage of the amount of the
drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to
have made a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in that amount. If
any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment
Percentage of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to
the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds
Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum
equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loans on and after
the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of
the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient
time to enable any Lender to effect such payment on such date shall not relieve such Lender from
its obligation under this Section 2.12(c), provided that such Lender shall not be obligated to pay
interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt
of notice from Agent of a drawing.




          (d) With respect to any unreimbursed drawing that is not converted into a Revolving Advance
maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section
2.12(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2 (other
than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred
from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such
Letter of Credit Borrowing shall be due and payable on demand






35









 







(together with interest) and shall bear interest at the rate per annum applicable to a
Revolving Advance maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to
Section 2.12(c) shall be deemed to be a payment in respect of its participation in such Letter of
Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of
its Participation Commitment under this Section 2.12.




          (e) Each Lender’s Participation Commitment shall continue until the last to occur of any of
the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of
Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and
uncancelled; and (z) all Persons (other than the Borrowers) have been fully reimbursed for all
payments made under or relating to Letters of Credit.




     2.13. Repayment of Participation Advances.



          (a) Upon (and only upon) receipt by Agent for its account of immediately available funds from
Borrowers (i) in reimbursement of any payment made by the Agent under the Letter of Credit with
respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of
interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each
Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment
Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such
funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.




          (b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments
made by Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith
return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.




     2.14. Documentation. Each Borrower agrees to be bound by the terms of the Letter of
Credit Application and by Agent’s interpretations of any Letter of Credit issued on behalf of such
Borrower and by Agent’s written regulations and customary practices relating to letters of credit,
though Agent’s interpretations may be different from such Borrower’s own. In the event of a
conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern.
It is understood and agreed that, except in the case of gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall
not be liable for any error, negligence and/or mistakes, whether of omission or commission, in
following the Borrowing Agent’s or any Borrower’s instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.



     2.15. Determination to Honor Drawing Request. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be
responsible only to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face with the



36









 




requirements of such Letter of Credit and that any other drawing condition appearing on the
face of such Letter of Credit has been satisfied in the manner so set forth.




     2.16. Nature of Participation and Reimbursement Obligations. Each Lender’s obligation
in accordance with this Agreement to make the Revolving Advances or Participation Advances as a
result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent
upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Section 2.16 under all circumstances,
including the following circumstances:



               (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have
against Agent, any Borrower or any other Person for any reason whatsoever;



               (ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of
Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving
Advance, it being acknowledged that such conditions are not required for the making of a Letter of
Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section
2.12;



               (iii) any lack of validity or enforceability of any Letter of Credit;



               (iv) any claim of breach of warranty that might be made by Borrower or any Lender against the
beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, cross-claim, defense or other right which any Borrower or any Lender may have at any
time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or
the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any
Lender or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying transaction between any
Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit
was procured);



               (v) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provisions of services
relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been
notified thereof;



               (vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such Letter of Credit;



               (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;



37









 





               (viii) any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in
the form requested by Borrowing Agent, unless the Agent has received written notice from Borrowing
Agent of such failure within three (3) Business Days after the Agent shall have furnished Borrowing
Agent a copy of such Letter of Credit and such error is material and no drawing has been made
thereon prior to receipt of such notice;



               (ix) any Material Adverse Effect;



               (x) any breach of this Agreement or any Other Document by any party thereto;



               (xi) the occurrence or continuance of an insolvency proceeding with respect to any Borrower or
any Guarantor;



               (xii) the fact that a Default or Event of Default shall have occurred and be continuing;



               (xiii) the fact that the Term shall have expired or this Agreement or the Obligations
hereunder shall have been terminated; and



               (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.



     2.17. Indemnity. In addition to amounts payable as provided in Section 16.5, each
Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s
Affiliates that have issued a Letter of Credit from and against any and all claims, demands,
liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the
gross negligence or willful misconduct of the Agent as determined by a final and non-appealable
judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of
Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such
dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental
Acts”).



     2.18. Liability for Acts and Omissions. As between Borrowers and Agent and Lenders,
each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit
by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the respective foregoing, Agent shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter
of Credit, or any other party



38









 




to which such Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of any Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any
Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable,
facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent,
including any governmental acts, and none of the above shall affect or impair, or prevent the
vesting of, any of Agent’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Agent from liability for Agent’s gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final non-appealable judgment) in connection with actions or
omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent
or Agent’s Affiliates be liable to any Borrower for any indirect, consequential, incidental,
punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees),
or for any damages resulting from any change in the value of any property relating to a Letter of
Credit.




     Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may
rely on any oral or other communication believed in good faith by Agent or such Affiliate to have
been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor
any presentation if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored
presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to
settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to
reimbursement to the same extent as if such presentation had initially been honored, together with
any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt of such statement (even
if such statement indicates that a draft or other document is being delivered separately), and
shall not be liable for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming
that it rightfully honored under the laws or practices of the place where such bank is located; and
(vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to
any order issued at the applicant’s request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in
connection with any Letter of Credit that is the subject of such Order, notwithstanding that any
drafts or other documents presented in connection with such Letter of Credit fail to conform in any
way with such Letter of Credit.



     In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it
or any documents and certificates delivered thereunder, if taken or omitted in good faith and
without gross negligence (as determined by a court of competent jurisdiction in a final
non-appealable judgment), shall not put Agent under any resulting liability to any Borrower or any
Lender.



39









 





     2.19. Additional Payments. Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1
hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations.



     2.20. Manner of Borrowing and Payment.



          (a) Each borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.




          (b) Each payment (including each prepayment) by any Borrower on account of the principal of
and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata
according to the applicable Commitment Percentages of Lenders. Except as expressly provided
herein, all payments (including prepayments) to be made by any Borrower on account of principal,
interest and fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York time,
in Dollars and in immediately available funds.




          (c) (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each borrowing of Revolving
Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00
P.M., New York time, on each Settlement Date commencing with the first Settlement Date following
the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate
amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the
aggregate amount of repayments applied to outstanding Revolving Advances during such preceding
Week, then each Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments
and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during
such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.




               (ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate
on outstanding Advances which it has funded.



               (iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.



          (d) If any Lender or Participant (a “Benefited Lender”) shall at any time receive any payment
of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof
(whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment
to and Collateral received by any other Lender, if any, in respect of such other






40









 







Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of
Collateral is not expressly permitted hereunder, such Benefited Lender shall purchase for cash from
the other Lenders a participation in such portion of each such other Lender’s Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s
Advances may exercise all rights of payment (including rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.




          (e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable Commitment
Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next Settlement Date and, in
reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate
(computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii)
such amount, times (iii) the number of days from and including such Settlement Date to the date on
which such amount becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent by such Lender
within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such
an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances
hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall
not prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender.




     2.21. Mandatory Prepayments. Subject to Section 4.3 hereof, when any Borrower sells
or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business,
Borrowers shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross
proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made
promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and
until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not
be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions
hereof. Such repayments shall be applied to the Advances in such order as Agent may determine,
subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof.



     2.22. Use of Proceeds.



          (a) Borrowers shall apply the proceeds of Advances to (i) pay fees and expenses relating to
this transaction, and (ii) provide for its working capital needs and reimburse drawings under
Letters of Credit.







41









 








          (b) Without limiting the generality of Section 2.22(a) above, neither the Borrowers, the
Guarantors nor any other Person which may in the future become party to this Agreement or the Other
Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds
of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy
Act.




     2.23. Defaulting Lender.



          (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement)
to make available its portion of any Advance or (y) notifies either Agent or Borrowing Agent that
it does not intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which
a Lender Default is in effect and of the other parties hereto shall be modified to the extent of
the express provisions of this Section 2.23 while such Lender Default remains in effect.




          (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are
not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Advances required to be advanced by any
Lender shall be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender
(other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Advances of
that type of all Lenders at the time of such application; provided, that, Agent shall not be
obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting
Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments
hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender
shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to a
Borrower the amount of such payments received or retained by it for the account of such Defaulting
Lender.




          (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.
All amendments, waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances
outstanding or a Commitment Percentage.




          (d) Other than as expressly set forth in this Section 2.23, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall
remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender
from its obligations under this Agreement and the Other Documents, shall alter such obligations,
shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice
any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.







42









 








          (e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer
be a Defaulting Lender and shall be treated as a Lender under this Agreement.




III. INTEREST AND FEES.




     3.1. Interest. Interest on Advances shall be payable in arrears on the first day of
each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the
end of each Interest Period or, for Eurodollar Rate Loans with an Interest Period in excess of
three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate
Loan or (b) the end of the Interest Period. Interest charges shall be computed on the actual
principal amount of Advances outstanding during the month at a rate per annum equal to with respect
to Revolving Advances, the applicable Revolving Interest Rate. Whenever, subsequent to the date of
this Agreement, the Alternate Base Rate is increased or decreased, the Revolving Interest Rate for
Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time such change or
changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate
Loans without notice or demand of any kind on the effective date of any change in the Reserve
Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, (i) at the option of Agent or at the direction of Required
Lenders, the Obligations shall bear interest at the Revolving Interest Rate for Domestic Loans
plus two percent (2%) per annum (the “Default Rate”).



     3.2. Letter of Credit Fees.



          (a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and including the date
of expiration or termination, equal to the average daily face amount of each outstanding Letter of
Credit multiplied by the Applicable Margin in effect for Eurodollar Rate Loans less
one-quarter of one percent (0.25%) per annum, such fees to be calculated on the basis of a 360-day
year for the actual number of days elapsed and to be payable quarterly in arrears on the first day
of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one
quarter of one percent (0.25%) per annum, together with any and all administrative, issuance,
amendment, payment and negotiation charges with respect to Letters of Credit and all fees and
expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of
Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses,
if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of Credit Fees”). All
such charges shall be deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any
reason. Any such charge in effect at the time of a particular transaction shall be the charge for
that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that
type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on
the date when the same are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, at the option of Agent or at the
direction of Required Lenders, the Letter of






43









 







Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional
two percent (2.0%) per annum.




          (b) At any time following the occurrence of an Event of Default or the expiration of the Term,
Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount
of all outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes Agent, in its
discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in the amounts
required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out
of any other funds of such Borrower coming into any Lender’s possession at any time. Agent will
invest such cash collateral (less applicable reserves) in such short-term money-market items as to
which Agent and such Borrower mutually agree and the net return on such investments shall be
credited to such account and constitute additional cash collateral. No Borrower may withdraw
amounts credited to any such account except upon the occurrence of all of the following: (x)
payment and performance in full of all Obligations; (y) expiration of all Letters of Credit; and
(z) termination of this Agreement.




     3.3. Closing Fee and Facility Fee.



          (a) Upon the execution of this Agreement, Borrowers shall pay to Agent for the ratable benefit
of Lenders a closing fee of $200,000.




          (b) If, for any month during the Term, the average daily unpaid balance of the Revolving
Advances plus the Maximum Undrawn Amount of all outstanding Letters of Credit for each day
of such month does not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to
Agent for the ratable benefit of Lenders a fee at a rate equal to the Unused Line Fee set forth in
the Applicable Margin on the amount by which the Maximum Revolving Advance Amount exceeds such
average daily unpaid balance (the “Unused Line Fee”). Such fee shall be payable to Agent in
arrears on the first day of each month with respect to the previous month.




     3.4. Collateral Evaluation Fee, Collateral Monitoring Fee and Appraisal Fee.



          (a) Borrowers shall pay Agent a collateral monitoring fee equal to $2,000 per month commencing
on the first day of the month following the Closing Date and on the first day of each month
thereafter during the Term. The collateral monitoring fee shall be deemed earned in full on the
date when same is due and payable hereunder and shall not be subject to rebate or proration upon
termination of this Agreement for any reason.




          (b) Borrowers shall pay to Agent on the first day of each month following any month in which
Agent performs any collateral evaluation — namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent and which evaluation is
undertaken by Agent or for Agent’s benefit — a collateral evaluation fee in an amount equal to $850
per day for each person employed to perform such evaluation, plus






44









 







all costs and disbursements incurred by Agent in the performance of such examination or
analysis.




          (c) Agent may, in its sole discretion, exercised in a commercially reasonable manner, at any
time after the Closing Date, engage the services of an independent appraisal firm or firms of
reputable standing, satisfactory to Agent, for the purpose of appraising the then current values of
the Collateral. Absent the occurrence and continuance of an Event of Default at such time, Agent
shall consult with Borrowers as to the identity of any such firm. All of the fees and
out-of-pocket costs and expense of any such firm (collectively, “appraisal amounts”) shall be paid
for when due, in full and without off-set, by Borrowers. In the event the value of Borrowers’
Inventory, as so determined pursuant to such appraisal, is less than anticipated by Agent or
Lenders, such that the Revolving Advances against Eligible Inventory, are in fact in excess of such
Advances permitted hereunder, then, promptly upon Agent’s demand for same, Borrowers shall make
mandatory prepayments of the then outstanding Revolving Advances made against such Eligible
Inventory so as to eliminate the excess Advances.




     3.5. Computation of Interest and Fees. Interest and fees hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate for Domestic Rate Loans during such extension.



     3.6. Maximum Charges. In no event whatsoever shall interest and other charges charged
hereunder exceed the highest rate permissible under law. In the event interest and other charges
as computed hereunder would otherwise exceed the highest rate permitted under law, such excess
amount shall be first applied to any unpaid principal balance owed by Borrowers, and if the then
remaining excess amount is greater than the previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the provisions hereof shall be deemed amended
to provide for such permissible rate.



     3.7. Increased Costs. In the event that any Applicable Law, treaty or governmental
regulation, or any change therein or in the interpretation or application thereof, or compliance by
any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender
and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent
or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or other financial,
monetary or other authority, shall:



          (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender
of principal, fees, interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);




          (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or






45









 







loans by, or other credit extended by, any office of Agent or any Lender, including pursuant
to Regulation D of the Board of Governors of the Federal Reserve System; or




          (c) impose on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;




     and the result of any of the foregoing is to increase the cost to Agent or any Lender of
making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems
to be material or to reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the Advances by an amount that Agent or such Lender deems to be material,
then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional cost or such
reduction, as the case may be. Agent or such Lender shall certify the amount of such additional
cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent
manifest error.



     3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that
Agent or any Lender shall have determined that:



          (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period; or




          (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in
the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a
proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar
Rate Loan,




     then Agent shall give Borrowing Agent prompt written or telephonic notice of such
determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made
as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. (New
York City time) two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an
affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan,
or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New
York City time) two (2) Business Days prior to the last Business Day of the then current Interest
Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type
of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected
Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.



46









 





     3.9. Capital Adequacy.



          (a) In the event that Agent or any Lender shall have determined that any Applicable Law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and
any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level
below that which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time,
Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent
or such Lender may use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of
invalidity or inapplicability with respect to the Applicable Law, regulation or condition.




          (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be
necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrowing Agent shall be conclusive absent manifest error.




     3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of
the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each,
individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or
Payees, as the case may be, shall be increased as may be necessary so that, after making all
required withholding or deductions, the applicable Payee or Payees receives an amount equal to the
sum it would have received had no such withholding or deductions been made (the “Gross-Up
Payment”), (b) such Borrower shall make such withholding or deductions, and (c) such Borrower shall
pay the full amount withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall be obligated to
make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that
would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete
exemption with respect thereto pursuant to Section 3.11 hereof.



     3.11. Withholding Tax Exemption.



          (a) Each Payee that is not incorporated under the Laws of the United States of America or a
state thereof (and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations






47









 







(“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate,
making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9;
a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as
required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in
§1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.




          (b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as
follows: (i) each Payee which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by any Borrower hereunder for the account of such Payee; (ii) each
Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole discretion shall
permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by Agent). Each Payee which so
delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent
two (2) additional copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent Withholding Certificate so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing
Agent or Agent.




          (c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under
§1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any
tax it deducts and withholds in accordance with regulations under §1441 of the Code.



IV. COLLATERAL: GENERAL TERMS




     4.1. Security Interest in the Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and
grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security
interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may
be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall
cause its financial statements to reflect such security interest. Each Borrower shall promptly
provide Agent with written notice of all commercial tort claims, such notice to contain the case
title together with the applicable court and a brief description of the claim(s). Upon delivery of
each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and
lien in and to such commercial tort claims and all proceeds thereof.



48









 





     4.2. Perfection of Security Interest. Each Borrower shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral
or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in
such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and
advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, control agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law. By its signature hereto, each Borrower hereby
authorizes Agent to file against such Borrower, one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent
(which statements may have a description of collateral which is broader than that set forth
herein). All charges, expenses and fees Agent may incur in doing any of the foregoing, and any
local taxes relating thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for
its benefit and for the ratable benefit of Lenders immediately upon demand.



     4.3. Disposition of Collateral. Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or
otherwise except (a) the sale of Inventory in the Ordinary Course of Business, (b) the disposition
or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal
year only to the extent that (i) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Agent’s first priority security interest or (ii) the
proceeds of which are remitted to Agent to be applied pursuant to Section 2.21 and (c) upon the
prior written consent of Agent (such consent not to be unreasonably withheld), the sale of other
assets (other than Receivables, Inventory or General Intangibles) for reasonably equivalent value
and the proceeds of which shall be maintained by Borrowers for use in the Ordinary Course of
Business.



     4.4. Preservation of Collateral. Following the occurrence of a Default or Event of
Default, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at
any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of other security
protection measures as Agent may deem appropriate; (b) may employ and maintain at any of any
Borrower’s premises a custodian who shall have full authority to do all acts necessary to protect
Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all
or part of the Collateral; (d) may use any Borrower’s owned or leased lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral is located, and
may proceed over and through any of Borrowers’ owned or leased property. Each Borrower shall
cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions
to preserve the Collateral as Agent may direct. All of Agent’s expenses of preserving the



49









 




Collateral, including any expenses relating to the bonding of a custodian, shall be charged to
Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the
Obligations.




     4.5. Ownership of Collateral.



          (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to
sell, transfer, pledge and/or grant a first priority security interest in each and every item of
the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement
executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower
that appear on such documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (iv) each Borrower’s Equipment and Inventory shall be located as set
forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written
consent of Agent (it being acknowledged that Borrowers may move equipment with a book value less
than $100,000 in the aggregate (in one or a series of moves) after the Closing Date from a location
not subject to the Direct TV Security Documents to a location subject to the Direct TV Security
Documents without the prior written consent of Agent) except with respect to the sale of Inventory
in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof.




          (b) (i) There is no location at which any Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a
correct and complete list, as of the Closing Date, of the legal names and addresses of each
warehouse at which Inventory of any Borrower is stored; none of the receipts received by any
Borrower from any warehouse states that the goods covered thereby are to be delivered to bearer or
to the order of a named Person or to a named Person and such named Person’s assigns; (iii)
Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place
of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule
4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state
and street address, of all Real Property owned or leased by each Borrower, together with the names
and addresses of any landlords.




     4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance in
full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the
Collateral shall continue in full force and effect. During such period no Borrower shall, without
Agent’s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business
and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to
exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. Each Borrower shall defend Agent’s interests in the
Collateral against any and all Persons whatsoever. At any time following demand by Agent for
payment of all Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including: labels, stationery,
documents, instruments and advertising materials. If Agent exercises this right to take possession
of the Collateral, Borrowers shall, upon demand, assemble it in the best



50









 




manner possible and make it available to Agent at a place reasonably convenient to Agent. In
addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights
and remedies set forth herein and further provided by the Uniform Commercial Code or other
Applicable Law. Each Borrower shall, and Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents
or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to
Agent’s order and if they shall come into any Borrower’s possession, they, and each of them, shall
be held by such Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver
them to Agent in their original form together with any necessary endorsement.




     4.7. Books and Records. Each Borrower shall: (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or transactions of or
in relation to its business and affairs; (b) set up on its books accruals with respect to all
taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its
books, from its earnings, allowances against doubtful Receivables, advances and investments and all
other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business. All determinations
pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently
applied in the opinion of such independent public accountant as shall then be regularly engaged by
Borrowers.



     4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs
all accountants and auditors employed by such Borrower at any time during the Term to exhibit and
deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial
balances or other accounting records of any sort in the accountant’s or auditor’s possession, and
to disclose to Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations. Each Borrower hereby authorizes all
Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating
to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will
attempt to obtain such information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or Governmental Bodies.



     4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of such Borrower’s business the
non-compliance with which could reasonably be expected to have a Material Adverse Effect. Each
Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided
that any related Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.



     4.10. Inspection of Premises. At all reasonable times Agent and each Lender shall
have full access to and the right to audit, check, inspect and make abstracts and copies from each
Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business. Agent, any Lender and their agents may enter upon
any premises of any Borrower at any time during business hours and at any other



51









 




reasonable time, and from time to time, for the purpose of inspecting the Collateral and any
and all records pertaining thereto and the operation of such Borrower’s business.




     4.11. Insurance. The assets and properties of each Borrower at all times shall be
maintained in accordance with the requirements of all insurance carriers which provide insurance
with respect to the assets and properties of such Borrower so that such insurance shall remain in
full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Borrower’s own cost and expense in amounts and with
carriers acceptable to Agent, each Borrower shall: (a) keep all its insurable properties and
properties in which such Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and
for such amounts, as is customary in the case of companies engaged in businesses similar to such
Borrower’s including business interruption insurance; (b) maintain a bond in such amounts as is
customary in the case of companies engaged in businesses similar to such Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who
may either singly or jointly with others at any time have access to the assets or funds of such
Borrower either directly or through authority to draw upon such funds or to direct generally the
disposition of such assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any state or jurisdiction in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of all policies and
evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (ii) appropriate loss payable endorsements in form and substance
satisfactory to Agent, naming Agent as a co-insured and loss payee as its interests may appear with
respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that
all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any
act or neglect of the insured or owner of the property described in such policy, and (C) that such
policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty
(30) days’ prior written notice is given to Agent. In the event of any loss thereunder, the
carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for
such loss to Agent and not to such Borrower and Agent jointly. If any insurance losses are paid by
check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse such
Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same to
cash. So long as no Event of Default has occurred and is continuing, Borrowers shall have the
right to adjust and compromise claims in amounts less than $100,000 under insurance coverage
referred to in clauses (a) through (c) above; provided further that in the event that any claim is
equal to or exceeds $100,000, Borrower shall have the right to adjust and compromise such claims
subject to the consent of Agent which consent shall not be unreasonably withheld. All loss
recoveries received by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to
Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid by
Borrowers to Agent, on demand.



     4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such
insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account
therefor



52









 




as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the
Obligations.




     4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments and
other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including
real and personal property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes. If any tax by any Governmental Body is or
may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender
which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other
Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which,
in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrowers pay the taxes, assessments or other Charges and each Borrower hereby
indemnifies and holds Agent and each Lender harmless in respect thereof. Agent will not pay any
taxes, assessments or Charges to the extent that any applicable Borrower has Properly Contested
those taxes, assessments or Charges. The amount of any payment by Agent under this Section 4.13
shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan
and added to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has
been made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent
shall retain its security interest in and Lien on any and all Collateral held by Agent.



     4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay, when
and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such leases and keep them in full force
and effect and, at Agent’s request will provide evidence of having done so.



     4.15. Receivables.



          (a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid
account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed
sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered
by a Borrower as of the date each Receivable is created. Same shall be due and owing in accordance
with the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim
except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent.




          (b) Solvency of Customers. Each Customer, to the best of each Borrower’s knowledge,
as of the date each Receivable is created, is and will be solvent and able to pay all Receivables
on which the Customer is obligated in full when due or with respect to such Customers of any
Borrower who are not solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.




          (c) Location of Borrowers. Each Borrower’s chief executive office is located at 6740
Shady Oak Road, Eden Prairie, Minnesota 55344. Until written notice is given to Agent






53









 







by Borrowing Agent of any other office at which any Borrower keeps its records pertaining to
Receivables, all such records shall be kept at such executive office.




          (d) Collection of Receivables; Credit Card Notifications.




               (i) Borrowers shall instruct their Customers to deliver all remittances upon Receivables to
such lockbox account or Blocked Account as Agent shall designate from time to time as contemplated
by Section 4.15(h) or as otherwise agreed to from time to time by Agent. Notwithstanding the
foregoing, to the extent any Borrower directly receives any remittances upon Receivables, such
Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s
account, collect as Agent’s property and in trust for Agent all amounts received on Receivables,
and shall not commingle such collections with any Borrower’s funds or use the same except to pay
Obligations. Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver
to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness. The Borrowers shall use commercially
reasonable efforts to cause the ACH or wire transfer of all payments due from credit card
processors (whether or not there are then any outstanding Obligations) to be made to a Blocked
Account with such frequency as is consistent with the Borrowers’ current business practices as in
effect on the Closing Date.



               (ii) Borrowers shall deliver to the Agent copies of notifications (each, a “Credit Card
Notification”) substantially in the form attached hereto as Exhibit 4.15(d)(ii) which have been
executed on behalf of such Borrower and which shall, upon satisfaction of the covenant set forth in
Section 6.11, be delivered to such Borrower’s credit card clearinghouses and processors listed on
Schedule 5.28.



          (e) Notification of Assignment of Receivables. At any time, Agent shall have the
right to send notice of the assignment of, and Agent’s security interest in and Lien on, the
Receivables to any and all Customers or any third party holding or otherwise concerned with any of
the Collateral. Thereafter, Agent shall have the sole right to collect the Receivables, take
possession of the Collateral, or both. Agent’s actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and
the salaries of any collection personnel used for collection, may be charged to Borrowers’ Account
and added to the Obligations.




          (f) Power of Agent to Act on Borrowers’ Behalf. Agent shall have the right to
receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks,
drafts and other instruments for the payment of money relating to the Receivables, and each
Borrower hereby waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney
with power (i) at any time: (A) to endorse such Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (B) to sign such
Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (C) to send verifications of Receivables
to any Customer; (D) to sign such Borrower’s name on all financing statements or any other
documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect
Agent’s interest in the Collateral and to file same; and (ii) at any time






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following the occurrence of a Default or Event of Default: (A) to demand payment of the
Receivables; (B) to enforce payment of the Receivables by legal proceedings or otherwise; (C) to
exercise all of such Borrower’s rights and remedies with respect to the collection of the
Receivables and any other Collateral; (D) to settle, adjust, compromise, extend or renew the
Receivables; (E) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (F) to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy
or similar document against any Customer; (G) to prepare, file and sign such Borrower’s name on any
notice of Lien, assignment or satisfaction of Lien or similar document in connection with the
Receivables; and (H) to do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said attorney or designee
shall not be liable for any acts of omission or commission nor for any error of judgment or mistake
of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a
court of competent jurisdiction in a final non-appealable judgment); this power being coupled with
an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right
at any time following the occurrence of an Event of Default or Default, to change the address for
delivery of mail addressed to any Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to any Borrower.




          (g) No Liability. Neither Agent nor any Lender shall, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of any kind occurring
in the settlement, collection or payment of any of the Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom. Following the occurrence of an Event of
Default or Default Agent may, without notice or consent from any Borrower, sue upon or otherwise
collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any
of the Receivables or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. Agent is authorized and empowered to accept following the occurrence
of an Event of Default or Default the return of the goods represented by any of the Receivables,
without notice to or consent by any Borrower, all without discharging or in any way affecting any
Borrower’s liability hereunder.




          (h) Establishment of a Lockbox Account, Dominion Account. All proceeds of Collateral
shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other
“blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked
Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be selected by
Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository Accounts”)
established at the Agent for the deposit of such proceeds. Each applicable Borrower, Agent and
each Blocked Account Bank shall enter into a deposit account control agreement in form and
substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so
deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by
wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked Accounts
shall immediately become the property of Agent and Borrowing Agent shall obtain the agreement by
such Blocked Account Bank to waive any offset rights against the funds so deposited. Neither Agent
nor any Lender assumes any responsibility for such blocked account arrangement, including any claim
of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank
thereunder. All deposit






55









 







accounts and investment accounts of each Borrower and its Subsidiaries are set forth on
Schedule 4.15(h).




               (i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust any
material amount of the Receivables (or extend the time for payment thereof) or accept any material
returns of merchandise or grant any additional discounts, allowances or credits thereon except for
those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of such Borrower.



     4.16. Inventory. To the extent Inventory held for sale or lease has been produced by
any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.



     4.17. Maintenance of Equipment. The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be
maintained and preserved. No Borrower shall use or operate the Equipment in violation of any law,
statute, ordinance, code, rule or regulation. Each Borrower shall have the right to sell Equipment
to the extent set forth in Section 4.3 hereof.



     4.18. Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent
or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume
any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.



     4.19. Environmental Matters.



          (a) Borrowers shall ensure that the Real Property and all operations and businesses conducted
thereon remains in compliance with all Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or
appropriate governmental authorities.




          (b) Borrowers shall establish and maintain a system to assure and monitor continued compliance
with all applicable Environmental Laws which system shall include periodic reviews of such
compliance.




          (c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose
of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers
that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers
shall use their best efforts to obtain certificates of disposal, such as hazardous waste manifest
receipts, from all treatment, transport, storage or disposal facilities or operators employed by
Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real
Property.







56









 








          (d) In the event any Borrower obtains, gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event
being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation,
request for information or notification that it is potentially responsible for investigation or
cleanup of environmental conditions at the Real Property, demand letter or complaint, order,
citation, or other written notice with regard to any Hazardous Discharge or violation of
Environmental Laws affecting the Real Property or any Borrower’s interest therein (any of the
foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any
state agency responsible in whole or in part for environmental matters in the state in which the
Real Property is located or the United States Environmental Protection Agency (any such person or
entity hereinafter the “Authority”), then Borrowing Agent shall, within five (5) Business Days,
give written notice of same to Agent detailing facts and circumstances of which any Borrower is
aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the Real Property and the
Collateral and is not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.




          (e) Borrowing Agent shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential responsibility with
respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated
or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to Agent until the
claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and
reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file
under any Environmental Laws. Such information is to be provided solely to allow Agent to protect
Agent’s security interest in and Lien on the Real Property and the Collateral.




          (f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to avoid subjecting
the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (i) give such
notices or (ii) enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums
paid in connection with any judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended at the Default Rate for Domestic
Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid
shall be added to and become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between Agent, any Lender and any Borrower.







57









 








          (g) Promptly upon the written request of Agent from time to time, Borrowers shall provide
Agent, at Borrowers’ expense, with an environmental site assessment or environmental audit report
prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found
on, under, at or within the Real Property. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such
Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post a bond, letter
of credit or other security reasonably satisfactory to Agent to secure payment of these costs and
expenses.




          (h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against all loss, liability,
damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion
of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous
Substances affecting the Real Property, whether or not the same originates or emerges from the Real
Property or any contiguous real estate, including any loss of value of the Real Property as a
result of the foregoing except to the extent such loss, liability, damage and expense is
attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.
Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of
any Hazardous Substances at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the
termination of this Agreement.




          (i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to
include all of each Borrower’s right, title and interest in and to its owned and leased premises.




     4.20. Financing Statements. Except as respects the financing statements filed by
Agent and the financing statements described on Schedule 1.2, no financing statement covering any
of the Collateral or any proceeds thereof is on file in any public office.


V. REPRESENTATIONS AND WARRANTIES.




     Each Borrower represents and warrants as follows:



     5.1. Authority. Each Borrower has full power, authority and legal right to enter into
this Agreement and the Other Documents and to perform all its respective Obligations hereunder and
thereunder. This Agreement and the Other Documents have been duly executed and delivered by each
Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding
obligation of such Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors’ rights generally. The execution, delivery and performance of this Agreement
and of the Other Documents (a) are within such Borrower’s corporate powers,



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have been duly authorized by all necessary corporate action, are not in contravention of law
or the terms of such Borrower’s by-laws, certificate of incorporation or other applicable documents
relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any
material agreement or undertaking to which such Borrower is a party or by which such Borrower is
bound, (b) will not conflict with or violate any law or regulation, or any judgment, order or
decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any
other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been
duly obtained, made or compiled prior to the Closing Date and which are in full force and effect
and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute
a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset
of such Borrower under the provisions of any agreement, charter document, instrument, by-law or
other instrument to which such Borrower is a party or by which it or its property is a party or by
which it may be bound.




     5.2. Formation and Qualification.



          (a) Each Borrower is duly incorporated and in good standing under the laws of the state listed
on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary
for such Borrower to conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has
delivered to Agent true and complete copies of its certificate of incorporation and by-laws and
will promptly notify Agent of any amendment or changes thereto.




          (b) The only Subsidiaries of each Borrower are listed on Schedule 5.2(b).




     5.3. Survival of Representations and Warranties. All representations and warranties
of such Borrower contained in this Agreement and the Other Documents shall be true at the time of
such Borrower’s execution of this Agreement and the Other Documents, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.



     5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth on
Schedule 5.4. Each Borrower has filed all federal, state and local tax returns and other reports
each is required by law to file and has paid all taxes, assessments, fees and other governmental
charges that are due and payable. Federal, state and local income tax returns of each Borrower
have been examined and reported upon by the appropriate taxing authority or closed by applicable
statute and satisfied for all fiscal years prior to and including the fiscal year ending February
4, 2006. The provision for taxes on the books of each Borrower is adequate for all years not
closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge
of any deficiency or additional assessment in connection therewith not provided for on its books.



     5.5. Financial Statements.



          (a) The pro forma balance sheet of Borrowers on a Consolidated Basis (the “Pro Forma Balance
Sheet”) dated October 31, 2009 is accurate, complete and correct and fairly






59









 







reflects the financial condition of Borrowers on a Consolidated Basis as of October 31, 2009,
and has been prepared in accordance with GAAP, consistently applied. The Pro Forma Balance Sheet
has been certified as accurate, complete and correct in all material respects by the President and
Chief Financial Officer of Borrowing Agent. All financial statements referred to in this
subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in
accordance with GAAP, except as may be disclosed in such financial statements.




          (b) The twelve-month cash flow projections of Borrowers on a Consolidated Basis and their
projected balance sheets as of the Closing Date delivered to Agent (the “Projections”) were
prepared by the Chief Financial Officer of ValueVision, are based on underlying assumptions which
provide a reasonable basis for the projections contained therein and reflect Borrowers’ judgment
based on present circumstances of the most likely set of conditions and course of action for the
projected period. The cash flow Projections together with the Pro Forma Balance Sheet, are
referred to as the “Pro Forma Financial Statements”.




          (c) The consolidated and consolidating balance sheets of Borrowers, their Subsidiaries and
such other Persons described therein (including the accounts of all Subsidiaries for the respective
periods during which a subsidiary relationship existed) as of January 31, 2009, and the related
statements of income, changes in stockholder’s equity, and changes in cash flow for the period
ended on such date, all accompanied by reports thereon containing opinions without qualification by
independent certified public accountants, copies of which have been delivered to Agent, have been
prepared in accordance with GAAP, consistently applied (except for changes in application in which
such accountants concur and present fairly the financial position of Borrowers and their
Subsidiaries at such date and the results of their operations for such period. Since January 31,
2009 there has been no change in the condition, financial or otherwise, of Borrowers or their
Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the
aggregate value of machinery, equipment and Real Property owned by Borrowers and their respective
Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in
the aggregate has been materially adverse.




     5.6. Entity Names. No Borrower has been known by any other corporate name in the past
five years and does not sell Inventory under any other name except as set forth on Schedule 5.6,
nor has any Borrower been the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5) years.



     5.7. OSHA and Environmental Compliance.



          (a) Each Borrower has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material respects with, the
provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders
of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds
or Equipment under any such laws, rules or regulations.




          (b) Each Borrower has been issued all required federal, state and local licenses, certificates
or permits relating to all applicable Environmental Laws.







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          (c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real
Property including any premises leased by any Borrower; (ii) there are no underground storage tanks
or polychlorinated biphenyls on the Real Property including any premises leased by any Borrower;
(iii) the Real Property including any premises leased by any Borrower has never been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property including any premises leased by any Borrower, excepting such
quantities as are handled in accordance with all applicable manufacturer’s instructions and
governmental regulations and in proper storage containers and as are necessary for the operation of
the commercial business of any Borrower or of its tenants.




     5.8. Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance.



          (a) Each Borrower is solvent, able to pay its debts as they mature, will have capital
sufficient to carry on its business and all businesses in which it is about to engage, and (i) as
of the Closing Date, the fair present saleable value of its assets, calculated on a going concern
basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the
fair saleable value of its assets (calculated on a going concern basis) will be in excess of the
amount of its liabilities.




          (b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened
litigation, arbitration, actions or proceedings which involve the possibility of having a Material
Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the
Obligations.




          (c) No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance
in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any
Borrower in violation of any order of any court, Governmental Body or arbitration board or
tribunal.




          (d) No Borrower nor any member of the Controlled Group maintains or is required to contribute
to any Plan other than those listed on Schedule 5.8(d) hereto. (i) No Plan has incurred any
“accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of
the Code, whether or not waived, each Borrower and each member of the Controlled Group has met all
applicable minimum funding requirements under Section 302 of ERISA and Section 412 of the Code in
respect of each Plan, and each Plan is in compliance with Sections 412, 430 and 436 of the Code and
Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances; (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the
Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the
Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability
to the PBGC other than for the payment of premiums, and there are no premium payments which have
become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor
by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each
Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and
neither






61









 







any Borrower nor any member of the Controlled Group knows of any facts or circumstances which
would materially change the value of such assets and accrued benefits and other liabilities; (vi)
neither any Borrower nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii)
neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise
tax arising under Section 4971, 4972 or 4980B of the Code, and no fact exists which could give rise
to any such liability; (viii) neither any Borrower nor any member of the Controlled Group nor any
fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or
result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each
Borrower and each member of the Controlled Group has made all contributions due and payable with
respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which
the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of
the Controlled Group has any fiduciary responsibility for investments with respect to any plan
existing for the benefit of persons other than employees or former employees of any Borrower or any
member of the Controlled Group; (xii) neither any Borrower nor any member of the Controlled Group
maintains or is required to contribute to any Plan which provides health, accident or life
insurance benefits to former employees, their spouses or dependents, other than in accordance with
Section 4980B of the Code; (xiii) neither any Borrower nor any member of the Controlled Group has
withdrawn, completely or partially, within the meaning of Section 4203 or 4205 of ERISA, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of
1980 and there exists no fact which would reasonably be expected to result in any such liability;
and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of
fiduciary duty or for any failure in connection with the administration or investment of the assets
of a Plan.




     5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent applications,
trademarks, trademark applications, service marks, service mark applications, copyrights, copyright
applications, design rights, tradenames, assumed names, trade secrets and licenses owned or
utilized by any Borrower are set forth on Schedule 5.9, are valid and have been duly registered or
filed with all appropriate Governmental Bodies and constitute all of the intellectual property
rights which are necessary for the operation of its business; there is no objection to or pending
challenge to the validity of any such patent, trademark, copyright, design rights, tradename, trade
secret or license and no Borrower is aware of any grounds for any challenge, except as set forth in
Schedule 5.9 hereto. Each patent, patent application, patent license, trademark, trademark
application, trademark license, service mark, service mark application, service mark license,
design rights, copyright, copyright application and copyright license owned or held by any Borrower
and all trade secrets used by any Borrower consist of original material or property developed by
such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof.
Each of such items has been maintained so as to preserve the value thereof from the date of
creation or acquisition thereof.



     5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a)
is in compliance with and (b) has procured and is now in possession of, all material licenses or
permits required by any applicable federal, state or local law, rule or regulation for the
operation



62









 




of its business in each jurisdiction wherein it is now conducting or proposes to conduct
business and where the failure to procure such licenses or permits could have a Material Adverse
Effect.




     5.11. Default of Indebtedness. No Borrower is in default in the payment of the
principal of or interest on any Indebtedness or under any instrument or agreement under or subject
to which any Indebtedness has been issued and no event has occurred under the provisions of any
such instrument or agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.



     5.12. No Default. No Borrower is in default in the payment or performance of any of
its contractual obligations and no Default has occurred.



     5.13. No Burdensome Restrictions. No Borrower is party to any contract or agreement
the performance of which could have a Material Adverse Effect. Each Borrower has heretofore
delivered to Agent true and complete copies of all material contracts to which it is a party or to
which it or any of its properties is subject. No Borrower has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.



     5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are no
strikes or walkouts or union organization of any Borrower’s employees threatened or in existence
and no labor contract is scheduled to expire during the Term other than as set forth on Schedule
5.14 hereto.



     5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally or
as one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.



     5.16. Investment Company Act. No Borrower is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.



     5.17. Disclosure. No representation or warranty made by any Borrower in this
Agreement or in any financial statement, report, certificate or any other document furnished in
connection herewith or therewith contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements herein or therein not misleading. There is no
fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower
has not disclosed to Agent in writing with respect to the transactions contemplated by this
Agreement which could reasonably be expected to have a Material Adverse Effect.



     5.18. Intentionally Omitted.



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     5.19. Swaps. No Borrower is a party to, nor will it be a party to, any swap agreement
whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same
provides that damages upon termination following an event of default thereunder are payable on an
unlimited “two-way basis” without regard to fault on the part of either party.



     5.20. Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the Other Documents.



     5.21. Application of Certain Laws and Regulations. Neither any Borrower nor any
Affiliate of any Borrower is subject to any law, statute, rule or regulation which regulates the
incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common
or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or
other public utility services.



     5.22. Business and Property of Borrowers. Upon and after the Closing Date, Borrowers
do not propose to engage in any business other than the sales, marketing and distribution of
consumer products through television programming and other electronic media and activities
necessary to conduct the foregoing. On the Closing Date, each Borrower will own all the property
and possess all of the rights and Consents necessary for the conduct of the business of such
Borrower.



     5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any
portion of the proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a
Section 20 Subsidiary.



     5.24. Anti-Terrorism Laws.



          (a) Neither any Borrower nor any Affiliate of any Borrower is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.




          (b) Neither any Borrower nor any Affiliate of any Borrower or their respective agents acting
or benefiting in any capacity in connection with the Advances or other transactions hereunder, is
any of the following (each a “Blocked Person”):




               (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224;



               (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed
in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;



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               (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;



               (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;



               (v) a Person or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official publication of such list, or



               (vi) a Person or entity who is affiliated or associated with a Person or entity listed above.



     Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any
capacity in connection with the Advances or other transactions hereunder (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked pursuant to the Executive Order No. 13224.



     5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to engage,
in any business or activity prohibited by the Trading with the Enemy Act.



     5.26. Federal Securities Laws. Neither any Borrower (other than ValueVision) nor any
of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any
securities registered under the Exchange Act or (iii) has filed a registration statement that has
not yet become effective under the Securities Act.



     5.27. Equity Interests. The authorized and outstanding Equity Interests of each
Borrower is as shown on Schedule 5.27 hereto. All of the Equity Interests of each Borrower (other
than ValueVision) has been duly and validly authorized and issued and is fully paid and
non-assessable and has been sold and delivered to the holders hereof in compliance with, or under
valid exemption from, all federal and state laws and the rules and regulations of each Governmental
Body governing the sale and delivery of securities. Except for the rights and obligations shown on
Schedule 5.27, there are no subscriptions, warrants, options, calls, commitments, rights or
agreement by which any Borrower or any of the shareholders of any Borrower is bound relating to the
issuance, transfer, voting or redemption of shares of its Equity Interests or any pre-emptive
rights held by any Person with respect to the Equity Interests of Borrowers. Except as shown on
Schedule 5.27, Borrowers have not issued any securities convertible into or exchangeable for shares
of its Equity Interests or any options, warrants or other rights to acquire such shares or
securities convertible into or exchangeable for such shares.



     5.28. Credit Card Arrangements. Attached hereto as Schedule 5.28 is a list describing
all arrangements as of the Closing Date to which any Borrower is a party with respect to the
processing and/or payment to such Borrower of the proceeds of any Credit Card Receivables
(including credit card charges and debit card charges) for sales made by such Borrower.



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     5.29. Inactive Subsidiaries. Each of Iosota, Fanbuzz and Fanbuzz Retail are inactive
Subsidiaries of Borrowers and do not conduct any business or maintain any material asserts.


VI. AFFIRMATIVE COVENANTS.




     Each Borrower shall, until payment in full of the Obligations and termination of this
Agreement:



     6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the
establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such fees and
expenses.



     6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business practices and maintain
all of its properties useful or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of
this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade
secrets and trademarks and take all actions necessary to enforce and protect the validity of any
intellectual property right or other right included in the Collateral; (b) keep in full force and
effect its existence and comply in all material respects with the laws and regulations governing
the conduct of its business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes
and license fees and do all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United States or any
political subdivision thereof where the failure to do so could reasonably be expected to have a
Material Adverse Effect.



     6.3. Violations. Promptly notify Agent in writing of any violation of any law,
statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to
any Borrower which could reasonably be expected to have a Material Adverse Effect.



     6.4. Government Receivables. Take all steps necessary to protect Agent’s interest in
the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all
other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed,
any instrument or chattel paper connected with any Receivable arising out of contracts between any
Borrower and the United States, any state or any department, agency or instrumentality of any of
them.



     6.5. Financial Covenants.



          (a) Fixed Charge Coverage Ratio. On or before March 31, 2010, Borrowers and Agent
shall enter into an amendment to this Agreement setting Fixed Charge Coverage Ratio covenants
reasonably acceptable to Borrowing Agent and Agent, such covenants to commence with the fiscal
quarter ending [October 31, 2010] and continuing at the end of each fiscal quarter thereafter,
measured on a rolling four (4) quarter basis. In the event that Borrowing Agent and Agent do not
have an amendment executed in accordance with this Section 6.5(a) and if at any






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time during any fiscal quarter commencing with the quarter ending [October 31, 2010] or any
quarter thereafter, Borrowers have more than $8,000,000 of outstanding Revolving Advances or if
Undrawn Availability (Modified) is less than $10,000,000, Borrowers shall cause to be maintained as
of the end of such fiscal quarter, a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0,
measured on a trailing four (4) quarter basis.




          (b) Minimum EBITDA. If at any time during any fiscal quarter through fiscal quarter
ending July 31, 2010, Borrowers have more than $8,000,000 of outstanding Revolving Advances or if
Undrawn Availability (Modified) is less than $10,000,000, cause to be achieved a minimum EBITDA of
not less than the following amounts for the end of such quarter (i) ($12,000,000) for the nine (9)
month period ending January 30, 2010, (ii) ($12,000,000) for the twelve (12) month period ending
May 1, 2010 and (iv) ($4,000,000) for the twelve (12) month period ending July 31, 2010.




          (c) Tangible Net Worth. If at any time during any fiscal quarter through fiscal
quarter ending July 31, 2010, Borrowers have more than $8,000,000 of outstanding Revolving Advances
or if Undrawn Availability (Modified) falls below $10,000,000, cause to be achieved a Tangible Net
Worth of $20,000,000.




          (d) Average FICO Score. Cause at all times the Average FICO Score of all Customers
participating in the Value Pay Plan to exceed 620 to be tested on a rolling six month basis.




          (e) At no time shall Borrowers permit the Average FICO Score to be less than 600 in any two
(2) consecutive months.




     6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from time to
time, upon demand, such supplemental agreements, statements, assignments and transfers, or
instructions or documents relating to the Collateral, and such other instruments as Agent may
request, in order that the full intent of this Agreement may be carried into effect.



     6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case of the trade
payables, to normal payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a Material Adverse Effect
or when the amount or validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary, subject at all times to any applicable subordination arrangement in favor of
Lenders.



     6.8. Standards of Financial Statements. Cause all financial statements referred to in
Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is applicable to be complete
and correct in all material respects (subject, in the case of interim financial statements, to
normal year-end audit adjustments) and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein (except as concurred in by such
reporting accountants or officer, as the case may be, and disclosed therein).



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     6.9. Federal Securities Laws. Promptly notify Agent in writing if any Borrower (other
than ValueVision) or any of its Subsidiaries (i) is required to file periodic reports under the
Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration
statement under the Securities Act.



     6.10. Post Closing Matters.



          (a) On or before December 31, 2009, cause all of Borrowers’ collection accounts to be
established with Agent and Borrowers hereby agree and acknowledge that until such accounts have
been established with Agent, any obligation of Agent to make any Revolving Advance or issue any
Letter of Credit hereunder is discretionary.




          (b) Within sixty (60) days of the Closing Date, cause to be delivered to Agent a Securities
Account Control Agreement among Agent, Borrowers and Wells Fargo relating to Borrowers’ investment
account #2164267 or at Borrowers’ option close such account and open similar investment account(s)
with Agent or Agent’s Affiliates. Borrowers hereby agree and acknowledge that until the conditions
in the foregoing sentence have been satisfied, any obligation of Agent to make any Revolving
Advance or issue any Letter of Credit hereunder is discretionary.




          (c) Within sixty (60) days of the Closing Date, cause to be delivered to Agent a Deposit
Account Control Agreement Agent, Borrowers and Wells Fargo relating to Borrowers’ concentration
account #1068699 such agreements to be in form and substance satisfactory to Agent in its
reasonable discretion unless Agent and Borrowers determine that all collections on account of
Borrowers’ Receivables are being paid to any collection maintained with Agent and the account at
Wells Fargo is closed. Borrowers hereby agree and acknowledge that until the conditions in the
foregoing sentence have been satisfied, any obligation of Agent to make any Revolving Advance or
issue any Letter of Credit hereunder is discretionary.




          (d) Promptly following the Closing Date, deliver to Agent evidence that the Direct TV
Mortgages have been delivered to the applicable Governmental Body for recording in the proper real
estate records office and upon receipt of recorded copies, deliver to Agent a copy of the recorded
Direct TV Mortgages.



VII. NEGATIVE COVENANTS.




     No Borrower shall, until satisfaction in full of the Obligations and termination of this
Agreement:



     7.1. Merger, Consolidation, Acquisition and Sale of Assets.



          (a) Other than transactions among Borrowers or a Permitted Acquisition, enter into any merger,
consolidation or other reorganization with or into any other Person or acquire all or a substantial
portion of the assets or Equity Interests of any Person or permit any other Person to consolidate
with or merge with it.




          (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i)
dispositions of Inventory and Equipment to the extent expressly permitted by Section






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4.3, (ii) the sale, lease or transfer from one Borrower to another Borrower, or (iii) any
other sales or dispositions expressly permitted by this Agreement.




     7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except Permitted
Encumbrances.



     7.3. Guarantees. Become liable upon the obligations or liabilities of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as
disclosed on Schedule 7.3, (b) the endorsement of checks in the Ordinary Course of Business and (c)
the guarantee by one Borrower of Indebtedness of another Borrower permitted to be incurred
hereunder.



     7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a
published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if (i) such bank has
a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of
a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an agency thereof.



     7.5. Loans. Make advances, loans or extensions of credit to any Person, including any
Parent, Subsidiary or Affiliate except with respect to (a) the extension of commercial trade credit
in connection with the sale of Inventory in the Ordinary Course of Business and (b) advances, loans
or extensions of credit from one Borrower to another Borrower.



     7.6. Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount for all Borrowers in
excess of $10,000,000.



     7.7. Dividends. Declare, pay or make any dividend or distribution on any Equity
Interests of any Borrower (other than dividends or distributions payable in its stock, or split-ups
or reclassifications of its stock) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any Equity Interest, or of any options to purchase or acquire any
Equity Interest of any Borrower; provided however, that (a) a Borrower may make dividends or
distributions from one Borrower to another Borrower; and (b) so long as either (i) (x) no Event of
Default pursuant to Sections 10.1, 10.4, 10.5 (but only to the extent such Event of Default is the
result of Borrowers’ failure to observe the covenants set forth in Section 6.5 hereof), 10.7, 10.8,
10.11, 10.13 or 10.16 hereof is continuing or would exist after giving effect to such payment and
(y) Borrowers demonstrate to Agent pursuant to a certificate reasonably acceptable to Agent that at
the time of and after giving effect to the making of such payment, Borrowers have and will have
Undrawn Availability and Thirty (30) Day Average Undrawn Availability of not less than Five Million
Dollars ($5,000,000), or (ii) at the time of and after



69









 




giving effect to the making of such payment no Default or Event of Default exists or would
exist, ValueVision may make Permitted Redemption Payments.




     7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt or trade debt evidenced under the Direct TV Agreement) except in respect
of (a) Indebtedness to Lenders; (b) Indebtedness incurred for Capital Expenditures permitted under
Section 7.6 hereof; (c) Indebtedness permitted under Section 7.5(b) hereof; (d) Indebtedness
disclosed in the financial statements delivered to the Agent pursuant to Section 5.5 hereof; and
(e) Indebtedness subject to a Permitted Encumbrance as set forth in Schedule 1.2 attached hereto.



     7.9. Nature of Business. Substantially change the nature of the business in which it
is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or
indirectly, in any assets or property other than in the Ordinary Course of Business for assets or
property which are useful in, necessary for and are to be used in its business as presently
conducted.



     7.10. Transactions with Affiliates. Directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or otherwise enter into any
transaction or deal with, any Affiliate, except transactions disclosed to the Agent, which are in
the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable
than terms and conditions which would have been obtainable from a Person other than an Affiliate as
determined by a committee of disinterested board of directors.



     7.11. Leases. Enter as lessee into any lease arrangement for real or personal
property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed $4,700,000 in any
one fiscal year in the aggregate for all Borrowers.



     7.12. Subsidiaries.



          (a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a
borrower and becomes jointly and severally liable for the obligations of Borrowers hereunder, under
the Notes, and under any other agreement between any Borrower and Lenders and (ii) Agent shall have
received all documents, including legal opinions, it may reasonably require to establish compliance
with each of the foregoing conditions.




          (b) Enter into any partnership, joint venture or similar arrangement.




     7.13. Fiscal Year and Accounting Changes. Change its fiscal year from January 31 or
make any change (a) in accounting treatment and reporting practices except as required by GAAP or
(b) in tax reporting treatment except as required by law.



     7.14. Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on any
purchases or for any purpose whatsoever or use any portion of any Advance in or for any business
other than such Borrower’s business as conducted on the date of this Agreement.



     7.15. Amendment of Articles of Incorporation, By-Laws. Amend, modify or waive any
term or material provision of its articles of incorporation or by-laws unless required by law or



70









 




upon prior written notice to Agent, in a manner that would not adversely affect the Lenders or
any of their rights hereunder.




     7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the Controlled
Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule
5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt
“prohibited transaction”, as that term is defined in Section 406 of ERISA or Section 4975 of the
Code, (iii) incur, or permit any Plan to incur, any “accumulated funding deficiency”, as that term
is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member
of the Controlled Group to terminate, any Plan where such event could result in any liability of
any Borrower or any member of the Controlled Group or the imposition of a lien on the property of
any Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume,
or permit any member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the
Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly
to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a
member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or
other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the
Controlled Group to fail to meet, all minimum funding requirements under ERISA and the Code,
without regard to any waivers or variances, or postpone or delay or allow any member of the
Controlled Group to postpone or delay any funding requirement with respect of any Plan, or (x)
cause, or permit any member of the Controlled Group to cause, a representation or warranty in
Section 5.8(d) to cease to be true and correct.



     7.17. Prepayment of Indebtedness. At any time, directly or indirectly, prepay any
Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Borrower.



     7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:



          (a) Conduct any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person.




          (b) Deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.




          (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall
deliver to Lenders any certification or other evidence requested from time to time by any Lender in
its sole discretion, confirming Borrower’s compliance with this Section.







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     7.19. Trading with the Enemy Act. Engage in any business or activity in violation of
the Trading with the Enemy Act.



     7.20. Credit Card Arrangements. Enter into new agreements with credit card processors
other than the ones expressly contemplated herein or in Section 4.15(d)(ii) hereof unless
the Borrowing Agent shall have delivered to the Agent appropriate Credit Card Notifications
consistent with the provisions of Section 4.15(d)(ii) hereof and otherwise reasonably
satisfactory to the Agent.



     7.21. Inactive Subsidiaries. Permit Iosota, Fanbuzz or Fanbuzz Retail to acquire any
material assets or conduct any business.



     7.22. Direct TV Payment. Make any payment on account of the $18,777,552 due
to Direct TV on March 2012 if after giving proforma effect to the making of such payment, Borrowers
would not have been in compliance with Section 6.5 hereof (as of the most recent fiscal quarter end
and after giving effect to the payment).


VIII. CONDITIONS PRECEDENT.




     8.1. Conditions to Initial Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by
Agent, immediately prior to or concurrently with the making of such Advances, of the following
conditions precedent:



          (a) This Agreement, the Note and the Other Documents. Agent shall have received this
Agreement, the Notes and each Other Document duly executed and delivered by an authorized officer
of each Borrower;




          (b) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related agreement or under law
or reasonably requested by the Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;




          (c) Corporate Proceedings of Borrowers. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of
each Borrower authorizing (i) the execution, delivery and performance of this Agreement, the Notes
and any related agreements (collectively the “Documents”) and (ii) the granting by each Borrower of
the security interests in and liens upon the Collateral in each case certified by the Secretary, or
an Assistant Secretary, of each Borrower as of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;







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          (d) Incumbency Certificates of Borrowers. Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of each Borrower executing this Agreement, the Other
Documents, any certificate or other documents to be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;




          (e) Certificates. Agent shall have received a copy of the Articles or Certificate of
Incorporation of each Borrower, and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with copies of the by-laws
of each Borrower and all agreements of each Borrower’s shareholders certified as accurate and
complete by the Secretary of each Borrower;




          (f) Good Standing Certificates. Agent shall have received good standing certificates
for each Borrower dated not more than 20 days prior to the Closing Date, issued by the Secretary of
State or other appropriate official of each Borrower’s jurisdiction of incorporation and each
jurisdiction where the conduct of each Borrower’s business activities or the ownership of its
properties necessitates qualification;




          (g) Legal Opinion. Agent shall have received the executed legal opinion of Maslon,
Edelman, Borman & Brand LLP in form and substance satisfactory to Agent which shall cover such
matters incident to the transactions contemplated by this Agreement, the Notes, the Other Documents
and related agreements as Agent may reasonably require and each Borrower hereby authorizes and
directs such counsel to deliver such opinions to Agent and Lenders;




          (h) No Litigation. (i) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Body shall be continuing or threatened against any Borrower or against
the officers or directors of any Borrower (A) in connection with this Agreement, the Other
Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature
materially adverse to any Borrower or the conduct of its business or shall have been issued by any
Governmental Body;




          (i) Financial Condition Certificates. Agent shall have received an executed Financial
Condition Certificate in the form of Exhibit 8.1(i).




          (j) Collateral Examination. Agent shall have completed Collateral examinations and
received appraisals, the results of which shall be satisfactory in form and substance to Lenders,
of the Receivables, Inventory, General Intangibles and Equipment of each Borrower and all books and
records in connection therewith;




          (k) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior
to the Closing Date hereunder, including pursuant to Article III hereof;




          (l) Pro Forma Financial Statements. Agent shall have received a copy of the Pro Forma
Financial Statements which shall be satisfactory in all respects to Lenders;







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          (m) Insurance. Agent shall have received in form and substance satisfactory to Agent,
certified copies of Borrowers’ casualty insurance policies, together with loss payable endorsements
on Agent’s standard form of loss payee endorsement naming Agent as loss payee, and certified copies
of Borrowers’ liability insurance policies, together with endorsements naming Agent as a
co-insured;




          (n) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this
Agreement;




          (o) Blocked Accounts. Agent shall have received duly executed agreements establishing
the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral;




          (p) Consents. Agent shall have received any and all Consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent
shall have received such Consents and waivers of such third parties as might assert claims with
respect to the Collateral, as Agent and its counsel shall deem necessary;




          (q) No Adverse Material Change. (i) since January 31, 2009, there shall not have
occurred any event, condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and (ii) no representations made or information supplied to Agent or
Lenders shall have been proven to be inaccurate or misleading in any material respect;




          (r) Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises leased by Borrowers at
which Inventory and books and records are located;




          (s) Contract Review. Agent shall have reviewed all material contracts of Borrowers
including leases, union contracts, labor contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall be satisfactory in all respects
to Agent;




          (t) Closing Certificate. Agent shall have received a closing certificate signed by
the Chief Financial Officer of each Borrower dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and the Other Documents are true and
correct on and as of such date, (ii) Borrowers are on such date in compliance with all the terms
and provisions set forth in this Agreement and the Other Documents and (iii) on such date no
Default or Event of Default has occurred or is continuing;




          (u) Borrowing Base. Agent shall have received evidence from Borrowers that the
aggregate amount of Eligible Receivables and Eligible Inventory is sufficient in value and amount
to support Advances in the amount requested by Borrowers on the Closing Date;




          (v) Undrawn Availability. After giving effect to the initial Advances hereunder,
Borrowers shall have Undrawn Availability of at least $13,000,000;







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          (w) Cash on Hand. Agent shall have received evidence that Borrowers have available
cash on hand of not less than $20,000,000;




          (x) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is
in compliance with all pertinent federal, state, local or territorial regulations, including those
with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act,
ERISA and the Trading with the Enemy Act;




          (y) Direct TV. Agent shall have received the Direct TV Agreement, the Direct TV
Security Documents and evidence that Borrowers have made payment under the Direct TV Agreement of
at least $5,885,393.64 on or before the Closing Date as required by the amendment to the Direct TV
Agreement dated October 22, 2009; and




          (z) Other. All corporate and other proceedings, and all documents, instruments and
other legal matters in connection with this Agreement shall be satisfactory in form and substance
to Agent and its counsel.




     8.2. Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to the satisfaction of
the following conditions precedent as of the date such Advance is made:



          (a) Representations and Warranties. Each of the representations and warranties made
by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to
which it is a party, and each of the representations and warranties contained in any certificate,
document or financial or other statement furnished at any time under or in connection with this
Agreement, the Other Documents or any related agreement shall be true and correct in all material
respects on and as of such date as if made on and as of such date;




          (b) No Default. No Event of Default or Default shall have occurred and be continuing
on such date, or would exist after giving effect to the Advances requested to be made, on such
date; provided, however that Agent, in its sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and




          (c) Maximum Advances. In the case of any type of Advance requested to be made, after
giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum
amount of such type of Advance permitted under this Agreement.




     Each request for an Advance by any Borrower hereunder shall constitute a representation and
warranty by each Borrower as of the date of such Advance that the conditions contained in this
subsection shall have been satisfied.


IX. INFORMATION AS TO BORROWERS.




     Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on
its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement:



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     9.1. Disclosure of Material Matters. Immediately upon learning thereof, report to
Agent all matters materially affecting the value, enforceability or collectibility of any portion
of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any
Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other
obligor.



     9.2. Schedules. Deliver to Agent on or before (a) the fifteenth (15th) day of each
month as and for the prior month (i) accounts receivable ageings inclusive of reconciliations to
the general ledger, (ii) accounts payable schedules inclusive of reconciliations to the general
ledger, (iii) Inventory reports and (iv) if no Advances are outstanding in any month, a Borrowing
Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the
last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s
rights under this Agreement) and (b) upon the request of any Advance and at least once each week if
there are Advances outstanding under this Agreement, Tuesday of each week as and for the prior
week, a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be
calculated as of the last day of the prior week and which shall not be binding upon Agent or
restrictive of Agent’s rights under this Agreement). In addition, each Borrower will deliver to
Agent at such intervals as Agent may require: (1) confirmatory assignment schedules, (2) copies of
Customer’s invoices, (3) evidence of shipment or delivery, and (4) such further schedules,
documents and/or information regarding the Collateral as Agent may require including trial balances
and test verifications. Agent shall have the right to confirm and verify all Receivables by any
manner and through any medium it considers advisable and do whatever it may deem reasonably
necessary to protect its interests hereunder. The items to be provided under this Section are to
be in form satisfactory to Agent and executed by each Borrower and delivered to Agent from time to
time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s
failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent’s Lien with respect to the Collateral.



     9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8, with a certificate signed by the
President of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in
compliance in all material respects with all federal, state and local Environmental Laws. To the
extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth
with specificity all areas of non-compliance and the proposed action such Borrower will implement
in order to achieve full compliance.



     9.4. Litigation. Promptly notify Agent in writing of any claim, litigation, suit or
administrative proceeding affecting any Borrower or any Guarantor, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding, which in any such
case affects the Collateral or which could reasonably be expected to have a Material Adverse
Effect.



     9.5. Material Occurrences. Promptly notify Agent in writing upon the occurrence of:
(a) any Event of Default or Default; (b) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material respect to present
fairly, in accordance with GAAP consistently applied, the financial condition or operating results
of any Borrower as of the date of such statements; (c) any accumulated retirement plan funding



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deficiency which, if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971
of the Code; (d) each and every default by any Borrower which might result in the acceleration of
the maturity of any Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness; and (e) any other
development in the business or affairs of any Borrower or any Guarantor, which could reasonably be
expected to have a Material Adverse Effect; in each case describing the nature thereof and the
action Borrowers propose to take with respect thereto.




     9.6. Government Receivables. Notify Agent immediately if any of its Receivables arise
out of contracts between any Borrower and the United States, any state, or any department, agency
or instrumentality of any of them.



     9.7. Annual Financial Statements. Furnish Agent and Lenders within one hundred twenty
(120) days after the end of each fiscal year of Borrowers, financial statements of Borrowers on a
consolidating and consolidated basis including, but not limited to, statements of income and
stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such
fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance
with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm selected by Borrowers
and satisfactory to Agent (the “Accountants”). The report of the Accountants shall be accompanied
by a statement of the Accountants certifying that (i) they have caused this Agreement to be
reviewed, (ii) in making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default or a Default under
this Agreement or any related agreement or, if such information came to their attention, specifying
any such Default or Event of Default, its nature, when it occurred and whether it is continuing,
and such report shall contain or have appended thereto calculations which set forth Borrowers’
compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8
and 7.11 hereof. In addition, the reports shall be accompanied by a Compliance Certificate.



     9.8. Quarterly Financial Statements. Furnish Agent and Lenders within 45 days after
the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a consolidated and
consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of
Borrowers on a consolidated and consolidating basis reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material respects, subject to
normal and recurring year end adjustments that individually and in the aggregate are not material
to Borrowers’ business. The reports shall be accompanied by a Compliance Certificate.



     9.9. Monthly Financial Statements. Furnish Agent and Lenders within thirty (30) days
after the end of each month an unaudited balance sheet of Borrowers on a consolidated and
consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of
Borrowers on a consolidated and consolidating basis reflecting results of operations from the
beginning of the fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material respects, subject to



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normal and recurring year end adjustments that individually and in the aggregate are not
material to Borrowers’ business.




     9.10. Other Reports. Furnish Agent as soon as available, but in any event within ten
(10) days after the issuance thereof, with copies of such financial statements, reports and returns
as each Borrower shall send to its stockholders.



     9.11. Additional Information. Furnish Agent with such additional information as Agent
shall reasonably request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Notes have been complied with by Borrowers
including, without the necessity of any request by Agent, (a) copies of all environmental audits
and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any
new office or place of business or any Borrower’s closing of any existing office or place of
business, and (c) promptly upon any Borrower’s learning thereof, notice of any labor dispute to
which any Borrower may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which any Borrower is a party or by
which any Borrower is bound.



     9.12. Projected Operating Budget. Furnish Agent and Lenders, no later than thirty
(30) days after the beginning of each Borrower’s fiscal years commencing with fiscal year 2010, a
month by month projected operating budget and cash flow of Borrowers on a consolidated and
consolidating basis for such fiscal year (including an income statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), such projections to be
accompanied by a certificate signed by the President or Chief Financial Officer of each Borrower to
the effect that such projections have been prepared on the basis of sound financial planning
practice consistent with past budgets and financial statements and that such officer has no reason
to question the reasonableness of any material assumptions on which such projections were prepared.



     9.13. Variances From Operating Budget. Furnish Agent, concurrently with the delivery
of the financial statements referred to in Section 9.7 and each monthly report, a written report
summarizing all material variances from budgets submitted by Borrowers pursuant to Section 9.12 and
a discussion and analysis by management with respect to such variances.



     9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt written notice of
(i) any lapse or other termination of any Consent issued to any Borrower by any Governmental Body
or any other Person that is material to the operation of any Borrower’s business, (ii) any refusal
by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies
of any periodic or special reports filed by any Borrower or any Guarantor with any Governmental
Body or Person, if such reports indicate any material change in the business, operations, affairs
or condition of any Borrower or any Guarantor, or if copies thereof are requested by Lender, and
(iv) copies of any material notices and other communications from any Governmental Body or Person
which specifically relate to any Borrower or any Guarantor.



     9.15. ERISA Notices and Requests. Furnish Agent with immediate written notice in the
event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that
a Termination Event has occurred, together with a written statement describing such



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Termination Event and the action, if any, which such Borrower or any member of the Controlled
Group has taken, is taking, or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect
thereto, (ii) any Borrower or any member of the Controlled Group knows or has reason to know that
a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred
together with a written statement describing such transaction and the action which such Borrower or
any member of the Controlled Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding waiver request has been filed with respect to any Plan together with all
communications received by any Borrower or any member of the Controlled Group with respect to such
request, (iv) any increase in the benefits of any existing Plan or the establishment of any new
Plan or the commencement of contributions to any Plan to which any Borrower or any member of the
Controlled Group was not previously contributing shall occur, (v) any Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a
trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower
or any member of the Controlled Group shall receive any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a)
of the Code, together with copies of each such letter; (vii) any Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together
with copies of each such notice; (viii) any Borrower or any member of the Controlled Group shall
fail to make a required installment or any other required payment under Section 412 of the Code on
or before the due date for such installment or payment; or (ix) any Borrower or any member of the
Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or
plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer
Plan.




     9.16. Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.


X. EVENTS OF DEFAULT.




     The occurrence of any one or more of the following events shall constitute an “Event of
Default”:



     10.1. Nonpayment. Failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any
other liabilities or make any other payment, fee or charge provided for herein when due or in any
Other Document;



     10.2. Breach of Representation. Any representation or warranty made or deemed made by
any Borrower or any Guarantor in this Agreement, any Other Document or any related agreement or in
any certificate, document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material respect on the date when
made or deemed to have been made;



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     10.3. Financial Information. Failure by any Borrower to (i) furnish financial
information when due or when requested, or (ii) permit the inspection of its books or records;



     10.4. Judicial Actions. Issuance of a notice of Lien, levy, assessment, injunction or
attachment against any Borrower’s Inventory or Receivables or against a material portion of any
Borrower’s other property;



     10.5. Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3 and
10.5(ii), (i) failure or neglect of any Borrower or any Guarantor or any Person to perform, keep or
observe any term, provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into between any Borrower
or any Guarantor or such Person, and Agent or any Lender, or (ii) failure or neglect of any
Borrower to perform, keep or observe any term, provision, condition or covenant, contained in
Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days
from the occurrence of such failure or neglect;



     10.6. Judgments. Any judgment or judgments are rendered against any Borrower or any
Guarantor for an aggregate amount in excess of $75,000 or against all Borrowers or Guarantors for
an aggregate amount in excess of $75,000 and (i) enforcement proceedings shall have been commenced
by a creditor upon such judgment, (ii) there shall be any period of forty (40) consecutive days
during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise,
shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of
the Collateral (other than a Permitted Encumbrance);



     10.7. Bankruptcy. Any Borrower or any Guarantor shall (i) apply for, consent to or
suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief
of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition
filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for
the purpose of effecting any of the foregoing;



     10.8. Inability to Pay. Any Borrower or any Guarantor shall admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease operations of its
present business;



     10.9. Affiliate Bankruptcy. Any Affiliate or any Subsidiary of any Borrower, or any
Guarantor, shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all
or a substantial part of its property, (ii) admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief
of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition
filed against it in any involuntary



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case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of
the foregoing;




     10.10. Material Adverse Effect. The occurrence of any Material Adverse Effect;



     10.11. Lien Priority. Any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;



     10.12. Intentionally Omitted.



     10.13. Cross Default. A default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which causes a Material Adverse Effect which default
is not cured within any applicable grace period;



     10.14. Breach of Guaranty or Pledge Agreement. Termination or breach of any Guaranty,
Guaranty Security Agreement, Pledge Agreement or similar agreement executed and delivered to Agent
in connection with the Obligations of any Borrower, or if any Guarantor attempts to terminate,
challenges the validity of, or its liability under, any such Guaranty, Guaranty Security Agreement,
Pledge Agreement or similar agreement;



     10.15. Change of Ownership. Any Change of Ownership shall occur;



     10.16. Invalidity. Any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on any Borrower or any Guarantor, or any
Borrower or any Guarantor shall so claim in writing to Agent or any Lender;



     10.17. Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any Borrower or any
Guarantor, the continuation of which is material to the continuation of any Borrower’s or
Guarantor’s business, or (B) commence proceedings to suspend, revoke, terminate or adversely modify
any such license, permit, trademark, tradename or patent and such proceedings shall not be
dismissed or discharged within sixty (60) days, or (c) schedule or conduct a hearing on the renewal
of any license, permit, trademark, tradename or patent necessary for the continuation of any
Borrower’s or any Guarantor’s business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which is necessary or material
to the operation of any Borrower’s or any Guarantor’s business shall be revoked or terminated and
not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such
revocation or termination, and such revocation or termination and non-replacement would reasonably
be expected to have a Material Adverse Effect;



     10.18. Seizures. Any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or any Guarantor or the title and rights of any Borrower, any
Guarantor or any Original Owner which is the owner of any material portion of the Collateral shall
have become the subject matter of claim, litigation, suit or other proceeding which might, in the
opinion of Agent, upon final determination, result in impairment or loss of the security provided
by this Agreement or the Other Documents;



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     10.19. Pension Plans. An event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or condition, together
with all other such events or conditions, any Borrower or any member of the Controlled Group shall
incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC
(or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect; or



     10.20. Direct TV. The occurrence of a default or event of default under any Direct TV
Security Document or the Direct TV Agreement.



XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.




     11.1. Rights and Remedies.



          (a) Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation of Lenders to make
Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time
thereafter, at the option of Required Lenders all Obligations shall be immediately due and payable
and Lenders shall have the right to terminate this Agreement and to terminate the obligation of
Lenders to make Advances and (iii) a filing of a petition against any Borrower in any involuntary
case under any state or federal bankruptcy laws, all Obligations shall be immediately due and
payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as
may be required by an appropriate order of the bankruptcy court having jurisdiction over such
Borrower. Upon the occurrence of any Event of Default, Agent shall have the right to exercise any
and all rights and remedies provided for herein, under the Other Documents, under the Uniform
Commercial Code and at law or equity generally, including the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available judicial procedure
and/or to take possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of any Borrower’s premises or other premises without legal process
and without incurring liability to any Borrower therefor, and Agent may thereupon, or at any time
thereafter, in its discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral
available to Agent at a convenient place. With or without having the Collateral at the time or
place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at
any time or place, in one or more sales, at such price or prices, and upon such terms, either for
cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral
which is perishable or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it
being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days
prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may
bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever
kind, including any equity of redemption and all such claims, rights and equities are hereby
expressly waived and released by each Borrower. In connection with the exercise of the foregoing
remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free,
nonexclusive license and Agent is granted permission to use all of each Borrower’s (a) trademarks,
trade styles, trade






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names, patents, patent applications, copyrights, service marks, licenses, franchises and other
proprietary rights which are used or useful in connection with Inventory for the purpose of
marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b)
Equipment for the purpose of completing the manufacture of unfinished goods. The cash proceeds
realized from the sale of any Collateral shall be applied to the Obligations in the order set forth
in Section 11.5 hereof. Noncash proceeds will only be applied to the Obligations as they are
converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and
Lenders therefor.




          (b) To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially
unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent
to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against
Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Customers and other Persons
obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Borrower, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi)
to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection
or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the
services of other brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that
the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or
omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 11.1(b).
Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed
to grant any rights to any Borrower or to impose any duties on Agent that would not have been
granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).




     11.2. Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.



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     11.3. Setoff. Subject to Section 14.12, in addition to any other rights which Agent
or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any
Borrower’s property held by Agent and such Lender to reduce the Obligations.



     11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not
preclude the exercise of any other right or remedies provided for herein or otherwise provided by
law, all of which shall be cumulative and not alternative.



     11.5. Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by the Agent on account of the Obligations or
any other amounts outstanding under any of the Other Documents or in respect of the Collateral may,
at Agent’s discretion, be paid over or delivered as follows:



     FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of this Agreement;



     SECOND, to payment of any fees owed to the Agent;



     THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of
this Agreement;



     FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;



     FIFTH, to the payment of the outstanding principal amount of the Obligations (including the
payment or cash collateralization of any outstanding Letters of Credit);



     SIXTH, to all other Obligations and other obligations which shall have become due and payable
under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH”
above; and



     SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus.



     In carrying out the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; (ii) each of the
Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata
share (based on the proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses
“FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for
distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount



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of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral
account and applied (A) first, to reimburse the Issuer from time to time for any drawings under
such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all
other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner
provided in this Section 11.5.



XII. WAIVERS AND JUDICIAL PROCEEDINGS.




     12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of
the Receivables, demand, presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon, and all other
demands and notices of any description, except such as are expressly provided for herein.



     12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising any
right, remedy or option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.



     12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE
AND EACH PARTY HEREBY 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 CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


XIII. EFFECTIVE DATE AND TERMINATION.




     13.1. Term. This Agreement, which shall inure to the benefit of and shall be binding
upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall
become effective on the date hereof and shall continue in full force and effect until November 24
2012 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term
(the date of such prepayment hereinafter referred to as the “Early Termination Date”), Borrowers
shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (x)
2.00% of the Maximum Revolving Advance Amount if the Early Termination Date occurs on or after the
Closing Date to and including the date immediately preceding the first



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anniversary of the Closing Date, (y) 1.00% of the Maximum Revolving Advance Amount if the
Early Termination Date occurs on or after the first anniversary of the Closing Date to and
including the date immediately preceding the second anniversary of the Closing Date, and (z) .5% of
the Maximum Revolving Advance Amount if the Early Termination Date occurs on or after the second
anniversary of the Closing Date to and including the date immediately preceding the expiration of
the Term.




     13.2. Termination. The termination of the Agreement shall not affect any Borrower’s,
Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations have been fully and
indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue
in full force and effect, notwithstanding the termination of this Agreement or the fact that
Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of
the Obligations of each Borrower have been indefeasibly paid and performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each Borrower
waives any rights which it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be required to send such
termination statements to each Borrower, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all Obligations have
been indefeasibly paid in full in immediately available funds. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination hereof until all
Obligations are indefeasibly paid and performed in full.


XIV. REGARDING AGENT.




     14.1. Appointment. Each Lender hereby designates PNC to act as Agent for such Lender
under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and the Other Documents and
to exercise such powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and
interest, fees (except the fees set forth in Sections 3.3(a) and 3.4), charges and collections
(without giving effect to any collection days) received pursuant to this Agreement, for the ratable
benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or
employees. As to any matters not expressly provided for by this Agreement (including collection of
the Note) Agent shall not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such instructions shall be binding;
provided, however, that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless
Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.



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     14.2. Nature of Duties. Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for any action taken or omitted by
them as such hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), or (ii) responsible in any manner for any recitals, statements,
representations or warranties made by any Borrower or any officer thereof contained in this
Agreement, or in any of the Other Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in connection with, this
Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for
any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to
inspect the properties, books or records of any Borrower. The duties of Agent as respects the
Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent
any obligations in respect of this Agreement except as expressly set forth herein.



     14.3. Lack of Reliance on Agent and Resignation. Independently and without reliance
upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each Borrower and each
Guarantor in connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of each Borrower and each Guarantor. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before making of the Advances
or at any time or times thereafter except as shall be provided by any Borrower pursuant to the
terms hereof. Agent shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document, certificate or a
statement delivered in connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other Document, or of the
financial condition of any Borrower or any Guarantor, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or conditions of this
Agreement, the Note, the Other Documents or the financial condition of any Borrower, or the
existence of any Event of Default or any Default.



     Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and
upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably
satisfactory to Borrowers.



     Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term
“Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent. After any Agent’s resignation as Agent, the provisions



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of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.




     14.4. Certain Rights of Agent. If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this Agreement or any
Other Document, Agent shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall
not have any right of action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.



     14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message believed by it to be
genuine and correct and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other Documents and its duties
hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact
selected by Agent with reasonable care.



     14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent
has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other
Documents, describing such Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of Lenders.



     14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by
Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion
of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to
or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable
judgment).



     14.8. Agent in its Individual Capacity. With respect to the obligation of Agent to
lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder
as any other Lender and as if it were not performing the duties as Agent specified herein; and the
term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include



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Agent in its individual capacity as a Lender. Agent may engage in business with any Borrower
as if it were not performing the duties specified herein, and may accept fees and other
consideration from any Borrower for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.




     14.9. Delivery of Documents. To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any
Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to
each Lender, Agent will promptly furnish such documents and information to Lenders.



     14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective
obligations to Lenders under the other provisions of this Agreement, each Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due
and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to
the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy
the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one
or more of them pursuant to this Agreement.



     14.11. No Reliance on Agent’s Customer Identification Program. Each Lender
acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or imposed under or
pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items relating to or in
connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or
the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2)
any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other
procedures required under the CIP Regulations or such other laws.



     14.12. Other Agreements. Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations, any amounts owing by such Lender to any
Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender.
Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take any action to protect or
enforce its rights arising out of this Agreement or the Other Documents, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement and the Other
Documents shall be taken in concert and at the direction or with the consent of Agent or Required
Lenders.



XV. BORROWING AGENCY.




     15.1. Borrowing Agency Provisions.



          (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent
and in such capacity to borrow, sign and endorse notes, and execute and






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deliver all instruments, documents, writings and further assurances now or hereafter required
hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes Agent to pay over or
credit all loan proceeds hereunder in accordance with the request of Borrowing Agent.




          (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in
the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their
request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To
induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any
Lender by any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to
this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the
indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable
judgment).




          (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the
part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any Collateral now or
thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to
the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each
Borrower waives all suretyship defenses.




     15.2. Waiver of Subrogation. Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such
Borrower may now or hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to the other
Borrowers’ property (including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until termination of
this Agreement and repayment in full of the Obligations.


XVI. MISCELLANEOUS.




     16.1. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois applied to contracts to be performed wholly within the State
of Illinois. Any judicial proceeding brought by or against any Borrower with respect to any of the
Obligations, this Agreement, the Other Documents or any related agreement may be brought in any
court of competent jurisdiction in the State of Illinois, United States of America, and, by
execution and delivery of this Agreement, each Borrower accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this
Agreement. Each Borrower hereby waives personal service of any and all



90









 




process upon it and consents that all such service of process may be made by registered mail
(return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.6 and
service so made shall be deemed completed five (5) days after the same shall have been so deposited
in the mails of the United States of America, or, at the Agent’s option, by service upon Borrowing
Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of
accepting service within the State of Illinois. Nothing herein shall affect the right to serve
process in any manner permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and shall not assert any
defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower
waives the right to remove any judicial proceeding brought against such Borrower in any state court
to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender
involving, directly or indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only in a federal or state
court located in the County of Cook, State of Illinois.




     16.2. Entire Understanding.



          (a) This Agreement and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no force and effect
unless in writing, signed by each Borrower’s, Agent’s and each Lender’s respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended,
waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the execution of this Agreement
and Other Documents and is not relying upon oral representations or statements inconsistent with
the terms and provisions of this Agreement.




          (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into
written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:




               (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount;



               (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this
Agreement;



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               (iii) alter the definition of the term Required Lenders or alter, amend or modify this Section
16.2(b);



               (iv) release any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of $1,000,000;



               (v) change the rights and duties of Agent;



               (vi) permit any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60)
consecutive Business Days or exceed one hundred and ten percent (110%) of the Formula Amount;



               (vii) increase the Advance Rates above the Advance Rates in effect on the Closing Date; or



               (viii) release any Guarantor.



     Any such supplemental agreement shall apply equally to each Lender and shall be binding upon
Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver,
Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event
of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event
of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of
Default is the same as the Event of Default which was waived), or impair any right consequent
thereon.



     In the event that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such Lender shall not respond or reply to Agent in writing within five (5) days of delivery of such
request, such Lender shall be deemed to have consented to the matter that was the subject of the
request. In the event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such consent is denied, then PNC may, at its option, require such Lender to assign its interest
in the Advances to PNC or to another Lender or to any other Person designated by the Agent (the
“Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid
when collected from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty
five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or
the Designated Lender no later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.



     Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or
(c) any other provision of this Agreement, Agent may at its discretion and without the consent of
the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed
the Formula Amount by up to ten percent (10%) of the Formula Amount for up to sixty (60)
consecutive Business Days (the “Out-of-Formula Loans”). If Agent is willing in its sole and



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absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be
payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of
Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor
Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this
paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances
that may result from time to time due to the fact that the Formula Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously deemed to be either
“Eligible Consumer Receivables”, “Eligible Credit Card Receivables”, or “Eligible Inventory”, as
applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving
Advances are thereafter returned for insufficient funds or overadvances are made to protect or
preserve the Collateral. In the event Agent involuntarily permits the outstanding Revolving
Advances to exceed the Formula Amount by more than ten percent (10%), Agent shall use its efforts
to have Borrowers decrease such excess in as expeditious a manner as is practicable under the
circumstances and not inconsistent with the reason for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.




     In addition to (and not in substitution of) the discretionary Revolving Advances permitted
above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders, from time
to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a
Default or an Event of Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to
Borrowers on behalf of the Lenders which the Agent, in its reasonable business judgment, deems
necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to
enhance the likelihood of, or maximize the amount of, repayment of the Advances and other
Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this
Agreement; provided, that at any time after giving effect to any such Revolving Advances the
outstanding Revolving Advances do not exceed one hundred and ten percent (110%) of the Formula
Amount.



     16.3. Successors and Assigns; Participations; New Lenders.



          (a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each
Lender, all future holders of the Obligations and their respective successors and assigns, except
that no Borrower may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Agent and each Lender.




          (b) Each Borrower acknowledges that in the regular course of commercial banking business one
or more Lenders may at any time and from time to time sell participating interests in the Advances
to other financial institutions (each such transferee or purchaser of a participating interest, a
“Participant”). Each Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations payable hereunder as
fully as if such Participant were the direct holder thereof provided that Borrowers shall not be
required to pay to any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in






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the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers
be required to pay any such amount arising from the same circumstances and with respect to the same
Advances or other Obligations payable hereunder to both such Lender and such Participant. Each
Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or
other property actually or constructively held by such Participant as security for the
Participant’s interest in the Advances.




          (c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed,
may sell, assign or transfer all or any part of its rights and obligations under or relating to
Revolving Advances under this Agreement and the Other Documents to one or more additional banks or
financial institutions and one or more additional banks or financial institutions may commit to
make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than
$5,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to
the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a
Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for
that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor Lender under this
Agreement and the Other Documents. Each Borrower hereby consents to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrowers shall execute and
deliver such further documents and do such further acts and things in order to effectuate the
foregoing.




          (d) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed,
may directly or indirectly sell, assign or transfer all or any portion of its rights and
obligations under or relating to Revolving Advances under this Agreement and the Other Documents to
an entity, whether a corporation, partnership, trust, limited liability company or other entity
that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and (ii) is administered, serviced or
managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together
with each Participant and Purchasing Lender, each a “Transferee” and collectively the
“Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the
interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate
purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to
Agent for recording. Upon such execution and delivery, from and after the transfer effective date
determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder
shall be a party hereto and, to the extent provided in such Modified Commitment Transfer
Supplement,






94









 







have the rights and obligations of a Lender thereunder and (ii) the transferor Lender
thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Modified Commitment Transfer Supplement
creating a novation for that purpose. Such Modified Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of
such Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing CLO.
Borrowers shall execute and deliver such further documents and do such further acts and things in
order to effectuate the foregoing.




          (e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of each Lender and the outstanding principal, accrued and
unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in
the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein for the purposes of
this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee
in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the
effective date of each transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.




          (f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession concerning such Borrower
which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement
or in connection with such Lender’s credit evaluation of such Borrower.




     16.4. Application of Payments. Agent shall have the continuing and exclusive right to
apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives
any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.



     16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of their
respective officers, directors, Affiliates, attorneys, employees and agents from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any
claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any transaction contemplated
by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or
not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises
out of the willful misconduct of the party being indemnified (as



95









 




determined by a court of competent jurisdiction in a final and non-appealable judgment).
Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including fees and disbursements of counsel)
asserted against or incurred by any of the indemnitees described above in this Section 16.5 by any
Person under any Environmental Laws or similar laws by reason of any Borrower’s or any other
Person’s failure to comply with laws applicable to solid or hazardous waste materials, including
Hazardous Substances and Hazardous Waste, or other Toxic Substances. Additionally, if any taxes
(excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but
including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by
Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the
execution, delivery, issuance or recording of any of the Other Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in
effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such
taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees
described above in this Section 16.5 harmless from and against all liability in connection
therewith.




     16.6. Notice. Any notice or request hereunder may be given to Borrowing Agent or any
Borrower or to Agent or any Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a notice of change of address under
this Section. Any notice, request, demand, direction or other communication (for purposes of this
Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of
this Loan Agreement shall be given or made by telephone or in writing (which includes by means of
electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice
on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including
the information necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 16.6) in accordance with this Section
16.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and
numbers set forth under their respective names on Section 16.6 hereof or in accordance with any
subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6.
Any Notice shall be effective:



          (a) In the case of hand-delivery, when delivered;




          (b) If given by mail, four days after such Notice is deposited with the United States Postal
Service, with first-class postage prepaid, return receipt requested;




          (c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of
such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a
facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);




          (d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives confirmation of the delivery
thereof from its own facsimile machine;







96









 








          (e) In the case of electronic transmission, when actually received;




          (f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the
information necessary to access such site) by another means set forth in this Section 16.6; and




          (g) If given by any other means (including by overnight courier), when actually received.




          Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such
Notice.





	 	(A)	 	If to Agent or PNC at:
	 
	 	 	 	PNC Bank, National Association
	 
	 	 	 	200 South Wacker Drive, Suite 600
	 
	 	 	 	Chicago, Illinois 60606
	 
	 	 	 	Attention: Portfolio Manager
	 
	 	 	 	Telephone: (312) 454-2920
	 
	 	 	 	Facsimile: (312) 454-2919
	 
	 	 	 	with a copy to:
	 
	 	 	 	Blank Rome LLP
	 
	 	 	 	One Logan Square
	 
	 		 	130 N. 18th Street
	 
	 	 	 	Philadelphia, Pennsylvania 19103
	 
	 	 	 	Attention: Lawrence F. Flick, II, Esquire
	 
	 	 	 	Telephone: (215) 569-5556
	 
	 	 	 	Facsimile: (215) 832-5556
	 
	 	(B)	 	If to a Lender other than Agent, as specified on the signature pages hereof
	 
	 	(C)	 	If to Borrowing Agent or any Borrower:
	 
	 	 	 	ValueVision Media, Inc.
	 
	 	 	 	6740 Shady Oak Road
	 
	 	 	 	Eden Prairie, Minnesota 55344
	 
	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	Telephone: (952) 943-6000
	 
	 	 	 	Facsimile: (952) 943-6111
	 
	 	 	 	with a copy to:
	 
	 	 	 	Maslon, Edelman, Borman & Brand LLP
	 
	 	 	 	3300 Wells Fargo Center
	 
	 	 	 	90 South Seventh Street




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	 	 	 	Minneapolis, Minnesota 55402
	 
	 	 	 	Attention: William M. Mower, Esquire
	 
	 	 	 	Telephone: (612) 672-8358
	 
	 	 	 	Facsimile: (612) 642-8358





     16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9,
4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination of
this Agreement and the Other Documents and payment in full of the Obligations.



     16.8. Severability. If any part of this Agreement is contrary to, prohibited by, or
deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not
be invalidated thereby and shall be given effect so far as possible.



     16.9. Expenses. All costs and expenses including reasonable attorneys’ fees
(including the allocated costs of in house counsel) and disbursements incurred by Agent on its
behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or waivers hereunder or
thereunder and all related agreements, documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any
of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights
hereunder and under all related agreements, documents and instruments, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out
of or relating to Agent’s or any Lender’s transactions with any Borrower or any Guarantor, or (e)
in connection with any advice given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements, documents and instruments, may be
charged to Borrowers’ Account and shall be part of the Obligations.



     16.10. Injunctive Relief. Each Borrower recognizes that, in the event any Borrower
fails to perform, observe or discharge any of its obligations or liabilities under this Agreement,
or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy
at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall
be entitled to temporary and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.



     16.11. Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney
for any of them, shall be liable to any Borrower or any Guarantor (or any Affiliate of any such
Person) for indirect, punitive, exemplary or consequential damages arising from any breach of
contract, tort or other wrong relating to the establishment, administration or collection of the
Obligations or as a result of any transaction contemplated under this Agreement or any Other
Document.



     16.12. Captions. The captions at various places in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted as part of this Agreement.



98









 





     16.13. Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of and by different parties hereto on separate counterparts, all of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.



     16.14. Construction. The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments, schedules or exhibits thereto.



     16.15. Confidentiality; Sharing Information. Agent, each Lender and each Transferee
shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to
the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s
customary procedures for handling confidential information of this nature; provided, however,
Agent, each Lender and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any
Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body
or representative thereof or pursuant to legal process; provided, further that (i) unless
specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its
reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the
applicable request for disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an examination of the
financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal
process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by any Borrower other than those documents and instruments in possession of
Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been
paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to
time financial advisory, investment banking and other services may be offered or provided to such
Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby
authorizes each Lender to share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter
into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that
any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 16.15 as if it were a Lender hereunder. Such authorization shall
survive the repayment of the other Obligations and the termination of this Agreement.



     16.16. Publicity. Each Borrower and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among Borrowers, Agent and
Lenders, including announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.



     16.17. Certifications From Banks and Participants; USA PATRIOT Act. Each Lender or
assignee or participant of a Lender that is not incorporated under the Laws of the United States



99









 




of America or a state thereof (and is not excepted from the certification requirement
contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both
(i) an affiliate of a depository institution or foreign bank that maintains a physical presence in
the United States or foreign country, and (ii) subject to supervision by a banking authority
regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the
certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and
certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable
regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required
under the USA PATRIOT Act.




100









 






     Each of the parties has signed this Agreement as of the day and year first above written.



	 	 	 	 	 
	 	VALUEVISION MEDIA, INC.

 	 
	 	By:  	/s/   FRANK ELSENBAST
 	 
	 	 	Name:  	Frank Elsenbast          	 
	 	 	Title:  	Chief Financial
Officer 	 
	 
	 	VALUEVISION INTERACTIVE, INC.

 	 
	 	By:  	/s/   FRANK ELSENBAST
 	 
	 	 	Name:  	Frank Elsenbast          	 
	 	 	Title:  	Chief Financial
Officer 	 
	 
	 	VVI FULFILLMENT CENTER, INC.

 	 
	 	By:  	/s/   FRANK ELSENBAST
 	 
	 	 	Name:  	Frank Elsenbast          	 
	 	 	Title:  	Chief Financial
Officer 	 
	 
	 	VALUEVISION MEDIA

ACQUISITIONS, INC.

 	 
	 	By:  	/s/   FRANK ELSENBAST
 	 
	 	 	Name:  	Frank Elsenbast          	 
	 	 	Title:  	Chief Financial
Officer 	 
	 
	 	VALUEVISION RETAIL, INC.

 	 
	 	By:  	/s/   FRANK ELSENBAST
 	 
	 	 	Name:  	Frank Elsenbast          	 
	 	 	Title:  	Chief Financial
Officer 	 



 









 







	 	 	 	 	 



	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

As Lender and as Agent

 	 
	 	By:  	/s/ BRUCE WEIDNER
 	 
	 	 	Name:  	Bruce Weidner           	 
	 	 	Title:  	Vice President 	 
	 	 	 
	 	
 	 
	 	200 South Wacker Drive, Suite 600 	 
	 	Chicago, Illinois 60606


Commitment Percentage:  100%