exv10w1





      Exhibit 10.1





EXECUTION COPY



 

 


$600,000,000




LOAN AND SECURITY AGREEMENT



Dated as of September 2, 2009



by and among



MOHAWK INDUSTRIES, INC.



and



CERTAIN OF ITS SUBSIDIARIES,

as Borrowers,



CERTAIN OF ITS SUBSIDIARIES,

as Guarantors,



THE LENDERS FROM TIME TO TIME PARTY HERETO,



WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,



JPMORGAN CHASE BANK, N.A.,

SUNTRUST BANK

and

BANK OF AMERICA, N.A.,

each, as a Syndication Agent



 





WELLS FARGO SECURITIES, LLC, J.P. MORGAN SECURITIES INC.,

SUNTRUST ROBINSON HUMPHREY, INC. and BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers



 





WELLS FARGO SECURITIES, LLC, J.P. MORGAN SECURITIES INC.,

SUNTRUST ROBINSON HUMPHREY, INC., BANC OF AMERICA SECURITIES LLC,

BARCLAYS BANK PLC, DEUTSCHE BANK SECURITIES INC. and

REGIONS BUSINESS CAPITAL CORPORATION,

as Joint Bookrunners



 

 


 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.1
	 	Defined Terms
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2	 	CREDIT FACILITIES	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.1
	 	Revolving Loans
	 	 	34	 
	 

	 	Section 2.2
	 	Swingline Loans
	 	 	34	 
	 

	 	Section 2.3
	 	Letters of Credit
	 	 	36	 
	 

	 	Section 2.4
	 	Procedure for Advance of Loans
	 	 	39	 
	 

	 	Section 2.5
	 	Repayments and Prepayments
	 	 	40	 
	 

	 	Section 2.6
	 	Optional Reduction of Commitments
	 	 	42	 
	 

	 	Section 2.7
	 	Optional Increase of Commitments
	 	 	42	 
	 

	 	Section 2.8
	 	Overadvances; Special Agent Advances
	 	 	43	 
	 

	 	Section 2.9
	 	Joint and Several Liability of the Borrowers
	 	 	44	 
	 

	 	Section 2.10
	 	Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts
of Loans and Statements
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3	 	GENERAL LOAN PROVISIONS	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.1
	 	Interest
	 	 	47	 
	 

	 	Section 3.2
	 	Fees
	 	 	49	 
	 

	 	Section 3.3
	 	Loan Accounts
	 	 	50	 
	 

	 	Section 3.4
	 	Pro Rata Treatment, Sharing of Payments, Funding by Lenders, Etc.
	 	 	50	 
	 

	 	Section 3.5
	 	Payments Generally
	 	 	52	 
	 

	 	Section 3.6
	 	Obligations Several; Independent Nature of Lenders’ Rights
	 	 	52	 
	 

	 	Section 3.7
	 	Bank Products
	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4	 	YIELD PROTECTION	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.1
	 	Inability to Determine Applicable Interest Rate
	 	 	53	 
	 

	 	Section 4.2
	 	Changed Circumstances
	 	 	53	 
	 

	 	Section 4.3
	 	Increased Costs
	 	 	53	 
	 

	 	Section 4.4
	 	Capital Requirements
	 	 	54	 
	 

	 	Section 4.5
	 	Taxes
	 	 	54	 
	 

	 	Section 4.6
	 	Breakage Indemnity
	 	 	56	 
	 

	 	Section 4.7
	 	Certificates for Reimbursement
	 	 	56	 
	 

	 	Section 4.8
	 	Delay in Requests
	 	 	56	 
	 

	 	Section 4.9
	 	Mitigation; Replacement of the Lenders
	 	 	57	 
	 

	 	Section 4.10
	 	No Requirement of Match Funding
	 	 	57	 
	 

	 	Section 4.11
	 	Optional Termination of Commitment of Defaulting Lender
	 	 	57	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5	 	CONDITIONS PRECEDENT	 	 	58	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.1
	 	Conditions Precedent to Initial Loans and Letters of Credit
	 	 	58	 
	 

	 	Section 5.2
	 	Conditions Precedent to All Loans and Letters of Credit
	 	 	61	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6	 	SECURITY INTEREST AND COLLECTION	 	 	62	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.1
	 	Grant of Security Interest
	 	 	62	 
	 

	 	Section 6.2
	 	Perfection of Security Interests
	 	 	62	 
	 

	 	Section 6.3
	 	Collection of Accounts
	 	 	65	 






i









 





TABLE OF CONTENTS
continued






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7	 	COLLATERAL REPORTING AND COVENANTS	 	 	66	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.1
	 	Collateral Reporting
	 	 	66	 
	 

	 	Section 7.2
	 	Accounts Covenants
	 	 	66	 
	 

	 	Section 7.3
	 	Inventory Covenants; Appraisals,
Etc.
	 	 	67	 
	 

	 	Section 7.4
	 	Power of Attorney
	 	 	68	 
	 

	 	Section 7.5
	 	Right to Cure
	 	 	69	 
	 

	 	Section 7.6
	 	Access to Premises; Field Audits
	 	 	69	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8	 	REPRESENTATIONS AND WARRANTIES	 	 	70	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.1
	 	Corporate Existence, Power and Authority
	 	 	70	 
	 

	 	Section 8.2
	 	Name; State of Organization; Chief Executive Office; Collateral Locations
	 	 	70	 
	 

	 	Section 8.3
	 	Financial Statements; No Material Adverse Effect
	 	 	70	 
	 

	 	Section 8.4
	 	Priority of Liens
	 	 	71	 
	 

	 	Section 8.5
	 	Tax Returns
	 	 	71	 
	 

	 	Section 8.6
	 	Litigation
	 	 	71	 
	 

	 	Section 8.7
	 	Compliance with Applicable Laws
	 	 	71	 
	 

	 	Section 8.8
	 	Environmental Compliance
	 	 	72	 
	 

	 	Section 8.9
	 	Employee Benefits
	 	 	72	 
	 

	 	Section 8.10
	 	Bank Accounts
	 	 	73	 
	 

	 	Section 8.11
	 	Intellectual Property
	 	 	73	 
	 

	 	Section 8.12
	 	Subsidiaries; Affiliates; Capitalization; Solvency
	 	 	73	 
	 

	 	Section 8.13
	 	Labor Disputes
	 	 	73	 
	 

	 	Section 8.14
	 	Material Contracts
	 	 	73	 
	 

	 	Section 8.15
	 	Title to Property
	 	 	74	 
	 

	 	Section 8.16
	 	Payable Practices
	 	 	74	 
	 

	 	Section 8.17
	 	Accuracy and Completeness of Information
	 	 	74	 
	 

	 	Section 8.18
	 	Investment Company Act
	 	 	74	 
	 

	 	Section 8.19
	 	Accounts; Inventory
	 	 	74	 
	 

	 	Section 8.20
	 	Anti-Terrorism Laws
	 	 	74	 
	 

	 	Section 8.21
	 	Senior Indebtedness
	 	 	74	 
	 

	 	Section 8.22
	 	Survival of Warranties; Cumulative
	 	 	74	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9	 	AFFIRMATIVE COVENANTS	 	 	75	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.1
	 	Maintenance of Existence
	 	 	75	 
	 

	 	Section 9.2
	 	Compliance with Laws, Regulations,
Etc.
	 	 	75	 
	 

	 	Section 9.3
	 	Payment of Taxes and Claims
	 	 	75	 
	 

	 	Section 9.4
	 	Insurance
	 	 	76	 
	 

	 	Section 9.5
	 	Financial Statements and Other Information
	 	 	76	 
	 

	 	Section 9.6
	 	Compliance with ERISA
	 	 	79	 
	 

	 	Section 9.7
	 	Intellectual Property
	 	 	79	 
	 

	 	Section 9.8
	 	Further Assurances
	 	 	79	 
	 

	 	Section 9.9
	 	Additional Borrowers and Guarantors; Release
	 	 	79	 
	 

	 	Section 9.10
	 	Use of Proceeds
	 	 	80	 
	 

	 	Section 9.11
	 	Fixed Charge Coverage Ratio
	 	 	80	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10	 	NEGATIVE COVENANTS	 	 	81	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 10.1
	 	Limitations on Indebtedness
	 	 	81	 
	 

	 	Section 10.2
	 	Limitations on Liens
	 	 	82	 






ii









 




TABLE OF CONTENTS
continued



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 10.3
	 	Limitations on Investments
	 	 	84	 
	 

	 	Section 10.4
	 	Limitations on Fundamental Changes
	 	 	86	 
	 

	 	Section 10.5
	 	Limitations on Asset Dispositions
	 	 	87	 
	 

	 	Section 10.6
	 	Limitations on Restricted Payments
	 	 	88	 
	 

	 	Section 10.7
	 	Transactions with Affiliates
	 	 	89	 
	 

	 	Section 10.8
	 	Limitation on Certain Accounting Changes and Amendments to Organizational
Documents
	 	 	90	 
	 

	 	Section 10.9
	 	Limitation on Payments and Modifications of Indebtedness
	 	 	90	 
	 

	 	Section 10.10
	 	No Further Negative Pledges; Restrictive Agreements
	 	 	91	 
	 

	 	Section 10.11
	 	Nature of Business
	 	 	92	 
	 

	 	Section 10.12
	 	Sale and Lease-Back Transaction
	 	 	92	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11	 	EVENTS OF DEFAULT AND REMEDIES	 	 	92	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 11.1
	 	Events of Default
	 	 	92	 
	 

	 	Section 11.2
	 	Remedies
	 	 	94	 
	 

	 	Section 11.3
	 	Crediting Payments and Proceeds
	 	 	97	 
	 

	 	Section 11.4
	 	Proofs of Claim
	 	 	98	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 12	 	THE ADMINISTRATIVE AGENT	 	 	98	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 12.1
	 	Appointment, Powers and Immunities
	 	 	98	 
	 

	 	Section 12.2
	 	Reliance by the Administrative Agent
	 	 	99	 
	 

	 	Section 12.3
	 	Notice of Events of Default
	 	 	99	 
	 

	 	Section 12.4
	 	Wachovia in its Individual Capacity
	 	 	100	 
	 

	 	Section 12.5
	 	Indemnification
	 	 	100	 
	 

	 	Section 12.6
	 	Non-Reliance on the Administrative Agent and Other Lenders
	 	 	100	 
	 

	 	Section 12.7
	 	Failure to Act
	 	 	101	 
	 

	 	Section 12.8
	 	Concerning the Collateral and the Related Loan Documents
	 	 	101	 
	 

	 	Section 12.9
	 	Field Audit, Examination Reports and other Information; Disclaimer by the Lenders
	 	 	101	 
	 

	 	Section 12.10
	 	Collateral Matters
	 	 	101	 
	 

	 	Section 12.11
	 	Agency for Perfection
	 	 	102	 
	 

	 	Section 12.12
	 	Successor to the Administrative Agent
	 	 	103	 
	 

	 	Section 12.13
	 	Other Agent Designations
	 	 	103	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 13	 	GUARANTY	 	 	103	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 13.1
	 	The Guaranty
	 	 	103	 
	 

	 	Section 13.2
	 	Bankruptcy
	 	 	104	 
	 

	 	Section 13.3
	 	Nature of Liability
	 	 	104	 
	 

	 	Section 13.4
	 	Independent Obligation
	 	 	104	 
	 

	 	Section 13.5
	 	Authorization
	 	 	104	 
	 

	 	Section 13.6
	 	Reliance
	 	 	105	 
	 

	 	Section 13.7
	 	Waiver
	 	 	105	 
	 

	 	Section 13.8
	 	Limitation on Enforcement
	 	 	106	 
	 

	 	Section 13.9
	 	Confirmation of Payment
	 	 	106	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 14	 	MISCELLANEOUS	 	 	106	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 14.1
	 	Notices
	 	 	106	 
	 

	 	Section 14.2
	 	Amendments and Waivers
	 	 	107	 
	 

	 	Section 14.3
	 	Costs and Expenses
	 	 	110	 
	 

	 	Section 14.4
	 	Indemnification
	 	 	110	 






iii









 





TABLE OF CONTENTS
continued




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 14.5
	 	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver
	 	 	111	 
	 

	 	Section 14.6
	 	Waiver of Notices
	 	 	112	 
	 

	 	Section 14.7
	 	Waiver of Counterclaims
	 	 	113	 
	 

	 	Section 14.8
	 	Partial Invalidity
	 	 	113	 
	 

	 	Section 14.9
	 	Confidentiality
	 	 	113	 
	 

	 	Section 14.10
	 	Successors
	 	 	114	 
	 

	 	Section 14.11
	 	Assignments; Participations
	 	 	114	 
	 

	 	Section 14.12
	 	Term
	 	 	116	 
	 

	 	Section 14.13
	 	Entire Agreement
	 	 	117	 
	 

	 	Section 14.14
	 	USA Patriot Act
	 	 	117	 
	 

	 	Section 14.15
	 	Judgment Currency
	 	 	117	 
	 

	 	Section 14.16
	 	Counterparts, Etc.
	 	 	118	 






iv









 






INDEX TO EXHIBITS AND SCHEDULES




	 	 	 
	EXHIBITS	 	 
	 
	 	 
	Exhibit A

	 	Form of Assignment and Assumption
	Exhibit B

	 	Form of Borrowing Base Certificate
	Exhibit C

	 	Form of Compliance Certificate
	Exhibit D

	 	Form of Information Certificate
	Exhibit E

	 	Form of Joinder Agreement
	Exhibit F

	 	Form of Notice of Borrowing
	Exhibit G

	 	Form of Notice of Account Designation
	Exhibit H

	 	Form of Notice of Prepayment
	Exhibit I

	 	Form of Notice of Conversion
	Exhibit J

	 	Form of Note
	Exhibit K

	 	Form of Acquisition Compliance Certificate






	 	 	 
	SCHEDULES	 	 
	 
	 	 
	Schedule 1.1(a)

	 	Lenders and Commitments
	Schedule 1.1(b)

	 	Consolidated EBITDA Adjustments
	Schedule 1.1(c)

	 	Existing Letters of Credit
	Schedule 7.1

	 	Other Collateral Reports
	Schedule 8.2

	 	Name; State of Organization; Chief Executive Office; Collateral Locations
	Schedule 8.6

	 	Litigation
	Schedule 8.10

	 	Deposit Accounts and Securities Accounts
	Schedule 8.12

	 	Subsidiaries; Affiliates; Capitalization; Solvency
	Schedule 8.13

	 	Collective Bargaining or Similar Agreements
	Schedule 8.14

	 	Material Contracts
	Schedule 10.1

	 	Existing Indebtedness
	Schedule 10.2

	 	Existing Liens
	Schedule 10.3

	 	Existing Investments
	Schedule 10.7

	 	Existing Affiliate Transactions







v











 





LOAN AND SECURITY AGREEMENT




     This Loan and Security Agreement dated as of September 2, 2009 is entered into by and among
MOHAWK INDUSTRIES, INC., a Delaware corporation (the “Company”), those Subsidiaries of the
Company identified as “Borrowers” on the signature pages hereto and any additional Subsidiary of
the Company that becomes a party hereto as a “Borrower” in accordance with the terms hereof
(together with the Company, the “Borrowers”), those Subsidiaries of the Company identified
as “Guarantors” on the signature pages hereto and each additional Subsidiary of the Company that
becomes a party hereto as a “Guarantor” (collectively, the “Guarantors”), the parties
hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and
Assumption (collectively, the “Lenders” as hereinafter further defined) and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, in its capacity as administrative agent for
the Lenders (in such capacity, the “Administrative Agent” as hereinafter further defined)
and in its capacity as issuing bank for letters of credit hereunder (in such capacity, “Issuing
Bank” as hereinafter further defined).



WITNESSETH:




     WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders enter into
financing arrangements with the Borrowers pursuant to which the Lenders may make loans and provide
other financial accommodations to the Borrowers; and



     WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and
provide such financial accommodations to the Borrowers on a pro rata basis according to its
Commitment (as defined below) on the terms and conditions set forth herein and the Administrative
Agent is willing to act as administrative agent for the Lenders on the terms and conditions set
forth herein and the other Loan Documents;



     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



ARTICLE 1

DEFINITIONS




     Section 1.1 Defined Terms. For purposes of this Agreement, the following terms have
the respective meanings given to them below:



     “2011 Indenture” means that certain Indenture dated as of January 9, 2006, by and
between the Company and SunTrust Bank as trustee, as amended, restated, supplemented or otherwise
modified through the date hereof pursuant to which certain notes of the Company in the aggregate
original principal amount of $500,000,000 had been issued.



     “2011 Notes” means the Company’s outstanding 5.75% senior notes due January 15, 2011
issued pursuant to the 2011 Indenture outstanding on the Closing Date.



     “2012 Indenture” means that certain Indenture dated as of April 2, 2002, by and
between the Company and Wachovia as trustee, as amended, restated, supplemented or otherwise
modified through the date hereof pursuant to which certain notes of the Company in the aggregate
original principal amount of $400,000,000 had been issued.



 









 





     “2012 Notes” means the Company’s outstanding 7.20% senior notes due April 15, 2012
issued pursuant to the 2012 Indenture outstanding on the Closing Date.



     “Accounts” means, as to each Loan Party, all present and future accounts, as defined
in the UCC, of such Loan Party.



     “Acquisition” means any transaction or series of related transactions for the purpose
of resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the
assets of a Person, or all or substantially all of any business unit, division, product line or
line of business of any Person, (b) the acquisition in excess of fifty percent (50%) of the Capital
Stock of any Person, or otherwise causing any Person to become a Subsidiary or (c) a merger or
consolidation or any other combination with another Person (other than a Person that is already a
Subsidiary).



     “Acquisition Compliance Certificate” means a certificate substantially in the form of
Exhibit K hereto delivered by a Responsible Officer of the Company pursuant to clause (i)
of the definition of Permitted Acquisition, which certificate shall confirm satisfaction of each of
the conditions precedent set forth in the definition of Permitted Acquisition and shall include
reasonably detailed calculations demonstrating satisfaction of the requirements set forth in clause
(d) therein.



     “Additional Issuing Bank” means up to two (2) Lenders, in addition to the
Administrative Agent, each designated by the Administrative Borrower as an additional issuer of
Letters of Credit pursuant to Section 2.3(j).



     “Adjusted Eurodollar Rate” means, with respect to each Interest Period for any
Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and
renewals), the rate per annum determined by dividing (a) the LIBOR Rate for such Interest Period
by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, “Reserve Percentage” means for any day, that percentage (expressed as a decimal)
which is in effect from time to time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any other category of liabilities
that includes deposits by reference to which the interest rate of Eurodollar Rate Loans is
determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve
requirement at that time. Eurodollar Rate Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to time to a Lender. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any
change in the Reserve Percentage.



     “Administrative Agent” means Wachovia Bank, National Association, in its capacity as
administrative agent on behalf of the Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.



     “Administrative Agent Payment Account” means the account of the Administrative Agent
as the Administrative Agent may from time to time designate to the Administrative Borrower as the
Administrative Agent Payment Account for purposes of this Agreement and the other Loan Documents.



     “Administrative Borrower” means the Company, in its capacity as the administrative
borrower on behalf of itself and the other the Borrowers pursuant to Section 2.10 and its
successors and assigns in such capacity.



2









 





     “Affiliate” means, with respect to a specified Person, any other Person that directly
or indirectly, through one or more intermediaries, controls or is controlled by or is under common
control with such Person, and without limiting the generality of the foregoing, includes (a) any
Person which beneficially owns or holds five percent (5%) or more of any class of Voting Stock of
such Person or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds five percent (5%) or more of any class of Voting Stock or in which such
Person beneficially owns or holds five percent (5%) or more of the equity interests, and (c) any
director or executive officer of such Person and (d) solely for purposes of Section 10.7,
any Affiliate (as described in clause (b) above) of any director or executive officer of the
Company. For the purposes of this definition, the term “control” (including with correlative
meanings, the terms “controlled by” and “under common control with”), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.



     “Aggregate Commitment” means the aggregate Commitments of all of the Lenders
hereunder, as such amount may be increased, reduced or otherwise modified pursuant to the terms of
this Agreement. The Aggregate Commitment on the Closing Date shall be $600,000,000.



     “Agreement” means, on any date, this Loan and Security Agreement as originally in
effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and
restated or otherwise modified from time to time and in effect on such date.



     “Alternative Currency” means (a) Euro, (b) Sterling, (c) Canadian Dollar and (d) with
the prior written consent of the applicable Issuing Bank, any other lawful currency (other than
Dollars); provided that in each case of (a) through (d) above, such currency is freely
transferable and convertible into Dollars in the United States currency market and freely available
to the applicable Issuing Bank in the London interbank deposit market.



     “Alternative Currency Letter of Credit” means any Letter of Credit denominated in an
Alternative Currency.



     “Alternative Currency Letter of Credit Obligations” means, at any time, the sum of (a)
the aggregate undrawn amount of all Alternative Currency Letters of Credit outstanding at such
time, plus (b) the aggregate amount of all drawings under Alternative Currency Letters of
Credit for which any Issuing Bank has not at such time been reimbursed, plus (c) without
duplication, the aggregate amount of all payments made by each Lender to each Issuing Bank with
respect to such Lender’s participation in Alternative Currency Letters of Credit as provided in
Section 2.3 for which the Borrowers have not at such time reimbursed the Lenders, whether
by way of a Loan or otherwise.



     “Alternative Currency Letter of Credit Sublimit” means an amount equal to the lesser
of the Letter of Credit Limit and $25,000,000.



     “Applicable Margin” means for Eurodollar Rate Loans, Swingline Loans and Base Rate
Loans, the appropriate applicable percentages corresponding to the Level of Average Excess
Availability determined as of the most recent Calculation Date as shown below:



3









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable Margin	 	 
	 	 	 	 	 	 	for Eurodollar Rate	 	 
	 	 	Average Excess	 	Loans and Swingline	 	Applicable Margin
	Level	 	Availability	 	Loans	 	for Base Rate Loans
	 
	1
	 	Less than $200,000,000	 	 	4.25	%	 	 	2.75	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	Greater than or equal to 
$200,000,000 but less than 
400,000,000	 	 	4.00	%	 	 	2.50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	3
	 	Greater than or equal to $400,000,000	 	 	3.75	%	 	 	2.25	%






     The Applicable Margin shall be determined and adjusted quarterly on the date (each a
“Calculation Date”) five (5) Business Days after the date on which the Administrative
Borrower provides the monthly Borrowing Base Certificate in accordance with the provisions of
Section 7.1(a) for the last month of the applicable quarterly period; provided that
(i) the initial Applicable Margin shall be based on Level 3 (as shown above) and shall remain at
Level 3 until the first Calculation Date that occurs after the Closing Date, and, thereafter, the
Level shall be determined by the Average Excess Availability for the applicable quarterly period,
and (ii) if the Administrative Borrower fails to provide the monthly Borrowing Base Certificate to
the Administrative Agent as required by and within the time limits set forth in Section
7.1(a) or an Event of Default shall have occurred and be continuing, the Applicable Margin
shall be based on Level 1 until five (5) Business Days after the applicable monthly Borrowing Base
Certificate is provided or such Event of Default is no longer continuing, whereupon the Level shall
be determined by the Average Excess Availability as of the most recent Calculation Date. Except as
set forth above, each Applicable Margin shall be effective from one Calculation Date until the next
Calculation Date.



     “Approved Fund” means any Person (other than a natural Person), including without
limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in the ordinary course
of its business; provided that any such Approved Fund must be administered, managed or
underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.



     “Assignment and Assumption” means an Assignment and Assumption substantially in the
form of Exhibit A hereto (with blanks appropriately completed) delivered to the
Administrative Agent in connection with an assignment of a Lender’s interest hereunder in
accordance with the provisions of Section 14.11.



     “Average Excess Availability” means, as of the end of each calendar quarter, the daily
average amount (calculated for such calendar quarter) of Excess Availability.



     “Bank Product Amount” has the meaning given to such term in the definition of Bank
Products.



     “Bank Product Provider” means any Person that, at the time it provides any Bank
Products to Loan Parties, is a Lender or an Affiliate of a Lender. In no event shall any Bank
Product Provider acting in such capacity be deemed a Lender for purposes hereof to the extent of
and as to Bank Products except that each reference to the term “Lender” in Sections 12.1,
12.2, 12.3(b), 12.6, 12.7, 12.8, 12.11 and
14.10



4









 




shall be deemed to include such Bank Product Provider and in no event shall the approval of
any such person in its capacity as Bank Product Provider be required in connection with the release
or termination of any security interest or Lien of the Administrative Agent.




     “Bank Products” means any one or more of the following types or services or facilities
provided to a Loan Party by a Bank Product Provider: (a) purchasing cards, commercial cards,
credit cards or stored value cards, (b) cash management or related services, including (i) the
automated clearinghouse transfer of funds for the account of a Loan Party pursuant to agreement or
overdraft for any accounts of a Loan Party maintained at the Administrative Agent or any Bank
Product Provider that are subject to the control of the Administrative Agent pursuant to any
Deposit Account Control Agreement to which the Administrative Agent or such Bank Product Provider
is a party, as applicable, (ii) controlled disbursement services and (iii) E-payables or comparable
services, and (c) Hedge Agreements if and to the extent permitted hereunder. In connection with
any Bank Product, each Bank Product Provider, other than Wachovia and its Affiliates, shall provide
written notice to the Administrative Agent prior to entering into a Bank Product of (x) the
existence of such Bank Product, (y) the maximum dollar amount of obligations arising thereunder
(the “Bank Product Amount”) and (z) the methodology to be used by such parties in
determining the obligations under such Bank Product from time to time. The Bank Product Amount may
be changed from time to time upon written notice to the Administrative Agent by the applicable Bank
Product Provider. No Bank Product Amount may be established at any time that a Default or Event of
Default exists, or if a reserve in such amount would cause an Overadvance.



     “Base Rate” means, on any date, the greatest of (a) the rate from time to time
publicly announced by Wachovia, or its successors, as its prime rate, whether or not such announced
rate is the best rate available at such bank, (b) the Federal Funds Rate in effect on such day
plus one-half percent (0.50%) and (c) the LIBOR Rate for a one month Interest Period on
such day plus one and one-half percent (1.50%) (provided that if the LIBOR Rate is
not available on such date as described in Article 4 or otherwise, the most recently available
LIBOR Rate for a one month Interest Period shall be used).



     “Base Rate Loans” means any Loan made to a Borrower that bears interest based on the
Base Rate.



     “Blocked Accounts” has the meaning given to such term in Section 6.3(a).



     “Borrower” and “Borrowers” have the meanings given to such terms in the
preamble hereof.



     “Borrowing Base” means, as of any date of calculation, the amount equal to:



          (a) eighty-five percent (85%) of Eligible Accounts; plus




          (b) the least of (i) sixty-five percent (65%) multiplied by the Value of Eligible
Inventory, (ii) eighty-five (85%) of the Net Recovery Percentage multiplied by the Value of
such Eligible Inventory or (iii) the amount calculated in clause (a) above; minus




          (c) Reserves.




     “Borrowing Base Certificate” means a borrowing base certificate in substantially the
form of Exhibit B hereto.



     “Business Day” means any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the State of New York or the
State of North Carolina, and a day on which the Administrative Agent is open for the transaction of
business, except that



5









 




if a determination of a Business Day shall relate to any Eurodollar Rate Loans or Swingline
Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in
Dollar deposits in the London interbank market or other applicable Eurodollar Rate market.




     “Calculation Date” has the meaning given to such term in the definition of Applicable
Margin.



     “Canadian Dollars” means the lawful currency of Canada.



     “Capital Expenditures” means expenditures for the acquisition (including the
acquisition by capitalized lease) or improvement of capital assets, as determined in accordance
with GAAP; provided that “Capital Expenditures” shall not include, to the extent otherwise
included therein, any Acquisition.



     “Capital Leases” means, as applied to any Person, any lease of (or any agreement
conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee
which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of
such Person. Notwithstanding the foregoing and Section 1.2(g), any obligations of a Person
under a lease (whether existing now or entered into in the future) that is not (or would not be) a
Capital Lease under GAAP as in effect on the Closing Date, shall not be treated as a Capital Lease
solely as a result of the adoption of changes in GAAP outlined by the Financial Accounting
Standards Board in its press release dated March 19, 2009.



     “Capital Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person’s capital stock or
partnership, limited liability company or other equity interests at any time outstanding, and any
and all rights, warrants or options exchangeable for or convertible into such capital stock or
other interests (but excluding any debt security that is exchangeable for or convertible into such
capital stock).



     “Cash Dominion Period” means (a) any period during which any Event of Default shall
have occurred and be continuing and (b) each period commencing on a date that either (i) Excess
Availability has been less than the Threshold Amount for a period of three (3) consecutive Business
Days (such period, the “Cash Dominion Grace Period”) or (ii) Excess Availability is less
than the Threshold Amount and the Company has waived application of the Cash Dominion Grace Period,
and continuing until the date Excess Availability shall have been equal to or greater than the
Threshold Amount for forty-five (45) consecutive calendar days (unless the Administrative Agent has
determined that the circumstances surrounding such Cash Dominion Period cease to exist);
provided that a Cash Dominion Period commencing under clause (b) may be discontinued no
more than two (2) times in any period of twelve (12) consecutive months.



     “Cash Equivalents” means, at any time, (a) any evidence of Indebtedness with a
maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof; provided that the full
faith and credit of the United States of America is pledged in support thereof; (b) certificates of
deposit or bankers’ acceptances with a maturity of ninety (90) days or less of any financial
institution that is a member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $1,000,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Loan Party) organized under the laws of any State of the United States of America
or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s; (d)
repurchase obligations with a term of not more than thirty (30) days for underlying securities of
the types described in clause (a) above entered into with any financial institution having combined
capital and surplus and undivided profits of not less than $1,000,000,000; (e) repurchase
agreements and reverse repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any governmental agency



6









 




thereof and backed by the full faith and credit of the United States of America, in each case
maturing within ninety (90) days or less from the date of acquisition; provided that the
terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements
of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the
Currency on October 31, 1985; (f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in clauses (a) through (e)
above; (g) investments in bond and equity funds which funds have a Morningstar rating of four or
higher and a term not in excess of twelve months; and (h) any other investments made by the Loan
Parties or their Domestic Subsidiaries in securities having a maturity of twelve months or less
which investments are made in accordance with the terms of an internal investment policy which
policy shall be reasonably satisfactory to the Administrative Agent. For the avoidance of doubt,
auction rate securities shall not constitute “Cash Equivalents”.




     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



     “Change of Control” means (a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder, becoming the ultimate
“beneficial owner” (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except
that for purposes of this clause (a) such person or group shall be deemed to have “beneficial
ownership” of all shares that any such person or group has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or indirectly, of more than
thirty percent (30%) of the Voting Stock in the Company; or (b) during any year following the
Closing Date, individuals who at the beginning of such year constituted the board of directors of
the Company (together with any new directors whose election to the board of directors or whose
nomination for election by the equityholders of the Company was approved by a vote of at least a
majority of the members of the board of directors then still in office who were either directors at
the beginning of such year or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the board of directors of the Company then still
in office; or (c) except as otherwise permitted pursuant to Section 10.4 or 10.5,
the failure of the Company to, directly or indirectly, own and control one hundred percent (100%)
of each class of the Capital Stock of each Borrower (other than the Company).



     “Closing Date” means the date on which the conditions specified in Section 5.1
are satisfied (or waived in accordance with Section 14.2).



     “Code” means the Internal Revenue Code of 1986, as the same now exists or may from
time to time hereafter be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.



     “Collateral” has the meaning given to such term in Section 6.1.



     “Collateral Access Agreement” means an agreement in writing, in form and substance
reasonably satisfactory to the Administrative Agent, from a lessor of premises to any Loan Party,
or another person to whom any Collateral is consigned or who has custody, control or possession of
any such Collateral or is otherwise the owner or operator of a premises on which any of such
Collateral is located, in favor of the Administrative Agent with respect to the Collateral at such
premises or otherwise in the custody, control or possession of such lessor, consignee or other
person.



7









 





     “Commitment” means, at any time, as to each Lender, the principal amount set forth
beside such Lender’s name on Schedule 1.1(a) or in the Assignment and Assumption Agreement
pursuant to which such Lender became a Lender hereunder in accordance with the provisions of
Section 14.11, as the same may be adjusted from time to time in accordance with the terms
hereof.



     “Commitment Fee” has the meaning given to such term in Section 3.2(a).



     “Commitment Fee Rate” means, on any date of calculation, (a) if Average Excess
Availability during the immediately preceding calendar quarter (or part thereof) is equal to or
greater than fifty percent (50%) of the Aggregate Commitment then in effect, one percent (1.00%)
per annum or (b) if Average Excess Availability during the immediately preceding calendar quarter
(or part thereof) is less than fifty percent (50%) of the Aggregate Commitment then in effect,
three-quarters of one percent (0.75%) per annum.



     “Company” has the meaning given to such term in the preamble.



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



     “Consolidated Cash Taxes” means, for any applicable period of computation, the sum of
all income taxes paid in cash by the Company and its Subsidiaries during such period (net of all
income tax refunds and credits received in cash by the Company and its Subsidiaries during such
period), which number for the applicable period of computation shall not be less than zero,
determined on a consolidated basis in accordance with applicable law and GAAP.



     “Consolidated EBITDA” means, for any applicable period of computation, determined on a
consolidated basis for the Company and its Subsidiaries in accordance with GAAP, (a) Consolidated
Net Income for such period plus (b) without duplication, the sum of the following to the
extent deducted in calculating Consolidated Net Income: (i) Consolidated Interest Expense for such
period, (ii) income tax expense (including, without limitation, any federal, state, local and
foreign income and similar taxes) of the Company and its Subsidiaries for such period, (iii)
depreciation and amortization of the Company and its Subsidiaries for such period, (iv) those
certain cash charges for the twelve-month period ending August 1, 2009 as set forth on Schedule
1.1(b), (v) any extraordinary charges or any non-cash charges (including non-recurring charges)
for such period (excluding non-cash charges that are expected to become cash charges in a future
period or that are reserves for future cash charges), (vi) non-cash losses for such period from the
proposed or actual disposition of material assets, (vii) non-cash goodwill and intangible asset
write-downs and restructuring charges for such period (provided that any cash payment made
with respect to any such goodwill and intangible asset write-down or restructuring charges shall be
subtracted in computing Consolidated EBITDA during the period during which such cash payment is
made), (viii) non-cash charges resulting from the vesting or exercise of stock options or stock
appreciation rights granted to management of the Company or any Subsidiary for such period, and
(ix) non-cash charges to the extent solely attributable to unrealized losses under Financial
Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities (“SFAS 133”) for such period (provided that any cash payment made with
respect to any such non-cash charge shall be subtracted in computing Consolidated EBITDA during the
period in which such cash payment is made (it being understood that the provision of cash
collateral shall not constitute a “payment” for these purposes)), minus (c) without
duplication, the sum of the following to the extent included in calculating Consolidated Net
Income: (i) non-cash, extraordinary or non-recurring gains for such period, (ii) non-cash gains for
such period from the proposed or actual disposition of material assets, and (iii) non-cash gains to
the extent solely attributable to unrealized gains under SFAS 133 (provided that any



8









 




cash received with respect to any such non-cash gain shall be added in computing Consolidated
EBITDA during the period in which such cash is received).




     “Consolidated Indebtedness” means, as of any date of determination, all Indebtedness
of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.



     “Consolidated Indebtedness Payments” means, for any applicable period of computation,
the sum of all (a) scheduled payments of principal on Consolidated Indebtedness for such period
(including the principal component of payments due on Capital Leases or under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing
product during such period) and (b) all repayments, repurchases and redemptions of the Existing
Senior Notes (or any Permitted Refinancing Indebtedness in respect thereof), determined on a
consolidated basis in accordance with GAAP; provided that Consolidated Indebtedness
Payments shall not include (i) voluntary prepayments or mandatory prepayments of Loans hereunder or
(ii) any payment pursuant to which such Consolidated Indebtedness is refinanced or repaid in whole
or in part (A) through an incurrence of Indebtedness expressly permitted by Section 10.1,
(B) with the proceeds of an issuance of Capital Stock of the Company or (C) with the proceeds of a
disposition of assets (other than Collateral) expressly permitted pursuant to Section 10.5.



     “Consolidated Interest Expense” means, for any applicable period of computation, all
interest expense of the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.



     “Consolidated Net Income” means, for any applicable period of computation, the net
income (or net deficit) of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be excluded from
Consolidated Net Income the net income (or net deficit) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has a joint interest with a third party, except to the
extent such net income is actually paid in cash to the Company or any of its Subsidiaries by
dividend or other distribution during such period.



     “Consolidated Total Assets” means, at any time, without duplication, the total assets
of the Company and its Subsidiaries, determined on a consolidated basis, as set forth or reflected
on the most recent consolidated balance sheet of the Company and its Subsidiaries, prepared in
accordance with GAAP.



     “Credit Card Agreements” means all agreements now or hereafter entered into by any
Borrower with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.



     “Credit Card Issuer” means any Person (other than a Borrower) who issues or whose
members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit
cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa,
U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and
other non-bank credit or debit cards.



     “Credit Card Processor” means any servicing or processing agent or any factor or
financial intermediary who facilitates, services, processes or manages the credit authorization,
billing transfer and/or payment procedures with respect to any sales transactions of any Borrower
involving credit card or debit card purchases by customers using credit cards or debit cards issued
by any Credit Card Issuer.



9









 





     “Credit Card Processor Agreement” means an agreement in writing, in form and substance
reasonably satisfactory to the Administrative Agent, by and between the Administrative Agent and a
Credit Card Processor related to any Borrower’s Credit Card Agreements.



     “Credit Facility” means the Loans and Letters of Credit provided to or for the benefit
of any Borrower pursuant to Sections 2.1, 2.2 and 2.3.



     “Default” means an act, condition or event which with notice or passage of time or
both would constitute an Event of Default.



     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the
Revolving Loans, participations in Letter of Credit Obligations or participations in Swingline
Loans required to be funded by it hereunder within one (1) Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one (1) Business Day of
the date when due, unless such amount is the subject of a good faith dispute, (c) has notified the
Borrowers, the Administrative Agent or any other Lender in writing that it does not intend to
comply with any of its funding obligations under this Agreement or has made a public statement to
the effect that it does not intend to comply with its funding obligations under this Agreement or
under other agreements in which it commits or is obligated to extend credit, or (d) has (or has a
parent corporation that has) (i) become or is insolvent, as reasonably determined by the
Administrative Agent in consultation with the Borrowers, or (ii) become the subject of a bankruptcy
or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for
it, or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.



     “Defaulting Lender Termination” has the meaning given to such term in Section
4.11.



     “Defaulting Lender Termination Date” has the meaning given to such term in Section
4.11.



     “Deposit Account Control Agreement” means an agreement in writing, in form and
substance reasonably satisfactory to the Administrative Agent, by and among the Administrative
Agent, the Loan Party with a deposit account at any bank and the bank at which such deposit account
is at any time maintained which provides that such bank will comply with instructions originated by
the Administrative Agent directing disposition of the funds in the deposit account without further
consent by such Loan Party and has such other terms and conditions as the Administrative Agent may
reasonably require.



     “Dollar Amount” means (a) with respect to any amount denominated in Dollars, such
amount, and (b) with respect to any amount expressed in an Alternative Currency, the amount of
Dollars which is equivalent to the amount so expressed in such Alternative Currency, at the most
favorable spot exchange rate determined by the Administrative Agent to be available to it at
approximately 11:00 a.m. (the time of the applicable Issuing Bank’s correspondent for the issuance
of such Alternative Currency Letter of Credit) two (2) Business Days prior to the most recent
Revaluation Date.



     “Dollars” means the lawful currency of the United States of America.



     “Domestic Subsidiary” means any Subsidiary that is incorporated or organized under the
laws of any state of the United States or the District of Columbia.



     “Eligible Accounts” means Accounts created by a Borrower that in each case satisfy the
criteria set forth below as reasonably determined by the Administrative Agent:



10









 





          (a) such Accounts arise from the actual and bona fide sale and delivery of goods by such
Borrower or rendition of services by such Borrower in the ordinary course of its business which
transactions are completed in accordance with the terms and provisions contained in any documents
related thereto;




          (b) such Accounts (i) are evidenced by an invoice delivered to the related account debtor and
(ii) have payment terms of:





     (A) sixty-one (61) days or less and do not remain unpaid more than sixty (60)
days after the original due date thereof;




     (B) sixty-two (62) to ninety-one (91) days, do not remain unpaid more than
thirty (30) days after the original due date thereof and are owing by account
debtors with a long term debt rating of BBB or better or Baa or better (in each case
with a stable outlook or better) by any two of S&P, Moody’s or Fitch, Inc.; or




     (C) sixty-two (62) to one hundred twenty-two (122) days, do not remain unpaid
more than thirty (30) days past the original due date thereof and are not included
in clause (b)(ii)(B) hereto (provided that all such Accounts under this
clause (b)(ii)(C) shall be limited to an amount equal to 12.0% of the Aggregate
Commitment in the aggregate and provided further that all such
Accounts under this clause (b)(ii)(C) with payment terms of ninety-two (92) to one
hundred twenty-two (122) days shall be limited to an amount equal to 2.5% of the
Aggregate Commitment in the aggregate);



          (c) such Accounts comply with the following terms and conditions: (i) the amounts shown on
any invoice delivered to the Administrative Agent or schedule thereof delivered to the
Administrative Agent shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to the Administrative Agent to the extent required pursuant to the
terms of this Agreement, (iii) no credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor except for credits, discounts, allowances or
extensions made or given in the ordinary course of each Borrower’s business in accordance with its
customary credit practices and policies and (iv) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms;




          (d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return,
sale on approval, or other terms under which payment by the account debtor may be conditional or
contingent;




          (e) the chief executive office of the account debtor with respect to such Accounts is located
in the United States of America or Canada (provided that, such Borrower shall have executed
and delivered, or shall have caused to be executed and delivered, such other agreements, documents
and instruments as may be reasonably required by the Administrative Agent to perfect the security
interest of the Administrative Agent in those Accounts of an account debtor with its chief
executive office or principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place of business is
located and shall have taken or shall have caused to be taken such other and further actions as the
Administrative Agent may have reasonably requested to enable the Administrative Agent as secured
party with respect thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at the Administrative Agent’s option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located other than in the
United States of America or Canada then if either: (i) the





11









 







account debtor has delivered to such Borrower an irrevocable letter of credit issued or
confirmed by a bank reasonably satisfactory to the Administrative Agent and payable only in the
United States of America and in Dollars, sufficient to cover such Account, in form and substance
satisfactory to the Administrative Agent and if required by Section 6.2(e), the original of
such letter of credit has been delivered to the Administrative Agent or the Administrative Agent’s
agent and the issuer thereof, and such Borrower has complied with the other applicable terms of
Section 6.2(e) with respect to the assignment of the proceeds of such letter of credit to
the Administrative Agent or naming the Administrative Agent as transferee beneficiary thereunder,
as the Administrative Agent may specify or (ii) such Account is subject to credit insurance payable
to the Administrative Agent issued by an insurer and on terms and in an amount acceptable to the
Administrative Agent, then so long as such Account is otherwise an Eligible Account, such Account
will be included as an Eligible Account;




          (f) such Accounts do not consist of percentage of completion accounts or progress billings
(such that the obligation of the account debtors with respect to such Accounts is conditioned upon
such Borrower’s satisfactory completion of any further performance under the agreement giving rise
thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if the
Administrative Agent shall have received an agreement in writing from the account debtor, in form
and substance satisfactory to the Administrative Agent, confirming the unconditional obligation of
the account debtor to take the goods related thereto and pay such invoice;




          (g) such Accounts are not owing by creditors or suppliers and are not otherwise subject to any
potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense,
chargeback, rebate, credit or allowance (provided that if such Accounts are otherwise
Eligible Accounts, the portion of such Accounts in excess of the amount at any time and from time
to time owed by such Borrower to such account debtor or claimed owed by such account debtor may be
deemed Eligible Accounts);




          (h) there are no facts, events or occurrences which would impair the validity, enforceability
or collectability of such Accounts or reduce the amount payable or delay payment thereunder;




          (i) such Accounts are subject to the first priority, valid and perfected security interest of
the Administrative Agent and not subject to any other Liens and any goods giving rise thereto are
not, and were not at the time of the sale thereof, subject to any Liens, in each case other than
Liens permitted under Section 10.2 that are junior to the Administrative Agent’s first
priority security interest;




          (j) neither the account debtor nor any officer or employee of the account debtor with respect
to such Accounts is an officer, employee, agent or Affiliate of any Loan Party;




          (k) the account debtors with respect to such Accounts are not any foreign government, the
United States of America, political subdivision, department, agency or instrumentality thereof,
unless, if the account debtor is the United States of America, political subdivision, department,
agency or instrumentality thereof, upon the Administrative Agent’s request, the Federal Assignment
of Claims Act of 1940, as amended, has been complied with in a manner satisfactory to the
Administrative Agent;




          (l) to the knowledge of the Responsible Officers of such Borrower, there are no proceedings or
actions which are threatened or pending against the account debtors with respect to such Accounts
which might result in any material adverse change in any such account debtor’s financial condition
(including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar
proceeding; provided that in the case of any account debtor that is a debtor in a case
under any





12









 







bankruptcy or insolvency proceeding, post-petition Accounts up to an aggregate amount of
$10,000,000 that are otherwise Eligible Accounts under this definition may be treated as Eligible
Accounts in the Administrative Agent’s discretion);




          (m) the aggregate amount of such Accounts owing by a single account debtor do not constitute
more than fifteen percent (15%) of the aggregate amount of all otherwise Eligible Accounts (but the
portion of the Accounts not in excess of the applicable percentages shall be deemed Eligible
Accounts);




          (n) such Accounts are not owed by an account debtor who has Accounts classified as ineligible
under clause (b) above which constitute more than fifty percent (50%) of the total Accounts of such
account debtor;




          (o) the account debtor is not located in a state requiring the filing of a “Notice of Business
Activities Report” or similar report in order to permit such Borrower to seek judicial enforcement
in such State of payment of such Account, unless such Borrower has qualified to do business in such
state or has filed a “Notice of Business Activities Report” or equivalent report for then current
year or such failure to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost;




          (p) such Accounts are owed by account debtors whose total indebtedness to such Borrower does
not exceed the credit limit with respect to such account debtors as determined by such Borrower
from time to time, to the extent such credit limit as to any account debtor is established
consistent with the customary credit practices and policies of such Borrower (but the portion of
the Accounts not in excess of such credit limit may be deemed Eligible Accounts if such Accounts
are otherwise Eligible Accounts);




          (q) such Accounts do not include any billing for interest, fees or late charges (but the
portion of the Accounts in excess of such amounts shall be deemed Eligible Accounts if such
Accounts are otherwise Eligible Accounts);




          (r) such Accounts are owed by account debtors deemed creditworthy at all times by the
Administrative Agent in good faith; and




          (s) no portion of any such Accounts is evidenced by a promissory note or other instrument or
by chattel paper.



The criteria for Eligible Accounts set forth above may only be changed and any new criteria for
Eligible Accounts may only be established by the Administrative Agent in good faith based on
either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an
event, condition or other circumstance existing on the Closing Date to the extent the
Administrative Agent has no written notice thereof from a Borrower prior to the Closing Date or
otherwise has no knowledge of such event, condition or other circumstance prior to the Closing
Date, in either case under clause (i) or (ii) which adversely affects or could reasonably be
expected to adversely affect the Accounts in the good faith determination of the Administrative
Agent. Any Accounts that are not Eligible Accounts shall nevertheless be part of the Collateral.
Prior to the inclusion of any Accounts acquired in connection with any Permitted Acquisition as
Eligible Accounts, the Administrative Agent or its designee shall have conducted an audit and field
examination with respect to such Accounts, the results of which audit and field examination shall
be reasonably satisfactory to the Administrative Agent.






13









 








     “Eligible Assignee” means (a) any Lender, (b) any Affiliate of a Lender, (c) an
Approved Fund or (d) any other Person (other than a natural person) that is approved by the
Administrative Agent (which approval shall not be unreasonably withheld, conditioned or delayed),
provided that neither the Company nor any Subsidiary or Affiliate thereof shall qualify as
an Eligible Assignee.



     “Eligible Inventory” means, as to each Borrower, Inventory of such Borrower consisting
of finished goods held for resale in the ordinary course of the business of such Borrower and raw
materials for such finished goods, except to the extent consisting of any of the following as
reasonably determined by the Administrative Agent:



          (t) work-in-process;




          (u) components which are not part of finished goods;




          (v) spare parts for equipment;




          (w) display items, samples, tooling and packaging and shipping materials;




          (x) supplies used or consumed in such Borrower’s business;




          (y) Inventory having a Value in excess of $200,000 located on leased premises or in the
possession of a warehouseman or processor, unless such lessor, warehouseman or processor has
delivered a Collateral Access Agreement with respect thereto or an appropriate Reserve with respect
to rent has been established with respect thereto;




          (z) Inventory located at any premises if the Value of the Inventory located at such premises
is less than $200,000 unless otherwise agreed by the Administrative Agent in its sole discretion;




          (aa) Inventory subject to a Lien of any other Person which Lien is not subordinated to the
Lien of the Administrative Agent pursuant to an intercreditor agreement in form and substance
reasonably satisfactory to the Administrative Agent;




          (bb) bill and hold goods;




          (cc) unsalable, unserviceable, obsolete or slow moving Inventory;




          (dd) Inventory that is not subject to the first priority, valid and perfected security
interest of the Administrative Agent;




          (ee) returned, damaged and/or defective Inventory;




          (ff) Inventory consisting of chemicals or dyes stored in open containers;




          (gg) Inventory that is not reflected in the details of a current perpetual inventory report
unless the Company shall have provided reporting with respect to such Inventory in form and
substance reasonably satisfactory to the Administrative Agent;




          (hh) Inventory subject to a negotiable warehouse receipt or other negotiable Document;




          (ii) Inventory purchased or sold on consignment;






14









 








          (jj) Inventory located outside the United States of America or Inventory that is in transit
(other than Inventory that is otherwise Eligible Inventory and is in transit between domestic
locations of the Borrowers); and




          (r) Inventory upon which any Material Trademark is affixed unless the Administrative Agent has
been granted a non-exclusive license with respect to such Material Trademark in accordance with
Section 11.2(g).



The criteria for Eligible Inventory set forth above may only be changed and any new criteria for
Eligible Inventory may only be established by the Administrative Agent in good faith based on
either: (i) an event, condition or other circumstance arising after the Closing Date or (ii) an
event, condition or other circumstance existing on the Closing Date to the extent the
Administrative Agent has no written notice thereof from the Administrative Borrower prior to the
Closing Date or otherwise has no knowledge of such event, condition or circumstance prior to the
Closing Date, in either case under clause (i) or (ii) which adversely affects or could reasonably
be expected to adversely affect the Inventory in the good faith determination of the Administrative
Agent. Any Inventory that is not Eligible Inventory shall nevertheless be part of the Collateral.
Prior to the inclusion of any Inventory acquired in connection with any Permitted Acquisition as
Eligible Inventory, the Administrative Agent or its designee shall have conducted an appraisal and
field examination with respect to such Inventory, the results of which appraisal and field
examination shall be reasonably satisfactory to the Administrative Agent.




     “EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European currency.



     “Environmental Laws” means all foreign, Federal, State, provincial and local laws
(including common law), legislation, rules, codes, licenses, permits (including any conditions
imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements
between any Loan Party and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water vapor, surface
water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant
and animal life or any other natural resource), or to human health or safety, (b) relating to the
exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or disposal, or threatened
release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous Materials including,
without limitation, (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of
1974, (ii) applicable state counterparts to such laws and (iii) any common law, civil law or
equitable doctrine that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous Materials.



     “ERISA” means the Employee Retirement Income Security Act of 1974, together with all
rules, regulations and interpretations thereunder or related thereto.



     “ERISA Affiliate” means any person required to be aggregated with the Company or any
of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code or Section 4001(b)
of ERISA.



15









 





     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA
or the regulations issued thereunder, with respect to a Pension Plan, other than events as to which
the requirement of notice has been waived in regulations by the Pension Benefit Guaranty
Corporation, (b) the adoption of any amendment to a Pension Plan that would require the provision
of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or a cessation
of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the Pension Benefit Guaranty Corporation to terminate a Pension Plan, (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, (f) the imposition of any
liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate in excess
of $25,000,000 and (g) any other event or condition with respect to a Plan including any Pension
Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could
reasonably be expected to result in liability of any Borrower in excess of $25,000,000.



     “Euro” means the single currency of the Participating Member States introduced in
accordance with the EMU Legislation.



     “Eurodollar Rate Loans” means any Revolving Loan made to a Borrower that bears
interest based on the Adjusted Eurodollar Rate.



     “Event of Default” has the meaning given to such term in Section 11.1.



     “Excess Availability” means the amount, as determined by the Administrative Agent,
calculated at any date, equal to (a) the lesser of (i) the Borrowing Base (as set forth in the
Borrowing Base Certificate most recently delivered by the Administrative Borrower) and (ii) the
Aggregate Commitment minus (b) the Total Outstandings as of such date.



     “Excess Special Agent Advances” has the meaning given to such term in Section
2.8(b).



     “Exchange Act” means the Securities Exchange Act of 1934, together with all rules,
regulations and interpretations thereunder or related thereto.



     “Excluded Account” has the meaning given to such term in Section 6.2.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Issuing Bank,
any Lender or any other recipient of any payment to be made by or on account of any obligation of
any Loan Party hereunder, (a) any taxes imposed on or measured by its overall net income (however
denominated) or net profits of such Person (and franchise taxes imposed in lieu thereof) by the
jurisdiction under the laws of which such recipient (i) is organized or incorporated, (ii)
maintains its principal lending office or, in the case of any Lender or any Issuing Bank, its
applicable lending office with respect to this Agreement or (iii) has a present or former
connection other than a connection resulting from entering into this Agreement, receiving any
payment or enforcing any right under this Agreement; (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in which such Lender
or such Issuing Bank is located and (c) in the case of any Foreign Lender, any withholding tax
payable with respect to payments under the Loan Documents under laws (including any statute, treaty
or regulation) in effect on the Closing Date (or, in the case of an Eligible Assignee, the date of
the Assignment and Assumption) or is attributable to such Foreign Lender’s failure or inability
(other



16









 




than as a result of a Change in Law) to comply with Section 4.5(g), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of assignment,
to receive additional amounts from the Loan Party with respect to such withholding tax pursuant to
Section 4.5(b).




     “Existing Facility” means the Five Year Credit Agreement dated as of October 28, 2005
(as amended, restated, supplemented or otherwise modified) by and among the Company, as borrower,
the financial institutions party thereto, as Lenders and Wachovia, as Administrative Agent.



     “Existing Letters of Credit” means, collectively, the letters of credit issued for the
account of a Loan Party or for which such Loan Party is otherwise liable, and listed on
Schedule 1.1(c).



     “Existing Senior Notes” means, collectively, the 2011 Notes and the 2012 Notes.



     “Facility Increase” has the meaning given to such term in Section 2.7.



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



     “Fee Letter” means the letter agreement, dated as of June 12, 2009, by and among the
Company, Wachovia, JPMorgan Chase Bank, N.A., SunTrust Bank, Bank of America, N.A. and the Joint
Lead Arrangers, setting forth certain fees payable by the Borrowers in connection with the Credit
Facilities, as the same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.



     “Financial Covenant Threshold Amount” means an amount equal to fifteen percent (15%)
of the Aggregate Commitment.



     “Financial Covenant Trigger Event” has the meaning given to such term in Section
9.11.



     “Fixed Charge Coverage Ratio” means, as of the last day of each fiscal month of the
Company, the ratio of (a) (i) Consolidated EBITDA plus (ii) cash interest income
minus (iii) Unfinanced Capital Expenditures minus (iv) Consolidated Cash Taxes
minus (v) Restricted Payments made pursuant to Section 10.6(e) to (b) Fixed
Charges, in each case, computed for the consecutive twelve-fiscal month period then ending. For
purposes of calculating the Fixed Charge Coverage Ratio for any applicable period during which any
Permitted Acquisition or any Asset Disposition is consummated, (i) income statement items and
balance sheet items (whether positive or negative) attributable to the business or Person acquired
in such Permitted Acquisition or the asset(s) subject to such Asset Disposition shall be included
or excluded, as applicable, in such calculations to the extent relating to such applicable period
and the Permitted Acquisition or Asset Disposition shall be deemed to have occurred as of the first
day of such applicable period, (ii) Consolidated EBITDA may be adjusted to include operating and
other expense reductions and other adjustments for such period resulting from such Permitted
Acquisition and (iii) Indebtedness of a business or Person that is retired in connection with such
Permitted Acquisition or Asset Disposition shall be excluded from such calculations and deemed to
have been retired as of the first day of such applicable period, in each case, to the extent that
such adjustments in clauses (i), (ii) and (iii) of this sentence (x) are of the type that would be
permitted pursuant to Article XI of Regulation S-X



17









 




under the Exchange Act or (y) are reasonably consistent with the purposes of such Regulation
S-X as determined in good faith by the Company and reasonably acceptable to the Administrative
Agent. For purposes of this definition, “Asset Disposition” means the disposition of any or all of
the assets of any Loan Party or any Subsidiary thereof whether by sale, lease, transfer or
otherwise.




     “Fixed Charges” means, for any applicable period of computation, without duplication,
the sum of (a) all Consolidated Interest Expense paid in cash for such period plus (b)
Consolidated Indebtedness Payments made during such period.



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



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



     “GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time as set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, which, in each case, are applicable to
the circumstances as of the date of determination consistently applied.



     “Governmental Authority” means any nation or government, any state, province, or other
political subdivision thereof, any central bank (or similar monetary or regulatory authority)
thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.



     “Guarantor” has the meaning given to such term in the preamble hereof and shall
include any other Person that at any time after the Closing Date becomes party to a guarantee in
favor of the Administrative Agent, for the benefit of the Secured Parties, with respect to the
Obligations or who is the owner of any property that is security for the Obligations.



     “Guaranty” means the guaranty made by the Guarantors of the Obligations under
Article 13 in favor of the Administrative Agent, for the benefit of the Secured Parties.



     “Hazardous Materials” means any hazardous, toxic or dangerous substances, materials
and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or
type of pollutants or contaminants (including materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes
and including any other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or toxic under any
Environmental Law).



     “Hedge Agreement” means any rate swap agreement, basis swap, forward rate agreement,
commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange
agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap
agreement, cross-currency rate swap agreement, currency option, any other similar agreement
(including any option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto).



18









 





     “Increase Effective Date” has the meaning given to such term in Section 2.7.



     “Indebtedness” means, with respect to any Person, any liability, whether or not
contingent, (a) in respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments, (b) representing the balance deferred and unpaid of the purchase price of any property
or services (other than an account payable to a trade creditor incurred in the ordinary course of
business of such Person and payable in accordance with customary trade practices), (c) all
obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded
as Capital Leases, (d) any contractual obligation, contingent or otherwise, of such Person to pay
or be liable for the payment of any indebtedness described in this definition of another Person,
including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness, or any security
therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition, (e) all obligations with respect to
redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity
securities issued by such Person, except to the extent such obligations can be satisfied with
Capital Stock of such Person, (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit,
bankers’ acceptances, drafts or similar documents or instruments issued for such Person’s account,
(g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money
or indebtedness of another Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of
trust, or other encumbrance on any asset of such Person, whether or not such indebtedness is
assumed by or is a personal liability of such Person, all as of such time, (h) all net obligations,
liabilities and indebtedness of such Person (marked to market) arising under Hedge Agreements, (i)
indebtedness of any partnership or joint venture in which such Person is a general partner or a
joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership
interest in such entity, except to the extent that the terms of such indebtedness expressly provide
that such Person is not liable therefor or such Person has no liability therefor as a matter of
law, (j) the principal and interest portions of all rental obligations of such Person under any
synthetic lease or similar off-balance sheet financing where such transaction is considered to be
borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP,
(k) all obligations of such Person under conditional sale or other title retention agreements
relating to property purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of business), and (l) all
obligations of such person under take or pay or similar arrangements.



     “Indemnitee” has the meaning given to such term in Section 14.4.



     “Information Certificate” means a certificate of the Loan Parties substantially in the
form of Exhibit D hereto.



     “Intellectual Property” means all of the following in any jurisdiction throughout the
world: (a) patents, patent applications and inventions, including all renewals, extensions,
combinations, divisions, or reissues thereof, (“Patents”); (b) trademarks, service marks,
trade names, trade dress, logos, Internet domain names and other business identifiers, together
with the goodwill symbolized by any of the foregoing, and all applications, registrations, renewals
and extensions thereof, (“Trademarks”); (c) copyrights and all works of authorship
including all registrations, applications, renewals, extensions and reversions thereof
(“Copyrights”); (d) all computer software, source code, executable code, data, databases
and documentation thereof; (e) all trade secret rights in information, including trade secret
rights in any formula, pattern, compilation, program, device, method, technique, or process, that
(1) derives independent economic value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can obtain economic value
from its



19









 




disclosure or use, and (2) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy; (f) all other intellectual property or proprietary rights in
any discoveries, concepts, ideas, research and development, know-how, formulae, patterns,
inventions, compilations, compositions, manufacturing and production processes and techniques,
program, device, method, technique, technical data, procedures, designs, recordings, graphs,
drawings, reports, analyses, specifications, databases, and other proprietary or confidential
information, including customer lists, supplier lists, pricing and cost information, business and
marketing plans and proposals and advertising and promotional materials; and (g) all rights to sue
at law or in equity for any infringement or other impairment or violation thereof and all products
and proceeds of the foregoing.




     “Interest Period” means for any Eurodollar Rate Loan, a period of one (1), two (2),
three (3) or six (6) months duration as the Administrative Borrower on behalf of any Borrower may
elect; provided that:



          (kk) the Administrative Borrower on behalf of such Borrower may not elect an Interest Period
that will end after the last day of then-current term of this Agreement;




          (ll) the Interest Period shall commence on the date the Revolving Loan is made or continued
as, or converted into, a Eurodollar Rate Loan, and shall expire on the numerically corresponding
day in the calendar month at its end;




          (mm) any Interest Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Business Day; and




          (nn) any Interest Period that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the end of such
Interest Period.




     “Inventory” means, as to each Loan Party, all present and future inventory, as defined
in the UCC, of such Loan Party.



     “Investment” means, with respect to a Person, any investment in any other Person,
whether by means of (a) purchase or acquisition of obligations or securities of such other Person,
(b) capital contribution to such other Person, (c) loan or advance to such other Person, (d) making
of a time deposit with such other Person, (e) guarantee or assumption of, or providing any
collateral or letter of credit for, any obligation of such other Person, (f) Acquisition or (g)
otherwise.



     “Investment Property Control Agreement” means an agreement in writing, in form and
substance reasonably satisfactory to the Administrative Agent, by and among the Administrative
Agent, any Loan Party (as the case may be) and any securities intermediary that maintains a
securities account of such Loan Party, acknowledging that such securities intermediary has custody,
control or possession of such securities account on behalf of the Administrative Agent, that it
will comply with entitlement orders originated by the Administrative Agent with respect to such
securities account, and has such other terms and conditions as the Administrative Agent may
reasonably require.



     “Issuing Bank” means (a) with respect to any Letter of Credit (other than Existing
Letters of Credit), Wachovia in its capacity as issuer of such Letters of Credit hereunder, any
Additional Issuing Bank or any successor issuer of such Letters of Credit hereunder and (b) with
respect to each Existing Letter of Credit, the Lender identified on Schedule 1.1(c) as the
issuer of such Existing Letter of Credit.



20









 





     “Joint Lead Arrangers” means, collectively, Wells Fargo Securities, LLC, J.P. Morgan
Securities Inc., SunTrust Robinson Humphrey, Inc. and Banc of America Securities LLC.



     “Lender” means each financial institution signatory hereto as a Lender and each other
Person made a party to this Agreement as a Lender in accordance with Section 14.11.



     “Lending Party” means the Administrative Agent or any Lender.



     “Letter of Credit Documents” means, with respect to any Letter of Credit, such Letter
of Credit, any amendments thereto, any documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing for (a) the rights
and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b)
any collateral security for any obligations related to such Letter of Credit.



     “Letter of Credit Limit” means $175,000,000.



     “Letter of Credit Obligations” means, at any time, the sum of (a) the aggregate
undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate
amount of all drawings under Letters of Credit for which any Issuing Bank has not at such time been
reimbursed, plus (c) without duplication, the aggregate amount of all payments made by each
Lender to each Issuing Bank with respect to such Lender’s participation in Letters of Credit as
provided in Section 2.3 for which the Borrowers have not at such time reimbursed the
Lenders, whether by way of a Loan or otherwise.



     “Letters of Credit” means all letters of credit (whether documentary or stand-by and
whether for the purchase of inventory, equipment or otherwise) issued by an Issuing Bank for the
account of any Borrower pursuant to this Agreement, and all amendments, renewals, extensions or
replacements thereof, and including, but not limited to, the Existing Letters of Credit.



     “LIBOR Market Index Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01 Page (or any successor
page) as the London interbank offered rate for one (1) month deposits in Dollars at approximately
11:00 a.m. (London time), on such day, or if such day is not a Business Day, then the immediately
preceding Business Day (or if not so reported, then as determined by the Administrative Agent from
another recognized source or interbank quotation) (provided that if such London interbank
offered rate is not available on such date, the most recently available London interbank offered
rate for one (1) month deposits in Dollars shall be used).



     “LIBOR Rate” means, for any Eurodollar Rate Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided that if more than
one rate is specified on Reuters Screen LIBOR01 Page, the applicable rate shall be the arithmetic
mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If, for any
reason, neither of such rates is available, then “LIBOR Rate” means the rate per annum at
which, as determined by the Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 a.m. (London time), two (2)
Business Days prior to the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank market for a period equal to
the Interest Period selected.



21









 





     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention agreement and any
Capital Lease having substantially the same economic effect as any of the foregoing).



     “Loan Documents” means, collectively, this Agreement, the Notes, the Letter of Credit
Documents, all Deposit Account Control Agreements, all Investment Property Control Agreements,
Credit Card Processor Agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by any Loan Party in connection with this Agreement;
provided that in no event shall the term “Loan Documents” be deemed to include any Hedge
Agreement.



     “Loan Parties” means, collectively, the Borrowers and the Guarantors.



     “Loans” means, collectively, the Revolving Loans and Swingline Loans.



     “Margin Stock” means “margin stock” as defined in Regulations T, U or X of the Board
of Governors of the Federal Reserve System, as in effect from time to time, together with all
offered ratings and interpretations issued thereunder.



     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, financial condition, liabilities (whether actual or contingent) or properties of the
Company and its Subsidiaries, taken as a whole; (b) the legality, validity or enforceability of
this Agreement or any other material Loan Document; (c) the legality, validity, enforceability,
perfection or priority of the security interests and liens of the Administrative Agent upon a
material portion of the Collateral; (d) a material portion of the Collateral or its value (to the
extent not otherwise addressed in this Agreement within the definitions of “Eligible Accounts”,
“Eligible Inventory” or “Reserves”); (e) the ability of any Loan Party to repay the Obligations or
of any Borrower to perform its material obligations under this Agreement or any other material Loan
Document as and when to be performed; or (f) the ability of the Administrative Agent or any Lender
to enforce the Obligations or realize upon the Collateral (except for an immaterial portion
thereof) or otherwise with respect to the rights and remedies of the Administrative Agent and the
Lenders under this Agreement or any other material Loan Document.



     “Material Contract” means any contract or other agreement (other than the Loan
Documents), whether written or oral, to which any Loan Party is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse
Effect.



     “Material Intellectual Property” means all Intellectual Property owned or licensed by
any Loan Party, where the failure to own or license such Intellectual Property could reasonably be
expected to have a Material Adverse Effect.



     “Material Release or Non-Compliance” means (a) the occurrence of any event involving
the release, spill or discharge of any Hazardous Material or (b) any investigation, proceeding,
complaint, order, directive, claim, citation or notice with respect to any non-compliance with or
violation of any Environmental Law by any Loan Party or the release, spill or discharge of any
Hazardous Material if, in the case of each of the foregoing clauses (a) or (b), the release, spill
or discharge, or the alleged or actual non-compliance or violation of Environmental Law by any Loan
Party could reasonably be expected to have a Material Adverse Effect.



     “Material Subsidiary” means, as of the date of any determination thereof, any Domestic
Subsidiary (other than a Domestic Subsidiary a majority of the Voting Stock of which is owned by a



22









 




Foreign Subsidiary, to the extent that such Domestic Subsidiary becoming a Guarantor would
result in material adverse tax consequences to the Company or its Subsidiaries) that either: (a)
owns assets having a book value equal to or greater than 5.0% of Consolidated Total Assets or (b)
had Consolidated EBITDA (calculated solely for such Domestic Subsidiary) for any prior period of
four consecutive fiscal quarters equal to or greater than 5.0% of Consolidated EBITDA of the
Company and its consolidated Subsidiaries for the same four fiscal quarter period.




     “Material Trademark” means any Trademark owned by a Loan Party that is affixed or
attached to, or otherwise required with respect to the sale of, Inventory of the Loan Parties
having a gross book value in excess of $25,000,000.



     “Maturity Date” means the earlier to occur of (a) September 2, 2013; provided
that such date shall be accelerated to: (i) if the 2011 Notes have not been repaid, refinanced,
defeased or, in the reasonable determination of the Administrative Agent, adequately reserved for
by the Borrowers prior to October 15, 2010, October 15, 2010 and (ii) if the Maturity Date has not
been modified pursuant to clause (i) above and the 2012 Notes have not been repaid, refinanced,
defeased or, in the reasonable determination of the Administrative Agent, adequately reserved for
by the Borrowers prior to January 15, 2012, January 15, 2012, (b) the date of termination of the
entire Aggregate Commitment by the Administrative Borrower pursuant to Section 2.6 or (c)
the date on which the Obligations have been accelerated pursuant to Section 11.2(b) and in
connection therewith, the Obligations have become immediately due and payable and the Aggregate
Commitment has been terminated. For purposes hereof, the Administrative Agent shall deem the
applicable Existing Senior Notes to be adequately reserved for if the Borrowers shall have arranged
for the following (individually or a through a combination of the following) in an amount greater
than or equal to the amount necessary to fully repay the principal and interest of the applicable
Existing Senior Notes as required pursuant to the 2011 Indenture and/or 2012 Indenture, as
applicable (such amount, the “Refinancing Amount”): (x) the Borrowers shall have deposited
cash in Dollars in a deposit account under the exclusive dominion and control of the Administrative
Agent (which the Loan Parties shall not be permitted to access) and/or (y) the Administrative Agent
shall have established Reserves (in addition to any other Reserves established pursuant to the
terms of this Agreement).



     “Maximum Interest Rate” means the maximum non-usurious rate of interest under
applicable Federal or State law as in effect from time to time that may be contracted for, taken,
reserved, charged or received in respect of the indebtedness of a Borrower to the Administrative
Agent or a Lender, or to the extent that at any time such applicable law may thereafter permit a
higher maximum non-usurious rate of interest, then such higher rate.



     “Moody’s” means Moody’s Investors Service, Inc., and its successors and assigns.



     “Multiemployer Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately preceding six (6)
years contributed to by any Loan Party or any ERISA Affiliate or with respect to which any Loan
Party or any ERISA Affiliate may incur any liability.



     “Net Cash Proceeds” means, as applicable, (a) with respect to any sales of Collateral,
the gross cash proceeds received by the Company or any of its Subsidiaries therefrom less
the sum of (i) all income taxes and other taxes assessed by a Governmental Authority (or reasonable
reserves therefor) as a result of such sale and any other fees and expenses incurred in connection
with such sale and (ii) the principal amount of, premium, if any, and interest on any Indebtedness
secured by a Lien on the asset (or portion thereof) sold, which Indebtedness is required to be
repaid in connection with such sale and (b) with respect to any proceeds received from any
insurance or condemnation award, the gross cash proceeds



23









 




received by the Company or any of its Subsidiaries therefrom less the sum of (i) all
fees and expenses in connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Indebtedness secured by a Lien on the asset (or portion thereof) subject to such
insurance or condemnation award, which Indebtedness is required to be repaid in connection
therewith.




     “Net Recovery Percentage” means the fraction, expressed as a percentage, (a) the
numerator of which is the amount equal to the amount of the recovery in respect of the Inventory at
such time on a “net orderly liquidation value” basis as set forth in the most recent acceptable
appraisal of Inventory received by the Administrative Agent in accordance with Section 7.3,
net of reasonably estimated liquidation expenses, and (b) the denominator of which is the
applicable original cost of the aggregate amount of the Inventory subject to such appraisal.



     “Non-Consenting Lender” has the meaning given to such term in Section 14.2(c).



     “Non-Loan Party” means any Subsidiary of the Company that is not a Loan Party.



     “Note” means any promissory note substantially in the form of Exhibit J hereto
made by the Borrowers in favor of a Lender evidencing such Lender’s Commitment, and any amendments,
supplements and modifications thereto and replacements or renewals thereof.



     “Notice of Account Designation” has the meaning given to such term in Section
2.4(b).



     “Notice of Borrowing” has the meaning given to such term in Section 2.4(a).



     “Notice of Conversion” has the meaning given to such term in Section
3.1(b)(ii).



     “Notice of Default or Failure of Condition” has the meaning given to such term in
Section 12.3(a).



     “Notice of Prepayment” has the meaning given to such term in Section 2.5(b).



     “Noticed Bank Product” means any Bank Product provided by the Administrative Agent or
any of its Affiliates and any other Bank Product for which the applicable Bank Product Provider (a)
has disclosed to the Administrative Agent prior to the Closing Date (which disclosure shall comply
with the information provisions set forth in the definition of “Bank Products”) or (b) shall have
complied with the notice and other information provisions set forth in the definition of “Bank
Products”.



     “Obligations” means (a) any and all Loans, Letter of Credit Obligations, Special Agent
Advances and all other obligations, liabilities and indebtedness of every kind, nature and
description owing by any or all of the Loan Parties to the Administrative Agent or any Lender
and/or any of their Affiliates or any Issuing Bank, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under this Agreement or any other Loan Document or on account of any Letter of
Credit and all other Letter of Credit Obligations, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of this Agreement or after
the commencement of any case or proceeding with respect to any such Loan Party under the United
States Bankruptcy Code or any similar statute (including, to the extent permitted under applicable
law, the payment of interest and other amounts which would accrue and become due but for the
commencement of such case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) subject to
the priority in right of payment set forth in Section 11.3, all obligations, liabilities
and indebtedness of every kind,



24









 




nature and description owing by any or all of the Loan Parties to any Bank Product Provider
arising under or pursuant to any Bank Products, whether now existing or hereafter arising.




     “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.



     “Other Taxes” has the meaning given to such term in Section 4.5(c).



     “Overadvance” has the meaning given to such term in Section 2.8(a).



     “Participant” has the meaning given to such term in Section 14.11(e).



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



     “Patriot Act” has the meaning given to such term in Section 14.14.



     “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which any Loan Party sponsors, maintains, or to which any Loan Party or ERISA
Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.



     “Permits” has the meaning given to such term in Section 8.7(b).



     “Permitted Acquisition” means any Acquisition by any Loan Party or any Subsidiary
thereof where:



          (oo) the business, assets or division acquired are for use, or the Person acquired is engaged,
in a Permitted Line of Business;




          (pp) if the Acquisition involves a merger or other combination involving (i) any Borrower,
such Borrower is the surviving entity and (ii) any Guarantor, either such Guarantor is the
surviving entity or the continuing or surviving entity shall become a Loan Party if and when
required to do so under Section 9.9;




          (qq) immediately before and after giving effect to such Acquisition, no Default or Event of
Default shall exist;





(rr) (i) if the Permitted Acquisition Consideration includes the incurrence or
assumption of Indebtedness permitted pursuant to Section 10.1, consists of
Capital Stock of the Company or is funded from the proceeds of any issuance of
Capital Stock of the Company (or a combination thereof), then (A) both 30-Day Pro
Forma Excess Availability and Pro Forma Excess Availability on the date of such
Acquisition shall not be less than $150,000,000 and (B) such Permitted Acquisition
Consideration shall not be funded, in whole or in part, from the proceeds of any
Loan hereunder; or




     (ii) if the Permitted Acquisition Consideration is provided from any source not
described in the preceding clause (d)(i), then immediately before and after giving
effect to such Acquisition, either:




     (A) both 30-Day Pro Forma Excess Availability and Pro
Forma Excess Availability on the date of such Acquisition shall
not be less than $300,000,000; or



25









 






     (B) (1) both 30-Day Pro Forma Excess Availability and Pro
Forma Excess Availability on the date of such Acquisition shall
not be less than twenty-five percent (25%) of the Aggregate Commitment and
(2) the Company shall have a Fixed Charge Coverage Ratio equal to or greater
than 1.10 to 1.00 (calculated for the fiscal month most recently ended prior
to the consummation of such Acquisition for which financial statements have
been delivered pursuant to Section 9.5, on a pro forma basis after
giving effect to such Acquisition);



          (ss) such Acquisition shall be non-hostile and shall have been approved, as necessary, by the
target’s board of directors, shareholders or other requisite Persons;




          (tt) for any Acquisition (or series of related Acquisitions) with Permitted Acquisition
Consideration greater than $50,000,000, the Administrative Agent shall have received complete
executed or conformed copies of each material document, instrument and agreement executed by a Loan
Party in connection with such Acquisition not more than twenty (20) Business Days after such
Acquisition (or such longer period as may be agreed to by the Administrative Agent in its sole
discretion); provided that if Pro Forma Excess Availability at the time of such Acquisition
would be less than $300,000,000, promptly upon the request of the Administrative Agent at any time
prior to the consummation of such Acquisition, the Administrative Borrower shall provide draft
copies of each material document, instrument and agreement to be executed by a Loan Party in
connection with such Acquisition;




          (uu) for any Acquisition (or series of related Acquisitions) with Permitted Acquisition
Consideration greater than $50,000,000, the Administrative Agent shall have received an acquisition
summary with respect to the Person, assets and/or business or division to be acquired (including
financial statements for the most recent twelve month period for which they are available and as
otherwise available, or such other form of financial statements reasonably acceptable to the
Administrative Agent) and the Company’s calculation of
pro forma Consolidated EBITDA relating
thereto calculated in a manner reasonably satisfactory to the Administrative Agent (i) not less
than ten (10) Business Days prior to such Acquisition (or such shorter period as may be agreed to
by the Administrative Agent in its sole discretion) if, immediately before and after giving effect
to such Acquisition, Pro Forma Excess Availability would be less than $300,000,000 or (ii) not more
than twenty (20) Business Days after such Acquisition (or such longer period as may be agreed to by
the Administrative Agent in its sole discretion) if, immediately before and after giving effect to
such Acquisition, Pro Forma Excess Availability would be equal to or greater than $300,000,000; and




          (vv) for any Acquisition (or series of related Acquisitions) with Permitted Acquisition
Consideration greater than $50,000,000, not less than five (5) Business Days prior to the
consummation of such Acquisition (or such shorter period as may be agreed to by the Administrative
Agent in its sole discretion), the Administrative Agent shall have received an executed Acquisition
Compliance Certificate.



For purposes of this definition and notwithstanding anything contained in this Agreement to the
contrary, (x) “Pro Forma Excess Availability” means Excess Availability calculated on a
pro forma basis to include (i) any Eligible Accounts and Eligible Inventory to be
acquired in connection with such Acquisition (determined pursuant to field exams, appraisals or
other methodologies reasonably acceptable to the Administrative Agent), (ii) the borrowing of any
Loans used to finance such Acquisition, as applicable, and (iii) prepayments of the Loans occurring
on the date of such Acquisition made from the proceeds from the incurrence of Indebtedness or the
issuance of Capital Stock of the Company (or a combination thereof) in excess of the Permitted
Acquisition Consideration for such Acquisition and (y) “30-Day Pro Forma Excess
Availability” means the average daily Pro Forma Excess Availability for the thirty (30)
consecutive day period immediately preceding such Acquisition.






26









 








     “Permitted Acquisition Consideration” means the aggregate amount of the purchase
price, including, but not limited to, any Indebtedness incurred or assumed in connection therewith,
earnouts (valued at the maximum amounts reasonably expected to be payable thereunder as determined
in good faith by the Company’s board of directors), deferred payments, or Capital Stock of the
Company, net of the applicable acquired company’s cash and Cash Equivalents (as shown on its most
recent financial statements delivered in connection with the applicable Permitted Acquisition) to
be paid in connection with any applicable Permitted Acquisition as set forth in the applicable
documentation for such Permitted Acquisition.



     “Permitted Currency” means Dollars or any Alternative Currency, or each such currency,
as the context requires.



     “Permitted Holder” shall mean (a) Jeffrey S. Lorberbaum, his spouse and any of his
children (whether natural or adopted); (b) all lineal descendants of any person described in clause
(a); (c) all trusts for the benefit of any person described in clause (a) or (b) and trustees of
such trusts acting in such capacity; (d) all legal representatives of any person or trust described
in clauses (a), (b) or (c) acting in such capacity; and (e) all partnerships, corporations, limited
liability companies or other entities controlling, controlled by or under common control with any
Person, trust or other entity described in clauses (a), (b), (c) or (d). The term “control” for
purposes of this definition shall have the meaning set forth in the definition of “Affiliate”.



     “Permitted Line of Business” shall mean businesses in substantially the same fields as
the businesses conducted by the Loan Parties and their Subsidiaries on the Closing Date (including,
without limitation, the manufacturing, marketing and/or distribution of commercial or home
furnishings and floor coverings and other reasonably related products and any “vertical
integration” with respect thereto), and business activities reasonably related, ancillary or
complementary thereto.



     “Permitted Refinancing Indebtedness” means, in respect of any Indebtedness (the
“Original Indebtedness”), any Indebtedness that refinances, refunds, renews, replaces,
defeases or extends such Original Indebtedness (or any Permitted Refinancing Indebtedness in
respect thereof); provided that (a) the principal amount of the Permitted Refinancing
Indebtedness shall not exceed the principal amount of the Original Indebtedness except by an amount
equal to any premium or other similar amount reasonably determined by the Company to be required to
be paid in connection therewith, accrued and unpaid interest thereon, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder, (b) the final maturity date and weighted average life of such
Permitted Refinancing Indebtedness shall not be prior to or shorter than that applicable to the
Original Indebtedness, (c) such Permitted Refinancing Indebtedness shall not be required to be
repaid, prepaid, redeemed, repurchased or defeased, whether on one or more fixed dates, upon the
occurrence of one or more events or at the option of any holder thereof (except, in each case, (i)
upon the occurrence of an event of default or a change in control, (ii) upon the sale or other
disposition of any assets securing such Permitted Refinancing Indebtedness, (iii) as and to the
extent such repayment, prepayment, redemption, repurchase or defeasance would have been required
pursuant to the terms of such Original Indebtedness or (iv) with respect to any Permitted
Refinancing Indebtedness for the Existing Senior Notes, upon the sale or other disposition of any
assets of the Company and its Subsidiaries the proceeds of which are not required to be applied to
prepay Loans pursuant to this Agreement) prior to the earlier of (A) the maturity date of such
Original Indebtedness and (B) the date that is three months after the Maturity Date; (d) except in
connection with any Permitted Refinancing Indebtedness for the Existing Senior Notes, such
Permitted Refinancing Indebtedness shall not constitute an obligation of any Subsidiary that shall
not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to
become) an obligor in respect of such Original Indebtedness, and shall not constitute an obligation
of the Company if the Company shall not have been an obligor in respect of such Original
Indebtedness and, in each case, shall constitute an obligation of such Subsidiary or of the



27









 




Company only to the extent of their obligations in respect of such Original Indebtedness; (e)
any Permitted Refinancing Indebtedness of any Subordinated Indebtedness shall be on subordination
terms substantially the same as those applicable to the Original Indebtedness or more favorable to
the Lenders and (f) except as permitted pursuant to Section 10.2(p), such Permitted
Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that
secured such Original Indebtedness (or would have been required to secure such Original
Indebtedness pursuant to the terms thereof) or by any Lien having a higher priority in respect of
the Obligations than the Lien that secured such Original Indebtedness.




     “Person” or “person” means any individual, sole proprietorship, partnership,
corporation (including any corporation which elects subchapter S status under the Code), limited
liability company, limited liability partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.



     “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any
Loan Party sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiemployer Plan has made contributions at any time during the
immediately preceding six (6) plan years or with respect to which any Loan Party may incur
liability.



     “Pro Forma Excess Availability” has the meaning given to such term in the definition
of “Permitted Acquisition”.



     “Pro Rata Share” means as to any Lender, the fraction (expressed as a percentage) the
numerator of which is such Lender’s Commitment and the denominator of which is the Aggregate
Commitment, as adjusted from time to time in accordance with the provisions of Section
14.11; provided that if the Aggregate Commitment shall have been terminated, the numerator
shall be the unpaid amount of such Lender’s Loans and its interests in the Letters of Credit and
Swingline Loans and the denominator shall be the aggregate amount of all unpaid Loans and Letters
of Credit.



     “Records” means, as to each Loan Party, all of such Loan Party’s present and future
books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with the tapes, disks,
diskettes and other data and software storage media and devices, file cabinets or containers in or
on which the foregoing are stored (including any rights of any Loan Party with respect to the
foregoing maintained with or by any other person).



     “Register” has the meaning given to such term in Section 14.11(b).



     “Report” has the meaning given to such term in Section 12.9(a).



     “Required Lenders” means, at any time, those Lenders whose Pro Rata Shares aggregate
in excess of fifty percent (50%) of the Aggregate Commitment, or if the Aggregate Commitment shall
have been terminated, the Lenders to whom in excess of fifty percent (50%) of the Total
Outstandings are owing; provided that the Pro Rata Share of, and the portion of the Total
Outstandings, as applicable, owing or deemed owing to, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.



     “Reserves” means as of any date of determination, such amounts as the Administrative
Agent may from time to time establish and revise in good faith reducing the amount of Loans and
Letters of Credit that would otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by the



28









 




Administrative Agent in good faith, adversely affect, or would have a reasonable likelihood of
adversely affecting, either (i) the Collateral, its value or the amount that might be received by
the Administrative Agent from the sale or other disposition or realization upon such Collateral,
(ii) the obligations or liabilities of any Loan Party or (iii) the security interests and other
rights of the Administrative Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect the Administrative Agent’s good faith belief
that any collateral report or financial information furnished by or on behalf of any Loan Party to
the Administrative Agent is or may have been incomplete, inaccurate or misleading in any material
respect; or (c) in respect of any state of facts which the Administrative Agent determines in good
faith constitutes a Default or an Event of Default. Without limiting the generality of the
foregoing, Reserves may, at the Administrative Agent’s option, be established to reflect: (A)
dilution with respect to the Accounts (based on the ratio of the aggregate amount of non-cash
reductions in such Accounts for any period to the aggregate dollar amount of the sales for such
period) as calculated by the Administrative Agent for any period is or is reasonably anticipated to
be greater than five percent (5%); (B) returns, discounts, claims (including, without limitation,
warranty claims), credits and allowances of any nature that are not paid pursuant to the reduction
of Accounts; (C) sales, excise or similar taxes included in the amount of any such Accounts
reported to the Administrative Agent; (D) factors that may negatively impact the Value of
Inventory, including, without limitation, change in salability, obsolescence, seasonality, theft,
shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks; (E) testing
variances identified as part of the Administrative Agent’s periodic field examinations; (F) a
reserve of up to three months’ rent and other charges that could be payable to any owner or lessor
of premises where any Collateral is located, other than for those locations where the
Administrative Agent has received a Collateral Access Agreement that the Administrative Agent has
accepted in writing; (G) amounts due or to become due to owners and licensors of Material
Intellectual Property used by any Borrower, and (H) obligations, liabilities or indebtedness
(contingent or otherwise) of Loan Parties to the Administrative Agent or any Bank Product Provider
arising under or in connection with any Bank Products or as such Affiliate or Person may otherwise
require in connection therewith to the extent that such obligations, liabilities or indebtedness
constitute Obligations as such term is defined herein or otherwise receive the benefit of the
security interest of the Administrative Agent in any Collateral. The amount of any Reserve
established by the Administrative Agent shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve and shall be established by the
Administrative Agent in good faith without duplication for items already excluded from Eligible
Accounts or Eligible Inventory, as the case may be.




     “Responsible Officer” means, for any Loan Party, any of the chief executive officer,
chief financial officer, treasurer or controller of such Loan Party.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Capital Stock of the Company or any of its
Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Capital Stock or on account of any return of capital to the
Company or such Subsidiary’s stockholders, partners or members (or the equivalent Person thereof),
or payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any Capital Stock of the Company or any of
its Subsidiaries, or any setting apart of funds or property for any of the foregoing.



     “Revaluation Date” means, with respect to any Alternative Currency Letter of Credit,
(a) the date of issuance of such Alternative Currency Letter of Credit, (b) the date of making any
Loan or issuance of any other Letter of Credit, (c) each date of an amendment of such Alternative
Currency Letter of Credit having the effect of increasing the amount thereof (solely with respect
to the increased amount), (d) each date of any payment by the applicable Issuing Bank of any
drawing under such Alternative Currency



29









 




Letter of Credit and (e) such additional dates as the Administrative Agent or the applicable
Issuing Bank shall reasonably determine or the Required Lenders shall reasonably require.




     “Revolving Loans” means the loans now or hereafter made by or on behalf of any Lender
or by the Administrative Agent for the account of any Lender on a revolving basis pursuant to the
Credit Facility (involving advances, repayments and readvances) as set forth in Section
2.1.



     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and its successors and assigns.



     “Sale and Lease-Back Transaction” means any arrangement whereby the Company or any of
its Subsidiaries has sold or transferred, or will sell or transfer, property (other than the
Collateral) to any Person and has or will take back a lease of such property from such Person or
its Affiliates pursuant to which the rental payments are calculated to amortize the purchase price
of such property substantially over the useful life of such property, in all cases, so long as such
lease is characterized as an operating lease.



     “Sanctioned Entity” means (a) an agency of the government of, (b) an organization
directly or indirectly controlled by, or (c) a person resident in, a country that is subject to a
sanctions program identified on the list maintained and published by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise published from time to time
as such program may be applicable to such agency, organization or person.



     “Sanctioned Person” means a person named on the list of Specially Designated Nationals
or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.



     “Secured Parties” means, collectively, (a) the Administrative Agent, (b) the Issuing
Banks, (c) the Lenders, and (d) the Bank Product Providers.



     “Solvent” means, at any time with respect to any Person, that at such time such Person
(a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will
continue to have) sufficient capital (and not unreasonably small capital) to carry on its business
consistent with its practices as of the Closing Date, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights
of subrogation, contribution or indemnification arising pursuant to any guarantees given by such
Person) are greater than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to believe, represents
an amount which can reasonably be expected to become an actual or matured liability (and including
as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as
reduced to reflect the probability of it becoming a matured liability).



     “Special Agent Advances” has the meaning given to such term in Section 2.8(b).



     “Sterling” means the lawful currency of the United Kingdom of Great Britain and
Northern Ireland.



     “Store Bank Accounts” means, collectively, those certain deposit accounts of the Loan
Parties maintained at local or regional banks, for use by certain sales service centers and other
similar stores, into which proceeds of Inventory sales and in-store payments on Accounts are
deposited, which amounts shall be thereafter swept into the Blocked Accounts of the Loan Parties
within two (2) Business Days after deposit therein.



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     “Subordinated Indebtedness” means Indebtedness of the Company and its Subsidiaries
that is subordinate in right of payment to the right of the Administrative Agent and the Lenders to
receive the prior payment in full of all of the Obligations on terms and conditions reasonably
acceptable to the Administrative Agent.



     “Subsidiary” or “subsidiary” means, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other limited or general
partnership, trust, association or other business entity of which an aggregate of at least a
majority of the outstanding Voting Stock of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more Subsidiaries of such Person.



     “Supermajority Lenders” means, at any time, those Lenders whose Pro Rata Shares
aggregate in excess of 66 2/3% of the Aggregate Commitment, or if the Aggregate Commitment shall
have been terminated, the Lenders to whom in excess of 66 2/3% of the Total Outstandings are owing;
provided that the Pro Rata Share of, and the portion of the Total Outstandings, as
applicable, owing or deemed owing to, any Defaulting Lender shall be excluded for purposes of
making a determination of Supermajority Lenders.



     “Swingline Lender” means Wachovia, in its capacity as swingline lender hereunder, and
its successors and assigns.



     “Swingline Limit” means $60,000,000.



     “Swingline Loans” has the meaning given to such term in Section 2.2(a).



     “Taxes” has the meaning given to such term in Section 4.5(a).



     “30-Day Excess Availability” means, in connection with an Investment pursuant to
Section 10.3(p) or 10.3(q), a Restricted Payment pursuant to Section
10.6(e), or a prepayment, repurchase or repayment pursuant to Section 10.9(b)(iii), the
average daily Excess Availability for the thirty (30) consecutive day period immediately preceding
such Investment or prepayment, repurchase or repayment, as applicable.



     “Threshold Amount” means an amount equal to twenty percent (20%) of the Aggregate
Commitment.



     “Total Outstandings” means, as of any date of calculation, the aggregate principal
Dollar Amount of all Loans and Letter of Credit Obligations outstanding as of such date.



     “Trademark” has the meaning given to such term in the definition of “Intellectual
Property”.



     “UCC” means the Uniform Commercial Code as in effect in the State of New York, and any
successor statute, as in effect from time to time.



     “Unfinanced Capital Expenditures” means, for any applicable period of computation,
Capital Expenditures made by the Company and its Subsidiaries during such period, which Capital
Expenditures are not financed from the proceeds of any Indebtedness (other than the Loans) or any
issuance of Capital Stock by the Company to fund such Capital Expenditure.



     “Value” means, as determined by the Administrative Agent in good faith, with respect
to Inventory, the lower of (a) cost computed on a first-in first-out basis in accordance with GAAP
(or such



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inventory accounting methods (subject to customary reserves) proposed by the Administrative
Borrower as are acceptable to the Administrative Agent in its reasonable discretion and, with
respect to any change in inventory accounting methods, a notice setting forth a description and the
impact of such change shall have been furnished to the Administrative Agent and the Lenders in
writing prior to the implementation of such change) or (b) market value (in each case, taking into
account each Borrower’s favorable purchase price variances); provided that for purposes of
the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include the portion
of the value of Inventory equal to the profit earned by any Affiliate on the sale thereof to any
Borrower and (ii) notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the most recent appraisal of the
Inventory received and accepted by the Administrative Agent, if any.




     “Voting Stock” means with respect to any Person, (a) one (1) or more classes of
Capital Stock of such Person having general voting powers to elect at least a majority of the board
of directors, managers or trustees of such Person, irrespective of whether at the time Capital
Stock of any other class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such Person described in
clause (a) of this definition.



     “Wachovia” means Wachovia Bank, National Association, in its individual capacity, and
its successors and assigns.



     Section 1.2 Interpretative Provisions.



          (a) All terms used herein that are defined in Article 1, Article 8 or Article 9 of the UCC
shall have the meanings given therein unless otherwise defined in this Agreement.




          (b) All references to the plural herein shall also mean the singular and to the singular shall
also mean the plural unless the context otherwise requires.




          (c) All references to any Loan Party, the Administrative Agent and the Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein, shall include their
respective successors and assigns.




          (d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.




          (e) The word “including” when used in this Agreement shall mean “including, without
limitation” and the word “will” when used in this Agreement shall be construed to have the same
meaning and effect as the word “shall”.




          (f) All references to the term “good faith” used herein when applicable to the Administrative
Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the
UCC, honesty in fact in the conduct or transaction concerned.




          (g) Any accounting term used in this Agreement shall have, unless otherwise specifically
provided herein, the meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of the Company most recently received by the
Administrative





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Agent prior to the Closing Date. Notwithstanding anything to the contrary contained in GAAP
or any interpretations or other pronouncements by the Financial Accounting Standards Board or
otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided
by accountants shall mean an opinion or report that is unqualified and also does not include any
explanation, supplemental comment or other comment concerning the ability of the applicable person
to continue as a going concern or the scope of the audit, except as otherwise specifically
prescribed herein. If at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in any Loan Document, and either Administrative Borrower or the
Required Lenders shall so request, the Administrative Agent, the Lenders, the Issuing Banks and
Administrative Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to the approval of
the Required Lenders); provided that until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and (ii)
Administrative Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement (at the same time as the delivery of
any annual, quarterly or monthly financial statements given in accordance with the provisions of
Section 9.5) or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to such change in
GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or
financial nature used herein shall be construed, and all computations of amounts and ratios
referred to herein shall be made, without giving effect to any election under Statement of
Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar
result or effect) to value any Indebtedness or other liabilities of any Borrower or any Subsidiary
thereof at “fair value”, as defined therein.




          (h) All time references in this Agreement and the other Loan Documents shall be to Eastern
Daylight or Eastern Standard Time, as then in effect, from time to time unless otherwise indicated.
In the computation of periods of time from a specified date to a later specified date, the word
“from” means “from and including”, the words “to” and “until” each mean “to but excluding” and the
word “through” means “to and including”.




          (i) Unless otherwise expressly provided herein, (i) references herein to any agreement,
document or instrument shall be deemed to include all subsequent amendments, modifications,
supplements, extensions, renewals, restatements or replacements with respect thereto, but only to
the extent the same are not prohibited by the terms hereof or of any other Loan Document, and (ii)
references to any statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, recodifying, supplementing or
interpreting the statute or regulation.




          (j) The captions and headings of this Agreement are for convenience of reference only and
shall not affect the interpretation of this Agreement.




          (k) This Agreement and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.




          (l) This Agreement and the other Loan Documents are the result of negotiations among and have
been reviewed by counsel to the Administrative Agent and the other parties, and are the products of
all parties. Accordingly, this Agreement and the other Loan Documents shall not be construed
against the Administrative Agent or the Lenders merely because of the Administrative Agent’s or any
Lender’s involvement in their preparation.






33









 








          (m) An Event of Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 14.2; provided that any Event of Default
resulting solely from the failure of the Loan Parties to give notice of a Default pursuant to
Section 9.5(b)(vii) shall be deemed to be waived upon the cure or waiver of such Default
without any further action hereunder.




          (n) For purposes of this Agreement, (i) references to the applicable outstanding amount of
Letters of Credit or Letter of Credit Obligations (including, without limitation, all Alternative
Currency Letters of Credit and Alternative Currency Letter of Credit Obligations) shall be deemed
to refer to the Dollar Amount thereof, (ii) any cash collateral that is required to be provided
with respect to Letters of Credit or Letter of Credit Obligations (including, without limitation,
all Alternative Currency Letters of Credit and Alternative Currency Letter of Credit Obligations)
shall be provided in the Permitted Currency in which such Letters of Credit are issued and (iii)
all Loans made under this Agreement, including, without limitation, Loans made to refund drawings
made under Alternative Currency Letters of Credit, shall be made only in Dollars.




          (o) For purposes of this Agreement, the Dollar Amount of any Alternative Currency Letter of
Credit shall be determined in accordance with the terms of this Agreement in respect of the most
recent Revaluation Date. Such Dollar Amount shall become effective as of such Revaluation Date for
such Alternative Currency Letter of Credit and shall be the Dollar Amount employed in converting
any amounts between the applicable currencies until the next Revaluation Date to occur for such
Alternative Currency Letter of Credit.




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




ARTICLE 2

CREDIT FACILITIES




     Section 2.1 Revolving Loans. Subject to and upon the terms and conditions contained
herein, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Revolving
Loans in Dollars to the Borrowers from time to time from the Closing Date to the Maturity Date in
amounts requested by the Administrative Borrower on behalf of the Borrowers; provided that,
subject to the terms of Section 2.8, after giving effect to any Revolving Loan (a) the
Total Outstandings shall not at any time exceed the lesser of (i) the Borrowing Base and (ii) the
Aggregate Commitment and (b) the aggregate outstanding principal amount of all Revolving Loans of
each Lender, together with such Lender’s Pro Rata Share of the aggregate outstanding principal
amount of all Swingline Loans and Letter of Credit Obligations, shall not exceed such Lender’s
Commitment. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and
reborrow Revolving Loans until the Maturity Date; provided that the Borrowers may not
borrow during any Cash Dominion Grace Period unless the Company has waived application of such Cash
Dominion Grace Period.



     Section 2.2 Swingline Loans.



          (a) Availability. Subject to and upon the terms and conditions of this Agreement
(including, without limitation, the terms and conditions set forth in Section 2.2(d)), the
Swingline Lender





34









 







shall make loans to each Borrower in Dollars (each such loan, a “Swingline Loan”) from
time to time from the Closing Date to the Maturity Date in amounts requested by the Administrative
Borrower on behalf of such Borrower up to the aggregate principal amount not to exceed at any time
outstanding the amount of the Swingline Limit; provided that, subject to the terms of
Section 2.8, after giving effect to any Swingline Loan, such Swingline Loan shall not
cause the Total Outstandings to exceed the lesser of (i) the Borrowing Base and (ii) the Aggregate
Commitment. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and
reborrow the applicable Swingline Loans hereunder. Each such Swingline Loan shall be requested by
the Administrative Borrower pursuant to Section 2.4(a) and shall be made available by the
Swingline Lender to the relevant Borrower in accordance with Section 2.4(b).




          (b) Refunding. The Swingline Lender may by written notice given to the Administrative
Agent not later than 11:00 a.m. on any Business Day require the Lenders to acquire participations
on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which the Lenders will participate. Promptly
upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender,
specifying in such notice such Lender’s Pro Rata Share of such Swingline Loan or Swingline Loans.
Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Pro Rata
Share of such Swingline Loan or Swingline Loans. Amounts funded by the Lenders pursuant to this
Section 2.2(b) shall bear interest payable by the Borrowers at the rate then applicable to
Base Rate Loans. Each Lender acknowledges and agrees that its obligation to acquire participations
in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and continuance of a Default or
Event of Default or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall
comply with its obligation under this paragraph by wire transfer of immediately available funds, in
the same manner as provided in Section 2.4(b) and Section 3.4 with respect to
Revolving Loans made by such Lender (and Section 2.4(b) and Section 3.4 shall
apply, mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from
the Lenders. The Administrative Agent shall notify the Administrative Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments
in respect of such Swingline Loan shall be made to the Administrative Agent and not to the
Swingline Lender. Any amounts received by the Swingline Lender from the relevant Borrower (or
other party on behalf of the relevant Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to
the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to
this paragraph and to the Swingline Lender, as their interests may appear; provided that
any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative
Agent, as the case may be, if and to the extent such payment is required to be refunded to any
Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrowers of any default in the payment thereof.




          (c) Settlement. The Administrative Agent, on behalf of the Swingline Lender, shall
request settlement (a “Settlement”) with the Lenders on at least a weekly basis or on any
earlier date that the Administrative Agent elects, by notifying the Lenders of such requested
Settlement by facsimile, telephone, or e-mail no later than 12:00 noon on the date of such
requested Settlement (the “Settlement Date”). Each Lender (other than the Swingline
Lender, in the case of the Swingline Loans) shall transfer the amount of such Lender’s Pro Rata
Share of the outstanding principal amount of the applicable Swingline Loan with respect to which
Settlement is requested to the Administrative Agent, to such account of the Administrative Agent as
the Administrative Agent may designate, not later than 3:00 p.m. on such Settlement Date.
Settlements may occur during the existence of a Default or Event of Default





35









 







and whether or not the applicable conditions precedent set forth in Section 5.2 have
then been satisfied. Such amounts transferred to the Administrative Agent shall be applied against
the amounts of the Swingline Lender’s Swingline Loans and, together with the Swingline Lender’s Pro
Rata Share of such Swingline Loan, shall constitute Revolving Loans (which shall be Base Rate
Loans) of such Lenders, respectively. If any such amount is not transferred to the Administrative
Agent by any Lender on such Settlement Date, the Swingline Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon as specified in Section
3.4(f).




          (d) Defaulting Lender. Notwithstanding anything to the contrary contained in this
Section 2.2, the Swingline Lender shall not be obligated to make any Swingline Loans at a
time when any other Lender is a Defaulting Lender, unless the Swingline Lender has entered into
arrangements satisfactory to it to eliminate the Swingline Lender’s risk with respect to any such
Defaulting Lender’s funding obligations hereunder, including by cash collateralizing such
Defaulting Lender’s Pro Rata Share of the applicable outstanding Swingline Loans. On demand by the
Swingline Lender or the Administrative Agent from time to time, the Borrowers shall cash
collateralize each Defaulting Lender’s Pro Rata Share of the outstanding Swingline Loans on terms
reasonably satisfactory to the Administrative Agent and the Swingline Lender. Any such cash
collateral shall be deposited in a separate account with the Administrative Agent as collateral for
the payment and performance of each Defaulting Lender’s Pro Rata Share of outstanding Swingline
Loans. The Administrative Agent shall have exclusive dominion and control, including the exclusive
right of withdrawal, over such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Swingline Lender immediately for each Defaulting Lender’s Pro
Rata Share of any Swingline Loans which have not otherwise been refunded by the Borrowers or such
Defaulting Lender pursuant to the terms of this Section 2.2.




     Section 2.3 Letters of Credit.



          (a) Letters of Credit. Subject to and upon the terms and conditions contained herein
and in the Letter of Credit Documents, at the request of the Administrative Borrower on behalf of a
Loan Party or any Subsidiary thereof, the Administrative Agent agrees to cause the applicable
Issuing Bank to issue, and such Issuing Bank agrees to issue, one or more Letters of Credit in
Permitted Currencies, for the ratable risk of each Lender according to its Pro Rata Share,
containing terms and conditions acceptable to the Administrative Agent and such Issuing Bank;
provided that an Additional Issuing Bank may only issue Letters of Credit under this
Section 2.3(a) following compliance with Section 2.3(j) with respect to such
Additional Issuing Bank. As of the Closing Date, each of the Existing Letters of Credit shall
constitute, for all purposes of this Agreement and the other Loan Documents, Letters of Credit
issued and outstanding hereunder.




          (b) Requests for Letters of Credit. The Administrative Borrower requesting a Letter
of Credit on behalf of a Borrower shall give the Administrative Agent and the applicable Issuing
Bank at least two (2) Business Days’ (or four (4) Business Days’ with respect to each Alternative
Currency Letter of Credit) prior written notice of the Administrative Borrower’s request for the
issuance of a Letter of Credit on such Borrower’s behalf together with an application, in form and
substance reasonably satisfactory to such Issuing Bank and the Administrative Agent, for the
issuance of the Letter of Credit and such other Letter of Credit Documents as may be reasonably
required by the Administrative Agent or the applicable Issuing Bank. Such notice shall be
irrevocable and shall (i) specify the original face amount of the Letter of Credit requested (or
identify the Letter of Credit to be amended, renewed or extended), (ii) the Permitted Currency in
which such Letter of Credit shall be denominated (which shall be Dollars if such notice does not
specify a Permitted Currency), (iii) the effective date (which date shall be a Business Day and in
no event shall be a date less than ten (10) days prior to the Maturity Date) of issuance of such
requested Letter of Credit (or such amendment, renewal or extension), (iv) whether such Letter of
Credit may be drawn in a single or in partial draws, (v) the date on which such requested Letter





36









 







of Credit is to expire (which date shall be a Business Day and shall not be more than one year
from the date of issuance or occur after the Maturity Date; provided that (A) a Letter of
Credit may be subject to automatic extension for additional one-year periods pursuant to the terms
of the Letter of Documents acceptable to the applicable Issuing Bank and (B) such Letter of Credit
may have an expiration date after the Maturity Date if (x) each of the Administrative Agent and the
applicable Issuing Bank consent in writing prior to the issuance thereof, (y) all Letter of Credit
Obligations associated with any such Letter of Credit are cash collateralized or otherwise
supported in a manner satisfactory to the Administrative Agent and the applicable Issuing Bank on
or prior to the Maturity Date and (z) except with respect to drawings made under such Letter of
Credit on or prior to the Maturity Date, each Lender, other than the applicable Issuing Bank, shall
be released from its obligation to participate in such Letter of Credit on the Maturity Date), (vi)
the purpose for which such Letter of Credit is to be issued, (vii) the name and address of the
beneficiary of the requested Letter of Credit, (viii) such other information as shall be necessary
to enable the applicable Issuing Bank to prepare, amend, renew or extend such Letter of Credit and
(ix) the proposed terms of the Letter of Credit. In no event shall a Letter of Credit be issued,
amended, renewed or extended unless the forms and terms of the proposed Letter of Credit (as
amended, renewed or extended, as the case may be) are reasonably satisfactory to the Administrative
Agent and the applicable Issuing Bank. The renewal or extension of, or increase in the amount of,
any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.




          (c) Conditions Precedent. In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Article 5 and the other terms and conditions
contained herein, no Letter of Credit shall be available unless each of the following conditions
precedent have been satisfied in a manner satisfactory to the Administrative Agent: (i) the form
and terms of the proposed Letter of Credit shall be satisfactory to the Administrative Agent and
the applicable Issuing Bank, (ii) as of the date of issuance, no order of any court, arbitrator or
other Governmental Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the proposed Letter of
Credit, and no law, rule or regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that the applicable
Issuing Bank refrain from, the issuance of letters of credit generally or the issuance of such
Letter of Credit, (iii) after giving effect to the issuance of such Letter of Credit, the Letter of
Credit Obligations shall not exceed the Letter of Credit Limit, (iv) after giving effect to the
issuance of such Letter of Credit, the Alternative Currency Letter of Credit Obligations shall not
exceed the Alternative Currency Letter of Credit Sublimit and (v) subject to the terms of
Section 2.8, after giving effect to the issuance of such Letter of Credit, the Total
Outstandings at such time shall not exceed the lesser of (A) the Borrowing Base at such time and
(B) the Aggregate Commitment at such time.




          (d) Reimbursement. Each Borrower shall reimburse immediately the applicable Issuing
Bank in the applicable Permitted Currency for any draw under any Letter of Credit issued for the
account of such Borrower and pay such Issuing Bank the amount of all other charges and fees payable
to such Issuing Bank in connection with any Letter of Credit issued for the account of such
Borrower immediately when due, irrespective of any claim, setoff, defense or other right which such
Borrower may have at any time against such Issuing Bank or any other Person. Each drawing under
any Letter of Credit or other amount payable in connection therewith when due, if such drawing is
not reimbursed by the Borrowers as provided in the immediately preceding sentence, shall
constitute a request by the Borrower for whose account such Letter of Credit was issued to the
Administrative Agent for a Base Rate Loan in the Dollar Amount of such drawing or other amount then
due, and shall be made by the Administrative Agent on behalf of the Lenders as a Revolving Loan (or
Special Agent Advance, as the case may be). The date of such Revolving Loan (or Special Agent
Advance, as applicable) shall be the date of the drawing or, as to other amounts, the due date
therefor. Any payments made by or on behalf of the Administrative Agent or any Lender to the
applicable Issuing Bank and/or related parties in connection





37









 







with any Letter of Credit shall constitute additional Revolving Loans to such Borrower
pursuant to this Section 2 (or Special Agent Advances as the case may be).




          (e) Indemnification; Assumption of Risk. The Loan Parties shall indemnify and hold
the Administrative Agent and the Lenders harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses which the Administrative Agent or any Lender may suffer or
incur in connection with any Letter of Credit and any documents, drafts or acceptances relating
thereto, including any losses (including currency fluctuations), claims, damages, liabilities,
costs and expenses due to any action taken by the applicable Issuing Bank or correspondent with
respect to any Letter of Credit, except to the extent such losses, claims, damages, liabilities,
costs or expenses result from the gross negligence or willful misconduct of the Administrative
Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Loan Party assumes all risks with respect to the acts or omissions of the
drawer under or beneficiary of any Letter of Credit. None of the Administrative Agent or any
Lender shall be responsible for paying any foreign, Federal, State or local taxes, duties or levies
relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances
thereunder. Each Loan Party hereby releases and holds the Administrative Agent and the Lenders
harmless from and against any acts, waivers, errors, delays or omissions with respect to or
relating to any Letter of Credit, except for the gross negligence or willful misconduct of the
Administrative Agent or any Lender as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction. The provisions of this Section 2.3(e) shall survive the
payment of Obligations and the termination of this Agreement.




          (f) Loan Party as Account Party. Each Loan Party hereby irrevocably authorizes and
directs the applicable Issuing Bank to name such Loan Party as the account party therein and to
deliver to the Administrative Agent all instruments, documents and other writings and property
received by such Issuing Bank pursuant to the Letter of Credit. Nothing contained herein shall be
deemed or construed to grant to any Loan Party any right or authority to pledge the credit of the
Administrative Agent or any Lender in any manner. Loan Parties shall be bound by any reasonable
interpretation made in good faith by the Administrative Agent, or the applicable Issuing Bank under
or in connection with any Letter of Credit or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any instructions of any Loan
Party.




          (g) Participations. Immediately upon the issuance or amendment of any Letter of
Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased and received,
without recourse or warranty, an undivided interest and participation therein equal to such
Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations
of the applicable Borrowers with respect thereto (including all Letter of Credit Obligations with
respect thereto). Each Lender shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the applicable Issuing Bank therefor and
discharge when due, its Pro Rata Share of all of such obligations arising under such Letter of
Credit. Without limiting the scope and nature of each Lender’s participation in any Letter of
Credit, to the extent that the applicable Issuing Bank has not been reimbursed or otherwise paid as
required hereunder or under any such Letter of Credit, each such Lender shall pay to such Issuing
Bank its Pro Rata Share of such unreimbursed drawing or other amounts then due to such Issuing Bank
in connection therewith. If such amount is not made available by a Lender when due, the
Administrative Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date such amount is paid
to the Administrative Agent at the interest rate then payable by any Borrower in respect of Loans
that are Base Rate Loans. All payments made by the Lenders pursuant to this Section 2.3(g)
shall be funded in Dollars based on the Dollar Amount of the applicable obligation.






38









 








          (h) Obligations Absolute. The obligations of the Borrowers to pay the applicable
Letter of Credit Obligations and the obligations of the Lenders to make payments to the
Administrative Agent for the account of the applicable Issuing Bank with respect to Letters of
Credit shall be absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances, whatsoever,
notwithstanding the occurrence or continuance of any Default, Event of Default, the failure to
satisfy any other condition set forth in Article 5 or any other event or circumstance. Any
reimbursement pursuant to Section 2.3(f) shall not relieve or otherwise impair the
obligation of the Borrowers to reimburse the applicable Issuing Bank under any Letter of Credit or
make any other payment in connection therewith.




          (i) Defaulting Lender. Notwithstanding anything to the contrary contained in this
Section 2.3, no Issuing Bank shall be obligated to issue any Letter of Credit at a time
when any other Lender is a Defaulting Lender, unless such Issuing Bank has entered into
arrangements satisfactory to it to eliminate such Issuing Bank’s risk with respect to any such
Defaulting Lender’s reimbursement obligations hereunder, including by cash collateralizing such
Defaulting Lender’s Pro Rata Share of the liability with respect to such Letter of Credit. On
demand by the applicable Issuing Bank or the Administrative Agent from time to time, the Borrowers
shall cash collateralize each Defaulting Lender’s Pro Rata Share of the outstanding Letter of
Credit Obligations on terms reasonably satisfactory to the Administrative Agent and the applicable
Issuing Bank. Any such cash collateral shall be deposited in a separate account with the
Administrative Agent as collateral for the payment and performance of each Defaulting Lender’s Pro
Rata Share of the outstanding Letter of Credit Obligations. The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal, over such account.
Moneys in such account shall be applied by the Administrative Agent to reimburse the applicable
Issuing Bank immediately for each Defaulting Lender’s Pro Rata Share of any drawing under any
Letter of Credit which has not otherwise been reimbursed by the Borrowers or such Defaulting Lender
pursuant to the terms of this Section 2.3.




          (j) Appointment and Duties of Additional Issuing Banks. The Administrative Borrower
may appoint Additional Issuing Banks by written agreement among the Administrative Borrower, the
Administrative Agent and the applicable Additional Issuing Bank entered into at least two (2)
Business Days before the issuance of any Letters of Credit by such Additional Issuing Bank. Any
Lender designated as an Additional Issuing Bank shall remain as such until the Administrative
Borrower gives written notice to the Administrative Agent that such Lender is no longer an
Additional Issuing Bank or such Additional Issuing Bank resigns pursuant to Section
14.11(g); provided that no Letter of Credit Obligations remain outstanding with respect
to such Additional Issuing Bank. Each Additional Issuing Bank shall notify the Administrative
Agent at least two (2) Business Days before (i) the issuance of any Letter of Credit by such
Additional Issuing Bank and (ii) any amendment or modification to any Letter of Credit issued by
such Additional Issuing Bank.




     Section 2.4 Procedure for Advance of Loans.



          (a) Requests for Borrowing. To request a Revolving Loan or a Swingline Loan on behalf
of a Borrower, the Administrative Borrower shall give the Administrative Agent irrevocable prior
written notice substantially in the form of Exhibit F hereof (a “Notice of
Borrowing”) not later than 11:00 a.m. (i) on the same Business Day as each Base Rate Loan and
each Swingline Loan and (ii) at least three (3) Business Days before each Eurodollar Rate Loan, of
its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day,
(B) the amount of such borrowing, which shall be, (x) with respect to Base Rate Loans (other than
Swingline Loans) in an aggregate principal amount of $2,000,000 or a whole multiple of $500,000 in
excess thereof, (y) with respect to Eurodollar Rate Loans in an aggregate principal amount of
$2,000,000 or a whole multiple of $500,000 in excess thereof and (z) with respect to Swingline
Loans in an aggregate principal amount of $100,000 or a whole multiple of





39









 







$25,000 in excess thereof, (C) whether such Loan is to be a Revolving Loan or Swingline Loan,
(D) in the case of a Revolving Loan, whether the Loans are to be Eurodollar Rate Loans or Base Rate
Loans, and (E) in the case of a Eurodollar Rate Loan, the duration of the Interest Period
applicable thereto. A Notice of Borrowing received after 11:00 a.m. shall be deemed received on
the next Business Day. Any Loan or any portion thereof as to which the Administrative Borrower has
not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan in the case
of a Revolving Loan, and any Eurodollar Rate Loan for which the Administrative Borrower fails to
specify an Interest Period shall be deemed to have an Interest Period of one (1) month. The
Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing.




          (b) Disbursement of Revolving Loans and Swingline Loans. Not later than 1:00 p.m. on
the proposed borrowing date, (i) each Lender will make available to the Administrative Agent, for
the account of the applicable Borrower, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, such Lender’s Pro Rata Share of the Revolving
Loans to be made on such borrowing date and (ii) the Swingline Lender will make available to the
Administrative Agent, for the account of the applicable Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent, the Swingline
Loans to be made on such borrowing date. The Borrowers hereby irrevocably authorize the
Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this
Section 2.4 in immediately available funds by crediting or wiring such proceeds to the
deposit account of such Borrower identified in the most recent notice substantially in the form
attached as Exhibit G hereto (a “Notice of Account Designation”) delivered by the
Administrative Borrower to the Administrative Agent or as may be otherwise agreed upon by the
Administrative Borrower and the Administrative Agent from time to time. Subject to Section
3.6, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of
any Revolving Loan requested pursuant to this Section 2.4 to the extent that any Lender has
not made available to the Administrative Agent its Pro Rata Share of such Revolving Loan.
Revolving Loans to be made for the purpose of refunding Swingline Loans shall be made by the
Lenders as provided in Section 2.2(c).




          (c) Authorization to Make Loans. The Administrative Agent and the Lenders are
authorized to make the Loans based upon telephonic or other instructions received from anyone
purporting to be an officer of the Administrative Borrower or any Borrower or other authorized
person or, at the discretion of the Administrative Agent, if such Loans are necessary to satisfy
any Obligations. All Loans and Letters of Credit under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of, any Borrower when
deposited to the credit of any Borrower or otherwise disbursed or established in accordance with
the instructions of the Administrative Borrower or in accordance with the terms and conditions of
this Agreement.




     Section 2.5 Repayments and Prepayments.



          (a) Repayment on Maturity Date. The Borrowers hereby agree to repay the outstanding
principal amount of (i) all Revolving Loans in full on the Maturity Date, and (ii) all Swingline
Loans on the earlier to occur of (x) one (1) Business Day following demand for payment thereof by
the Administrative Agent and (y) the Maturity Date, together, in each case, with all accrued but
unpaid interest thereon; provided that to the extent that the outstanding principal amount
of any Swingline Loan is not repaid as set forth in clause (x) above, the Administrative Agent
shall request a Settlement with respect to such Swingline Loan pursuant to Section 2.2(c),
and the Borrowers shall be deemed to have satisfied their obligations to repay such Swingline Loan
upon the completion of such Settlement.




          (b) Optional Prepayments. The Borrowers may at any time and from time to time prepay
Revolving Loans and Swingline Loans, in whole or in part, with irrevocable prior written notice to
the Administrative Agent substantially in the form of Exhibit H (a “Notice of
Prepayment”) given not





40









 







later than 11:00 a.m. (i) on the same Business Day as each Base Rate Loan and each Swingline
Loan and (ii) at least three (3) Business Days before each Eurodollar Rate Loan, specifying the
date and amount of prepayment and whether the prepayment is of Eurodollar Rate Loans, Base Rate
Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify
each Lender. If any such notice is given, the amount specified in such notice shall be due and
payable on the date set forth in such notice. Partial prepayments shall be in an aggregate amount
of $2,000,000 or a whole multiple of $500,000 in excess thereof with respect to Base Rate Loans
(other than Swingline Loans), $2,000,000 or a whole multiple of $500,000 in excess thereof with
respect to Eurodollar Rate Loans and $100,000 or a whole multiple of $25,000 in excess thereof with
respect to Swingline Loans. A Notice of Prepayment received after 11:00 a.m. shall be deemed
received on the next Business Day. Each such repayment shall be accompanied by any amount required
to be paid pursuant to Section 4.6.




          (c) Mandatory Prepayments.




               (i) Except as provided in Section 2.8, if at any time the Total Outstandings exceed
the lesser of (i) the Borrowing Base and (ii) the Aggregate Commitment, the Borrowers shall repay
promptly upon the earlier of (A) any Responsible Officer of the Administrative Borrower obtaining
knowledge thereof and (B) demand from the Administrative Agent, by payment to the Administrative
Agent for the account of the Lenders, an amount equal to such excess with each such repayment
applied first to the principal amount of outstanding Swingline Loans, second to the
principal amount of outstanding Revolving Loans and third, with respect to any Letters of
Credit then outstanding, to a payment of cash collateral into a cash collateral account opened by
the Administrative Agent, for the benefit of the Lenders.



               (ii) If as of the most recent Revaluation Date and for any reason (including, without
limitation, due to currency rate fluctuations) (A) the outstanding Letter of Credit Obligations
exceed the Letter of Credit Limit or (B) the outstanding Alternative Currency Letter of Credit
Obligations exceed the Alternative Currency Letter of Credit Sublimit, then the Borrowers shall,
promptly upon the earlier of (x) any Responsible Officer of the Administrative Borrower obtaining
knowledge thereof and (y) demand from the Administrative Agent, by payment to the Administrative
Agent for the account of the applicable Issuing Banks and the Lenders, make a payment of cash
collateral in an amount equal to such excess into a cash collateral account opened by the
Administrative Agent, for the benefit of the applicable Issuing Banks and the Lenders.



               (iii) If at any time any Loan Party or any of its Subsidiaries shall receive Net Cash Proceeds
from (A) any insurance or condemnation award payable by reason of theft, loss, physical destruction
or damage, taking or similar event with respect to any Collateral or (B) the sale (or series of
sales) or other disposition of Collateral or Material Trademarks, the Borrowers shall prepay Loans
in an amount equal to one hundred percent (100%) of such Net Cash Proceeds, which Net Cash Proceeds
shall promptly upon receipt thereof be deposited into a Blocked Account and payments therefrom
shall be applied by the Administrative Agent for the account of the Lenders first to the
principal amount of outstanding Swingline Loans and second to the principal amount of
outstanding Revolving Loans, without a corresponding reduction of the Aggregate Commitment;
provided that such prepayment shall only be required (x) during a Cash Dominion Period or
(y) if, after giving effect to any event described in this clause (ii), a Cash Dominion Period
(without giving effect to any Cash Dominion Grace Period) would be triggered.



          (d) Limitation on Prepayment of LIBOR Rate Loans. The Borrowers may not prepay any
Eurodollar Rate Loan on any day other than on the last day of the Interest Period applicable





41









 







thereto unless such prepayment is accompanied by any amount required to be paid pursuant to
Section 4.6.




          (e) Hedging Agreements. No repayment or prepayment pursuant to this Section
2.5 shall affect any Loan Party’s obligations under any Hedging Agreement.




     Section 2.6 Optional Reduction of Commitments. The Administrative Borrower shall
have the right to terminate or permanently reduce the unused portion of the Aggregate Commitment at
any time or from time to time upon not less than three (3) Business Days’ prior written notice to
the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each
such termination or reduction, which notice shall specify the effective date thereof and the amount
of any such reduction which shall be in a minimum amount of $10,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall be irrevocable and effective upon receipt by the
Administrative Agent; provided that no such reduction or termination shall be permitted if
after giving effect thereto, and to any prepayments of the Loans made on the effective date
thereof, the sum of then outstanding aggregate principal amount of the Loans plus Letter of
Credit Obligations would exceed the Aggregate Commitment after such proposed reduction.



     Section 2.7 Optional Increase of Commitments. At any time following the Closing Date,
the Company shall have the right, from time to time and upon not less than fifteen (15) Business
Days (or such shorter period of time as agreed to by the Administrative Agent in its sole
discretion) prior written notice to the Administrative Agent (which notice shall not obligate the
Company to increase the Aggregate Commitment) to increase the Aggregate Commitment (each such
increase, a “Facility Increase”); provided that:



          (a) no Default or Event of Default shall have occurred and be continuing or would result from
any such requested Facility Increase or borrowings thereunder;




          (b) all representations and warranties contained herein and in the other Loan Documents shall
be true and correct in all material respects with the same effect as though such representations
and warranties had been made on and as of the date of such Facility Increase and after giving
effect thereto, except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date); provided that any
representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or
similar language shall be true and correct (after giving effect to any qualification therein) in
all respects on such respective dates;




          (c) each Facility Increase shall be in an aggregate principal amount of at least $50,000,000
or a whole multiple of $10,000,000 in excess thereof;




          (d) the aggregate amount of all Facility Increases made pursuant to this Section 2.7
shall not exceed $200,000,000;




          (e) Facility Increases shall not increase or otherwise affect the Letter of Credit Limit or
the Swingline Limit;




          (f) the Commitment of any Lender shall not be increased without the approval of such Lender;




          (g) in connection with each proposed Facility Increase, the Company may solicit commitments
from (i) any Lender (provided that no Lender shall have an obligation to commit to all or a





42









 







portion of the proposed Facility Increase) or (ii) Eligible Assignees that are reasonably
acceptable to both the Administrative Agent and the Company;




          (h) in the event that any existing Lender or any new lender commits to such requested Facility
Increase, (i) any new lender will execute an accession agreement to this Agreement, (ii) the
Commitment of any existing Lender that has committed to provide any of the requested increase shall
be increased, (iii) the Pro Rata Shares of the Lenders shall be adjusted, (iv) the Borrowers shall
make such borrowings and repayments as shall be necessary to affect the reallocation of the
Commitments (and the Borrowers shall pay any amounts due under Section 4.6 in connection
therewith), and (v) other changes shall be made to the Loan Documents as may be necessary to
reflect the aggregate amount, if any, by which the Lenders have agreed to increase their respective
Commitments or make new commitments in response to the Company’s request for an increase pursuant
to this Section 2.7 and which other changes do not adversely affect the rights of those
Lenders not participating in the increase;




          (i) if the Aggregate Commitment is increased in accordance with this Section 2.7, the
Administrative Agent and the Company shall determine the effective date (the “Increase
Effective Date”) and the final allocation of such Facility Increase and the Administrative
Agent shall promptly notify the Administrative Borrower and the Lenders of the final allocation of
such Facility Increase and Increase Effective Date;




          (j) the Administrative Agent and the Lenders shall have received any fees and expenses payable
by the Loan Parties in respect of such Facility Increase; and




          (k) each Facility Increase shall be subject to all of the terms and conditions of this
Agreement, and shall be secured by the Collateral and guaranteed by Guarantors pursuant to the
terms hereof.




     Section 2.8 Overadvances; Special Agent Advances.



          (a) Additional Loans. No Loan shall be made nor shall any Letter of Credit be
provided to any Borrower intentionally and with actual knowledge that such Loan or Letter of Credit
would cause the Total Outstandings to exceed the lesser of (i) the Borrowing Base and (ii) the
Aggregate Commitment (such excess, an “Overadvance”), without the prior consent of all of
the Lenders, except, that, notwithstanding anything to the contrary contained herein and unless its
authority has been revoked in writing by the Required Lenders, the Administrative Agent may require
the Lenders to honor requests for such additional Loans or any Issuing Bank may provide such
additional Letters of Credit intentionally and with actual knowledge that such Loans or Letters of
Credit will cause an Overadvance, as the Administrative Agent may deem necessary or advisable in
its discretion; provided that:




               (i) the sum of (i) the aggregate principal amount of the additional Loans or additional
Letters of Credit to any Borrower that may be made or provided after obtaining such actual
knowledge of such Overadvance plus (ii) the amount of Special Agent Advances made pursuant
to Section 2.8(b) then outstanding, shall not exceed an aggregate amount equal to the
lesser of (x) ten percent (10%) of the Aggregate Commitment and (y) $60,000,000;



               (ii) the sum of (i) the aggregate outstanding principal amount of the Loans and Letters of
Credit (including the additional Loans and additional Letters of Credit made pursuant to this
Section 2.8(a)), plus (ii) the amount of Special Agent Advances made pursuant to
Section 2.8(b) then outstanding, shall not exceed the Aggregate Commitment; and



43









 





               (iii) no such additional Loan or Letter of Credit shall be outstanding more than forty-five
(45) days after the date such additional Loan or Letter of Credit is made or issued (as the case
may be), in each case, except as the Required Lenders may otherwise agree.


Each Lender shall provide the amount of its Pro Rata Share of any such additional Loans or Letters
of Credit pursuant to the terms of this Agreement, which Loans and Letters of Credit shall bear
interest at the same applicable rates for other Loans and Letters of Credit made or provided
hereunder.




          (b) Special Agent Advances. The Administrative Agent may, at its option, from time to
time, at any time on or after an Event of Default and for so long as the same is continuing or upon
any other failure of a condition precedent to the Loans and Letters of Credit hereunder, make such
disbursements and advances (“Special Agent Advances”) which the Administrative Agent, in
its sole discretion, deems necessary or desirable either (i) to preserve or protect the Collateral
or any portion thereof, (ii) to enhance the likelihood or maximize the amount of repayment by the
Loan Parties of the Loans or any other Obligations or (iii) to pay any other amount chargeable to
any Loan Party pursuant to the terms of this Agreement or any of the other Loan Documents
consisting of costs, fees and expenses and payments to any Issuing Bank in respect of any Letter of
Credit Obligations, provided that (A) the aggregate principal amount of the Special Agent
Advances outstanding at any time, plus then outstanding principal amount of the additional
Loans and Letters of Credit made or provided pursuant to Section 2.8(a), shall not exceed
an aggregate amount equal to the lesser of (x) ten percent (10%) of the Aggregate Commitment and
(y) $60,000,000 and (B) the aggregate principal amount of the Special Agent Advances outstanding at
any time, plus the then outstanding principal amount of the Loans and Letters of Credit
(including the additional Loans and the additional Letters of Credit made pursuant to Section
2.8(a)), shall not exceed the Aggregate Commitment, except at the Administrative Agent’s
option; provided that to the extent that the aggregate principal amount of Special Agent
Advances plus then outstanding principal amount of the Loans and Letters of Credit exceed
the Aggregate Commitment, the Special Agent Advances that are in excess of the Aggregate Commitment
(“Excess Special Agent Advances”) shall be for the sole account and risk of the
Administrative Agent and notwithstanding anything to the contrary set forth below, no Lender shall
have any obligation to provide its share of such Excess Special Agent Advances. The Special Agent
Advances shall be repayable on demand and together with all interest thereon shall constitute
Obligations secured by the Collateral. Special Agent Advances shall not constitute Loans but shall
otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at
the interest rate then applicable to Base Rate Loans and shall be payable on demand. Each Lender
agrees that it shall make available to the Administrative Agent, upon the Administrative Agent’s
demand, in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each
such Special Agent Advance not to exceed such Lender’s Commitment. If such funds are not promptly
made available to the Administrative Agent by such Lender, such Lender shall be deemed a Defaulting
Lender and the Administrative Agent shall be entitled to recover such funds, on demand from such
Lender together with interest thereon for each day from the date such payment was due until the
date such amount is paid to the Administrative Agent at the greater of the daily average of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation for each day during such period and if such amounts are
not paid within three (3) days of the Administrative Agent’s demand, at the highest interest rate
provided for in Section 3.1 applicable to Base Rate Loans. The Required Lenders may at any
time by written notice to the Administrative Agent (x) revoke the Administrative Agent’s authority
to make further Special Agent Advances (including Excess Special Agent Advances) and (y) instruct
the Administrative Agent to demand repayment of outstanding Special Agent Advances from the Loan
Parties. Absent such revocation, the Administrative Agent’s determination that funding of a
Special Agent Advance is appropriate shall be conclusive.




     Section 2.9 Joint and Several Liability of the Borrowers.



44









 





          (a) Notwithstanding anything in this Agreement or any other Loan Documents to the contrary,
each Borrower, jointly and severally, in consideration of the financial accommodations to be
provided by the Administrative Agent and the Lenders under this Agreement and the other Loan
Documents, for the mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability for the
Obligations, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations, it being the intention of the parties hereto that all of the
Obligations shall be the joint and several obligations of each Borrower without preferences or
distinction among them. The Borrowers shall be liable for all amounts due to the Administrative
Agent and the Lenders under this Agreement, regardless of which Borrower actually receives the
Loans or Letter of Credit Obligations hereunder or the amount of such Revolving Loans received or
the manner in which the Administrative Agent or any Lender accounts for such Loans, Letter of
Credit Obligations or other extensions of credit on its books and records. The Obligations of the
Borrowers with respect to Revolving Loans made to one of them, and the Obligations arising as a
result of the joint and several liability of one of the Borrowers hereunder with respect to
Revolving Loans made to the other of the Borrowers hereunder, shall be separate and distinct
obligations, but all such other Obligations shall be primary obligations of all the Borrowers.




          (b) If and to the extent that any Borrower shall fail to make any payment with respect to any
of the Obligations as and when due or to perform any of the Obligations in accordance with the
terms thereof, then in each such event, the other Borrowers will make such payment with respect to,
or perform, such Obligation.




          (c) Except as otherwise expressly provided herein, to the extent permitted by law, each
Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other
Borrower) hereby waives notice of acceptance of its joint and several liability, notice of
occurrence of any Event of Default (except to the extent notice is expressly required to be given
pursuant to the terms of this Agreement), or of any demand for any payment under this Agreement or
the other Loan Documents, notice of any action at any time taken or omitted by the Administrative
Agent or any Lender under or in respect of any of the obligations hereunder, any requirement of
diligence and, generally, all demands, notices and other formalities of every kind in connection
with this Agreement and the other Loan Documents. Each Borrower hereby assents to, and waives
notice of, any extension or postponement of the time for the payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by
the Administrative Agent or any Lender at any time or times in respect of any default by the other
Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this
Agreement, any and all other indulgences whatsoever by the Administrative Agent or any Lender in
respect of any of the obligations hereunder, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of such obligations or the
addition, substitution or release, in whole or in part, of the other Borrowers. Without limiting
the generality of the foregoing, each Borrower (in its capacity as a joint and several obligor in
respect of the obligations of the other Borrowers) assents to any other action or delay in acting
or any failure to act on the part of the Administrative Agent or any Lender, including, without
limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder which might, but for the provisions of
this Section 2.9, afford grounds for terminating, discharging or relieving such Borrower,
in whole or in part, from any of its obligations under this Section 2.9, it being the
intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied,
the obligations of such Borrower under this Section 2.9 shall not be discharged except by
payment or performance and then only to the extent of such payment or performance. The obligations
of each Borrower under this Section 2.9 shall not be diminished or rendered unenforceable
by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any other Borrower. The joint and several liability of each Borrower hereunder
shall continue in full





45









 







force and effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any other Borrower or any
of the Lenders.




          (d) The provisions of this Section 2.9 are made for the benefit of the Lenders and
their successors and assigns, and subject to Section 11.2, may be enforced by them from
time to time against any Borrower as often as occasion therefor may arise and without requirement
on the part of the Administrative Agent or any Lender first to marshal any of its claims or to
exercise any of its rights against the other Borrowers or to exhaust any remedies available to it
against the other Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy.




          (e) Notwithstanding any provision to the contrary contained herein or in any of the other Loan
Documents, to the extent the obligations of a Borrower shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the obligations of such Borrower
hereunder shall be limited to the maximum amount that is permissible under applicable law (whether
federal or state and including, without limitation, the United States Bankruptcy Code).




          (f) With respect to the Obligations arising as a result of the joint and several liability of
the Borrowers hereunder with respect to Loans, Letter of Credit Obligations or other extensions of
credit made to the other Borrowers hereunder, each Borrower waives, until the Obligations shall
have been paid in full (other than indemnities and contingent Obligations which have not yet
accrued) and this Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Administrative Agent or any Lender now has or may hereafter
have against any Borrower, any endorser or any guarantor of all or any part of the Obligations, and
any benefit of, and any right to participate in, any security or collateral given to the
Administrative Agent or any Lender. Any claim which any Borrower may have against any other
Borrower with respect to any payments to the Administrative Agent or the Lenders hereunder or under
any of the other Loan Documents are hereby expressly made subordinate and junior in right of
payment, without limitation as to any increases in the Obligations arising hereunder or thereunder,
to the prior payment in full in cash of the Obligations. Upon the occurrence of any Event of
Default and for so long as the same is continuing, the Administrative Agent and the Lenders may
proceed directly and at once, without notice (to the extent notice is waivable under applicable
law), against (i) with respect to Obligations of the Borrowers, any of them or (ii) with respect to
Obligations of any Borrower, to collect and recover the full amount, or any portion of the
applicable Obligations, without first proceeding against the other applicable Borrowers or any
other Person, or against any security or collateral for the Obligations. Each Borrower consents
and agrees that the Administrative Agent and the Lenders shall be under no obligation to marshal
any assets in favor of Borrower(s) or against or in payment of any or all of the Obligations.




     Section 2.10 Appointment of Administrative Borrower as Agent for Requesting Loans and
Receipts of Loans and Statements.



          (a) Each Borrower hereby irrevocably appoints and constitutes the Administrative Borrower as
its agent and attorney-in-fact to request and receive Loans and Letters of Credit pursuant to this
Agreement and the other Loan Documents from the Administrative Agent or any Lender in the name or
on behalf of such Borrower. The Administrative Agent and the Lenders may disburse the Loans to
such bank account of the Administrative Borrower or a Borrower or otherwise make such Loans to a
Borrower and provide such Letters of Credit to a Borrower as the Administrative Borrower may
designate or direct, without notice to any other Loan Party. Notwithstanding anything to the
contrary contained herein, the Administrative Agent may at any time and from time to time require
that Loans to or for the account of any Borrower be disbursed directly to an operating account of
such Borrower.






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          (b) The Administrative Borrower hereby accepts the appointment by the Borrowers to act as the
agent and attorney-in-fact of the Borrowers pursuant to this Section 2.10. The
Administrative Borrower shall ensure that the disbursement of any Loans to each Borrower requested
by or paid to or for the account of the Company, or the issuance of any Letter of Credit for a
Borrower hereunder, shall be paid to or for the account of such Borrower.




          (c) Each Loan Party hereby irrevocably appoints and constitutes the Administrative Borrower as
its agent to receive statements on account and all other notices from the Administrative Agent and
the Lenders with respect to the Obligations or otherwise under or in connection with this Agreement
and the other Loan Documents.




          (d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf
of any other Loan Party by Administrative Borrower shall be deemed for all purposes to have been
made by such Loan Party, as the case may be, and shall be binding upon and enforceable against such
Loan Party to the same extent as if made directly by such Loan Party.




          (e) No purported termination of the appointment of the Administrative Borrower as agent as
aforesaid shall be effective, except after ten (10) days’ prior written notice to the
Administrative Agent.




ARTICLE 3

GENERAL LOAN PROVISIONS




     Section 3.1 Interest.



          (a) Interest Rate Options. The Borrowers shall pay to the Administrative Agent, for
the benefit of the Lenders, interest on the outstanding principal amount of the Loans as follows:



               (i) as to Base Rate Loans, a rate equal to the Base Rate plus the Applicable Margin
then in effect for Base Rate Loans;



               (ii) as to Eurodollar Rate Loans, a rate equal to the Adjusted Eurodollar Rate plus
the Applicable Margin then in effect for Eurodollar Rate Loans; and



               (iii) as to Swingline Loans, a rate equal to the LIBOR Market Index Rate, plus the Applicable
Margin then in effect for Swingline Loans.



     All interest accruing hereunder on and after the date of any Event of Default or the Maturity
Date shall be payable on demand.



          (b) Base Rate and Eurodollar Rate Loans.




               (i) The Administrative Borrower on behalf of any Borrower shall select Base Rate Loans or
Eurodollar Rate Loans and the Interest Period applicable thereto at the time a Notice of Borrowing
is given pursuant to Section 2.4 or at the time a Notice of Conversion is given pursuant to
Section 3.1(b)(ii).



               (ii) The Borrowers shall have the option to (A) convert at any time following the third
Business Day after the Closing Date all or any portion of any outstanding Base Rate Loans (other
than Swingline Loans) in a principal amount equal to $2,000,000 or any whole multiple of $500,000
in excess thereof into one or more Eurodollar Rate Loans and (B) upon the expiration of any



47









 




Interest Period, (x) convert all or any part of its outstanding Eurodollar Rate Loans in a
principal amount equal to $2,000,000 or a whole multiple of $500,000 in excess thereof into Base
Rate Loans (other than Swingline Loans) or (y) continue such Eurodollar Rate Loans as Eurodollar
Rate Loans; provided that, in the case of a conversion of Base Rate Loans into, or the
continuation of, Eurodollar Rate Loans, no Event of Default shall have occurred and be continuing.
Whenever any Borrower desires to convert or continue Loans as provided above, the Administrative
Borrower on behalf of such Borrower shall give the Administrative Agent irrevocable prior written
notice substantially in the form attached as Exhibit I hereto (a “Notice of
Conversion”) not later than 11:00 a.m. three (3) Business Days before the day on which a
proposed conversion or continuation of such Loan is to be effective specifying (1) the Loans to be
converted or continued, and, in the case of any Eurodollar Rate Loan to be converted or continued,
the last day of the then-current Interest Period therefor, (2) the effective date of such
conversion or continuation (which shall be a Business Day), (3) the principal amount of such Loans
to be converted or continued, and (4) the Interest Period to be applicable to such converted or
continued Eurodollar Rate Loan. The Administrative Agent shall promptly notify the Lenders of such
notice.




               (iii) No more than six (6) Interest Periods may be in effect at any one time with respect to
Eurodollar Rate Loans.



               (iv) Any Eurodollar Rate Loans shall be automatically continued as a Eurodollar Rate Loan with
an Interest Period of one (1) month upon the last day of the applicable Interest Period, unless the
Administrative Agent has received a request to continue or convert such Eurodollar Rate Loan in
accordance with the terms hereof.



          (c) Default Rate. Notwithstanding anything to the contrary contained herein, (i)
immediately, automatically and without notice to the Borrowers, upon the occurrence and during the
continuance of an Event of Default under Section 11.1(a), (f) or (g), or
(ii) at Required Lenders’ option and upon prior written notice by the Administrative Agent to the
Administrative Borrower, upon the occurrence and during the continuance of any other Event of
Default, each Applicable Margin shall be increased by two percent (2%) per annum.




          (d) Maximum Interest. Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, in no event whatsoever shall the aggregate of all
amounts that are contracted for, charged or received by the Administrative Agent or any Lender
pursuant to the terms of this Agreement or any of the other Loan Documents and that are deemed
interest under applicable law exceed the Maximum Interest Rate (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of the United States of America
as amended, 12 U.S.C. Section 85, as amended). In no event shall any Borrower or Guarantor be
obligated to pay interest or such amounts as may be deemed interest under applicable law in amounts
which exceed the Maximum Interest Rate. In the event any interest or deemed interest is charged or
received in excess of the Maximum Interest Rate (“Excess”), each Borrower and Guarantor
acknowledges and stipulates that any such charge or receipt shall be the result of an accident and
bona fide error, and that any Excess received by the Administrative Agent or any Lender shall be
applied, first, to the payment of then outstanding and unpaid principal hereunder; second to the
payment of the other Obligations then outstanding and unpaid; and third, returned to such Borrower
or Guarantor. All monies paid to the Administrative Agent or any Lender hereunder or under any of
the other Loan Documents, whether at maturity or by prepayment, shall be subject to any rebate of
unearned interest as and to the extent required by applicable law. For the purpose of determining
whether or not any Excess has been contracted for, charged or received by the Administrative Agent
or any Lender, all interest at any time contracted for, charged or received from any Borrower or
Guarantor in connection with this Agreement or any of the other Loan Documents shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread during the entire term of
this Agreement in accordance with the amounts outstanding from time to time hereunder and the





48









 







Maximum Interest Rate from time to time in effect in order to lawfully charge the maximum
amount of interest permitted under applicable laws. The provisions of this Section 3.1
shall be deemed to be incorporated into each of the other Loan Documents (whether or not any
provision of this Section 3.1 is referred to therein).




          (e) Interest Payment and Computations. Interest on Base Rate Loans shall be payable
by the Borrowers to the Administrative Agent, for the account of the Administrative Agent and the
Lenders, quarterly in arrears not later than the first day of each calendar quarter. Interest on
any Eurodollar Rate Loan having an Interest Period of three months or less shall be payable on the
last day of such Interest Period, and interest on any Eurodollar Rate Loan having an Interest
Period longer than three months shall be payable on each day which is three months after the first
day of such Interest Period and on the last day of such Interest Period. Interest on Base Rate
Loans bearing interest based on the “prime rate” shall be calculated on the basis of actual number
of days elapsed over a year of 365 days. All other computations of interest and fees hereunder
shall be made on the basis of actual number of days elapsed over a year of 360 days. The interest
rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall change simultaneously
with each change in the Base Rate.




     Section 3.2 Fees.



          (a) Commitment Fee. The Borrowers shall pay to the Administrative Agent, for the
account of the Lenders (other than any Defaulting Lender from and after the date such Lender became
a Defaulting Lender and regardless of whether such Defaulting Lender’s Commitment has been
terminated pursuant to Section 4.11 or otherwise), a fee on the unused amount of the
Aggregate Commitment (a “Commitment Fee”), which shall be payable on the first day of each
calendar quarter in arrears, determined by multiplying: (i) the amount, if any, by which (A) the
Aggregate Commitment exceeds (B) the average daily amount of Total Outstandings (other than
outstanding Swingline Loans) during the immediately preceding calendar quarter (or part thereof) by
(ii) the Commitment Fee Rate then in effect. Such Commitment Fees shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the obligation of the Borrowers
to pay such fees that remain unpaid shall survive the termination of this Agreement.




          (b) Letter of Credit Fee. In consideration for the issuance of Letters of Credit
hereunder, the Borrowers shall pay to the Administrative Agent, for the account of the Lenders
(other than any Defaulting Lender from and after the date such Lender became a Defaulting Lender
and regardless of whether such Defaulting Lender’s Commitment has been terminated pursuant to
Section 4.11 or otherwise), a fee at a per annum rate for each day from the date of
issuance thereof to the date of expiration equal to the Applicable Margin for Eurodollar Rate Loans
on the average daily maximum Dollar Amount available to be drawn under all of such Letters of
Credit for the immediately preceding calendar quarter (or part thereof), payable in arrears in
Dollars as of the first day of each succeeding calendar quarter, computed for each day from the
date of issuance to the date of expiration. Such letter of credit fees shall be calculated on the
basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of the
Borrowers to pay such fees that remain unpaid shall survive the termination of this Agreement.




          (c) Letter of Credit Fronting Fee. In addition to the letter of credit fees provided
above, the Borrowers shall pay to the applicable Issuing Bank for its own account (without sharing
with the Lenders) a letter of credit fronting fee of one-eighth percent (0.125%), payable in
arrears in Dollars as of the first day of each succeeding calendar quarter, of the average daily
maximum Dollar Amount available to be drawn under each Letter of Credit issued by such Issuing Bank
computed at a per annum rate for each day from the date of issuance to the date of expiration
thereof, negotiation fees agreed to by the Borrowers and such Issuing Bank from time to time, the
customary charges from time to time of such





49









 







Issuing Bank with respect to the issuance, amendment, transfer, administration, cancellation
and conversion of, and drawings under, such Letters of Credit and in the case of documentary
Letters of Credit, such Issuing Bank’s customary processing fees. Each Issuing Bank confirms that
such customary charges and fees shall be those typically charged by the applicable Issuing Bank to
its other customers generally.




          (d) Other Fees. The Borrowers shall pay to the Administrative Agent and the Lead
Arrangers the other fees and amounts set forth in the Fee Letter in the amounts and at the times
specified therein. To the extent payment in full of the applicable fee is received by the
Administrative Agent from the Borrowers on or about the Closing Date, the Administrative Agent
shall pay to each Lender its share of such fees in accordance with the terms of the arrangements
of the Administrative Agent with such Lender.




     Section 3.3 Loan Accounts. The Loans made by each Lender (and the purchases by such
Lender of participations in Letters of Credit and Swingline Loans) hereunder shall be evidenced by
one or more accounts or records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the Administrative Agent and
each Lender shall be conclusive absent manifest error of the amount of the Loans made by the
Lenders to the Borrowers (and the purchases by such Lender of participations in Letters of Credit
and Swingline Loans) and the interest and payments thereon. Any failure to so record or any error
in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder
to pay any amount owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the Administrative Agent shall
control in the absence of manifest error. Upon the request of any Lender made through the
Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the
Administrative Agent) a Note which shall evidence such Lender’s Loans in addition to such accounts
or records. Each Lender may attach schedules to its Notes and endorse thereon the date, amount and
maturity of its Loans and payments with respect thereto.



     Section 3.4 Pro Rata Treatment, Sharing of Payments, Funding by Lenders, Etc.



          (a) Except to the extent otherwise provided in this Agreement or as otherwise agreed by the
Lenders: (i) the making and conversion of Loans shall be made among the Lenders based on their
respective Pro Rata Shares as to the Loans and (ii) each payment on account of any Obligations to
or for the account of one or more of the Lenders in respect of any Obligations due on a particular
day shall be allocated among the Lenders (other than Defaulting Lenders) entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.




          (b) Each Loan Party agrees that, at any time after an Event of Default shall have occurred and
be continuing, in addition to (and without limitation of) any right of setoff, banker’s lien or
counterclaim the Administrative Agent or any Lender may otherwise have, the Administrative Agent,
each Lender and each of their respective Affiliates shall be entitled, at its option (but subject,
as among the Administrative Agent and the Lenders, to the provisions of Section 12.3(b) and
Section 3.4(c)), to offset balances held by it for the account of such Loan Party at any of
its offices, in Dollars or in any other currency, against any principal of or interest on any Loans
owed to such Person or any other amount payable to such Person hereunder (regardless of whether
such balances are then due to such Loan Party), in which case it shall promptly notify the
Administrative Borrower and the Administrative Agent thereof; provided that such Person’s
failure to give such notice shall not affect the validity thereof.




          (c) Except as otherwise expressly permitted by this Agreement, if any Lender (including the
Administrative Agent) shall obtain from any Loan Party payment of any principal of or





50









 







interest on any Loan owing to it or payment of any other amount under this Agreement or any of
the other Loan Documents through the exercise of any right of setoff, banker’s lien or counterclaim
or similar right or otherwise (other than from the Administrative Agent as provided herein), and,
as a result of such payment, such Lender shall have received more than its Pro Rata Share of the
principal of the Loans or more than its share of such other amounts then due hereunder or
thereunder by any Loan Party to such Lender than the percentage thereof received by any other
Lender, it shall promptly pay to the Administrative Agent, for the benefit of the Lenders, the
amount of such excess and simultaneously purchase from such other Lenders a participation in the
Loans or such other amounts, respectively, owing to such other Lenders (or such interest due
thereon, as the case may be) in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment
(net of any expenses that may be incurred by such Lender in obtaining or preserving such excess
payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by the Lenders.
To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise be restored.




          (d) Each Loan Party agrees that any Lender purchasing a participation (or direct interest) as
provided in this Section 3.4 may exercise, in a manner consistent with this Section
3.4, all rights of setoff, banker’s lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or other amounts (as the
case may be) owing to such Lender in the amount of such participation.




          (e) Nothing contained herein shall require any Lender to exercise any right of setoff,
banker’s lien, counterclaims or similar rights or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other Indebtedness or
obligation of any Loan Party. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.4
applies, such Lender shall, to the extent practicable, assign such rights to the Administrative
Agent for the benefit of the Lenders and, in any event, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled under this Section
3.4 to share in the benefits of any recovery on such secured claim.




          (f) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with Sections 2.4(b) and may, in
reliance upon such assumption, make available to the applicable Borrower a corresponding amount.
In such event, if a Lender has not in fact made its share of the applicable borrowing available to
the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be
made by such Lender, the greater of the daily average Federal Funds Rate and a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank compensation and
(ii) in the case of a payment to be made by the Borrowers, the interest rate applicable to Base
Rate Loans. If the Borrowers and such Lender shall pay such interest to the Administrative Agent
for the same or an overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such period. If such Lender pays
its share of the applicable borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in such borrowing. Any payment by the Borrowers shall be
without prejudice to any claim the Borrowers may have against a Lender that shall have failed to
make such payment to the Administrative Agent.






51









 








          (g) Nothing in this Section 3.4 or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require the Administrative Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights that any Borrower may have against any Lender as a result of any default by
any Lender hereunder in fulfilling its Commitment.




     Section 3.5 Payments Generally.



          (a) Each payment by the Borrowers on account of the principal of or interest on the Loans or
of any fee, commission or other amounts payable to the Lenders under this Agreement shall be made
not later than 2:00 p.m. on the date specified for payment under this Agreement to the
Administrative Agent’s Payment Account, in Dollars, in immediately available funds and shall be
made without any set-off, counterclaim or deduction whatsoever. Any payment received after 2:00
p.m. shall be deemed to have been made on the next succeeding Business Day for all purposes
hereunder. If any payment under this Agreement shall be specified to be made upon a day which is
not a Business Day, it shall be made on the next succeeding day which is a Business Day and such
extension of time shall in such case be included in computing any interest if payable along with
such payment. At the Administrative Agent’s option, during a Cash Dominion Period, all principal,
interest, fees, costs, expenses and other charges provided for in this Agreement or the other Loan
Documents may be charged directly to the loan account(s) of any applicable Borrower maintained by
the Administrative Agent.




          (b) Notwithstanding anything to the contrary contained in this Agreement, unless so directed
by the Administrative Borrower, or unless a Default or an Event of Default shall have occurred and
be continuing, the Administrative Agent shall not apply any payments which it receives to any
Eurodollar Rate Loans, except (i) on the expiration date of the Interest Period applicable to any
such Eurodollar Rate Loans or (ii) in the event that there are no outstanding Base Rate Loans;
provided that the Administrative Agent will attempt to honor any written request received
from the Administrative Borrower to hold such payment until the expiration of the applicable
Interest Period, it being understood and agreed that the Administrative Agent shall have no
liability for any failure to do so.




          (c) To the extent that any Loan Party makes a payment or payments to the Administrative Agent
for the benefit of the Lenders or the Administrative Agent receives any payment or proceeds of
Collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such payment or proceeds
had not been received by the Administrative Agent. This Section 3.5(c) shall remain
effective notwithstanding any contrary action which may be taken by the Administrative Agent or any
Lender in reliance upon such payment or proceeds. This Section 3.5 shall survive the
payment of the Obligations and the termination of this Agreement.




          Section 3.6 Obligations Several; Independent Nature of Lenders’ Rights. The
obligation of each Lender hereunder is several, and no Lender shall be responsible for the
obligation or commitment of any other Lender hereunder. Nothing contained in this Agreement or any
of the other Loan Documents and no action taken by the Lenders pursuant hereto or thereto shall be
deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and subject to Section 12.3, each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.





52











 





     Section 3.7 Bank Products. Each Bank Product Provider shall be deemed a third
party beneficiary hereof and of the provisions of the other Loan Documents for purposes of any
reference in a Loan Document to the parties for whom the Administrative Agent is acting; it being
understood and agreed that the rights and benefits of such Bank Product Provider under the Loan
Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and
security interests granted to the Administrative Agent and the right to share in payments and
collections out of the Collateral as more fully set forth herein.



ARTICLE 4

YIELD PROTECTION




     Section 4.1 Inability to Determine Applicable Interest Rate. If the Administrative
Agent shall determine in good faith (which determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto) that on any date by reason of circumstances affecting
the London interbank market, adequate and fair means do not exist for ascertaining the interest
rate applicable to Eurodollar Rate Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, the Administrative Agent shall on such date give notice to the Administrative
Borrower and each Lender of such determination. Upon such date no Loans may be made as, or
converted to, Eurodollar Rate Loans, until such time as the Administrative Agent notifies the
Administrative Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist (in which case the Administrative Agent shall give prompt notice to the Administrative
Borrower and the Lenders) and any request for such Loans or the conversion or continuation of any
Eurodollar Rate Loans received by the Administrative Agent shall be deemed to be a request, or a
continuation or conversion, for or into Base Rate Loans.



     Section 4.2 Changed Circumstances. Notwithstanding anything to the contrary contained
herein, if (i) any change in any law or interpretation thereof by any Governmental Authority makes
it unlawful for a Lender to make or maintain a Eurodollar Rate Loan or to maintain any Commitment
with respect to a Eurodollar Rate Loan, (ii) a Lender determines in good faith (which determination
shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that it
has become impracticable as a result of a circumstance that adversely affects the London interbank
market or the position of such Lender in such market or (iii) the Required Lenders determine that
the Adjusted Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding
such Loan, then, in each case, such Lender or Lenders shall give notice thereof to the
Administrative Agent and the Administrative Borrower and may (A) declare that Eurodollar Rate Loans
will not thereafter be made by such Lender, such that any request for Eurodollar Rate Loans from
such Lender shall be deemed to be a request for a Base Rate Loan, unless such Lender’s declaration
has been withdrawn (and it shall be withdrawn promptly upon the cessation of the circumstances
described in clause (i) or (ii) above) and (B) require that all outstanding Eurodollar Rate Loans
made by such Lender be converted to Base Rate Loans immediately, in which event all outstanding
Eurodollar Rate Loans of such Lender shall be so converted.



     Section 4.3 Increased Costs. If any Change in Law shall: (a) impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement
against assets of, deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the Adjusted Eurodollar Rate) or Issuing
Bank; (b) subject any Lender or any Issuing Bank to any tax of any kind whatsoever other than any
Excluded Tax with respect to this Agreement, any Letter of Credit, any participation in a Letter of
Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such
Lender or such Issuing Bank in respect thereof (except for Taxes or Other Taxes covered by
Section 4.5 or Excluded Taxes and the imposition of, or any change in the rate of, any
taxes payable by such Lender or such Issuing Bank described in Sections 4.5(d)); or (c)
impose on any Lender, any Issuing Bank or the London interbank



53









 




market any other condition, cost or expense affecting this Agreement, Eurodollar Rate Loans
made by such Lender or any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate
Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such
Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the
amount of any sum received or Account by such Lender or such Issuing Bank hereunder (whether of
principal, interest or any other amount) then, upon request of such Lender or such Issuing Bank
pursuant to Section 4.7, the Borrowers will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.




     Section 4.4 Capital Requirements. If any Lender or any Issuing Bank determines in
good faith that any Change in Law affecting such Lender or such Issuing Bank or any lending office
of such Lender or such Lender’s or such Issuing Bank’s holding company, if any, regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or such
Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company,
if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or
such Issuing Bank’s holding company with respect to capital adequacy), then, upon request of such
Lender or such Issuing Bank pursuant to Section 4.7, from time to time the Borrowers will
pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
company for any such reduction suffered.



     Section 4.5 Taxes.



          (a) Any and all payments by or on account of any of the Obligations shall be made free and
clear of and without deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, charges, withholdings, liabilities,
restrictions or conditions of any kind imposed by any Governmental Authority, excluding all
Excluded Taxes (all such non-excluded taxes, levies, imposts, fees, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”).




          (b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable
in respect of the Obligations to any Lender, any Issuing Bank or the Administrative Agent (i) the
sum payable shall be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 4.5), such
Lender, such Issuing Bank or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the relevant Loan Party
shall make such deductions, (iii) the relevant Loan Party shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable law and (iv) the
relevant Loan Party shall deliver to the Administrative Agent evidence of such payment.




          (c) In addition, each Loan Party agrees to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies of the United States or any
political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with
respect thereto, in each case arising from any payment made hereunder or under any of the other
Loan





54









 







Documents or from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any of the other Loan Documents (collectively, “Other Taxes”).




          (d) Each Loan Party shall indemnify each Lender, each Issuing Bank and the Administrative
Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by
any jurisdiction on amounts payable under this Section 4.5) paid by such Lender, such
Issuing Bank or the Administrative Agent (as the case may be) and any liability (including for
penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within
ten (10) days from the date such Lender, such Issuing Bank or the Administrative Agent (as the case
may be) makes written demand therefor. A certificate as to the amount of such payment or liability
delivered to the Administrative Borrower by a Lender, an Issuing Bank (with a copy to the
Administrative Agent) or by the Administrative Agent on its own behalf or on behalf of a Lender or
an Issuing Bank, shall be conclusive absent manifest error.




          (e) As soon as practicable after any payment of Taxes or Other Taxes by any Loan Party, such
Loan Party shall furnish to the Administrative Agent, at its address referred to herein, the
original or a certified copy of a receipt evidencing payment thereof.




          (f) Without prejudice to the survival of any other agreements of any Loan Party hereunder or
under any of the other Loan Documents, the agreements and obligations of such Loan Party contained
in this Section 4.5 shall survive the termination of this Agreement and the payment in full
of the Obligations.




          (g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the applicable Borrower is resident for tax purposes, or
any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any
of the other Loan Documents shall deliver to the Administrative Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by
the Administrative Borrower or the Administrative Agent (in such number of copies as is reasonably
requested by the recipient), whichever of the following is applicable (but only if such Foreign
Lender is legally entitled to do so): (i) duly completed copies of Internal Revenue Service Form
W-8BEN claiming exemption from, or a reduction to, withholding tax under an income tax treaty, or
any successor form, (ii) duly completed copies of Internal Revenue Service Form W-8ECI claiming
exemption from withholding because the income is effectively connected with a U.S. trade or
business or any successor form, (iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, a certificate of the
Foreign Lender to the effect that such Foreign Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section
881(c)(3)(B) of the Code or a “controlled foreign corporation” described and Section 881(c)(3)(C)
of the Code and duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption
from withholding under the portfolio interest exemption or any successor form or (iv) any other
applicable form, certificate or document prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit a Borrower to
determine the withholding or deduction required to be made. Unless the Administrative Borrower and
the Administrative Agent have received forms or other documents satisfactory to them indicating
that payments hereunder or under any of the other Loan Documents to or for a Foreign Lender are not
subject to United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrowers or the Administrative Agent shall withhold amounts required to
be withheld by applicable requirements of law from such payments at the applicable statutory rate.






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          (h) Any Lender claiming any additional amounts payable pursuant to this Section 4.5
shall use its reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its applicable lending office if the making of such a
change would avoid the need for, or reduce the amount of, any such additional amounts that would be
payable or may thereafter accrue and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender.




          (i) If the Administrative Agent, any Issuing Bank or any Lender determines, in its reasonable
discretion, that is has received a refund of an additional amount from any Loan Party pursuant to
Section 4.5(b), the Administrative Agent, such Issuing Bank or such Lender shall pay to
such Loan Party an amount equal to such refund, net of all out-of-pocket expenses of the
Administrative Agent, such Issuing Bank or such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with respect to such refund).
Each Loan Party, upon request of the Administrative Agent, such Issuing Bank or such Lender, agrees
to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent, such Issuing Bank or
such Lender in the event the Administrative Agent, such Issuing Bank or such Lender is required to
repay such refund to such Governmental Authority. This paragraph shall not be construed to require
the Administrative Agent, any Issuing Bank or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to any Loan Party or any other
Person.




     Section 4.6 Breakage Indemnity. The Borrowers shall pay to the Administrative Agent
its customary administrative charge and to each Lender all losses, expenses and liabilities
(including any interest paid by such Lender to the Lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection
with the liquidation or redeployment of such) that it sustains (a) if for any reason (other than a
default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified
therefor in a request for borrowing, or a conversion to, or continuation of, any Eurodollar Rate
Loan does not occur on a date specified therefor in a request for conversion or continuation, (b)
if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest Period applicable to such Loan, or (c)
if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice
of prepayment given by a Borrower (or on its behalf by the Administrative Borrower). This covenant
shall survive the termination or non-renewal of this Agreement and the payment of the Obligations.



     Section 4.7 Certificates for Reimbursement. A certificate of a Lender or an Issuing
Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank
or its holding company, as the case may be, as specified in Sections 4.3 or 4.4 and
delivered to the Administrative Borrower shall be conclusive absent manifest error. The Borrowers
shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof absent a good faith dispute of the amount
due.



     Section 4.8 Delay in Requests. Failure or delay on the part of any Lender or any
Issuing Bank to demand compensation pursuant to Section 4.3 or 4.4 shall not
constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation;
provided that the Borrowers shall not be required to compensate a Lender or an Issuing Bank
pursuant to such Sections for any increased costs incurred or reductions occurring more than one
hundred eighty (180) days prior to the date that such Lender or such Issuing Bank, as the case may
be, becomes aware of the event giving rise to such Lender’s or such Issuing Bank’s claim for
compensation therefor (except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be
extended to include the period of retroactive effect thereof).



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     Section 4.9 Mitigation; Replacement of the Lenders.



          (a) If Section 4.2 applies, any Lender requests compensation under Section
4.2, 4.3 or 4.4, or the Borrowers are required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant to Section
4.5, then such Lender shall, if requested by the Administrative Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate a different lending
office for funding or booking its Loans hereunder, to assign its rights and obligations hereunder
to another of its offices, branches or affiliates or to take such other actions as such Lender or
the Administrative Agent determines, if, in the judgment of such Lender, such designation,
assignment or other action (i) would eliminate or reduce amounts payable pursuant to such Sections
in the future and (ii) would not subject the Administrative Agent or such Lender to any
unreimbursed cost or expense and the Administrative Agent or such Lender would not suffer any
economic, legal or regulatory disadvantage. Nothing in this Section 4.9 shall affect or
postpone any of the obligations of the Borrowers or the rights of the Administrative Agent or such
Lender pursuant to this Section 4.9. The Borrowers hereby agree to pay on demand all
reasonable costs and expenses incurred by the Administrative Agent or any Lender in connection with
any such designation or assignment.




          (b) If Section 4.2 applies, any Lender requests compensation under Section
4.2, 4.3 or 4.4, or becomes a Defaulting Lender, or the Borrowers are required
to pay any additional amount to any Lender or Governmental Authority pursuant to Section
4.5, then within sixty (60) days thereafter, the Administrative Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent, replace such Lender by
requiring such Lender to assign and delegate (and such Lender shall be obligated to assign and
delegate), without recourse (in accordance with and subject to the restrictions contained in
Section 14.11), all of its interests, rights and obligations under this Agreement to an
Eligible Assignee that shall assume such obligations; provided that (i) the Administrative
Borrower has received the prior written consent of the Administrative Agent and the applicable
Issuing Banks, in accordance with, and subject to, the provisions of Section 14.11, (ii) the
Administrative Borrower shall have paid to the Administrative Agent the assignment fee specified in
Section 14.11, (iii) such Lender shall have received payment of an amount equal to the
outstanding principal amount of its Loans and participations in Letter of Credit Obligations and
Swingline Loans that it has funded, if any, accrued interest thereon, accrued fees and other
amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal)
and the Administrative Borrower (in the case of accrued interest, fees and other amounts, including
amounts under Section 4.6), (iv) such assignment will result in a reduction in such
compensation and payments, and (v) such assignment does not conflict with applicable laws or
regulations. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Administrative Borrower to require such assignment and delegation cease to apply. Nothing in this
Section 4.9 shall impair any rights that any Borrower or the Administrative Agent may have
against any Lender that is a Defaulting Lender.




     Section 4.10 No Requirement of Match Funding. Notwithstanding anything to the
contrary contained herein, the Administrative Agent and the Lenders shall not be required to
acquire Dollar deposits in the London interbank market or any other offshore Dollar market to fund
any Eurodollar Rate Loan or to otherwise match fund any Obligations as to which interest accrues
based on the Eurodollar Rate. All of the provisions of this Article 4 shall be deemed to
apply as if the Administrative Agent, each Lender or any Participant had acquired such deposits to
fund any Eurodollar Rate Loan or any other Obligation as to which interest is accruing at the
Eurodollar Rate by acquiring such Dollar deposits for each Interest Period in the amount of the
Eurodollar Rate Loans or other applicable Obligations.



     Section 4.11 Optional Termination of Commitment of Defaulting Lender.



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          (a) In addition to the replacement right under Section 4.9(b), if any Lender becomes a
Defaulting Lender, the Administrative Borrower may terminate in full the Commitment of such
Defaulting Lender by giving notice to such Defaulting Lender and the Administrative Agent (such
termination, a “Defaulting Lender Termination”); provided that on the effective
date of such Defaulting Lender Termination and after giving effect thereto and to any repayment of
Loans in connection therewith, (i) no Default or Event of Default has occurred and is continuing
(unless the Required Lenders otherwise consent to such Defaulting Lender Termination), (ii) the
aggregate outstanding principal amount of Loans, if any, owing to such Defaulting Lender shall have
been repaid in full in accordance with subsection (d) below and (iii) the Total
Outstandings shall not at any time exceed the lesser of (x) the Borrowing Base and (y) the
Aggregate Commitment. Each such notice shall specify the effective date of such Defaulting Lender
Termination (the “Defaulting Lender Termination Date”), which shall be not less than five
(5) Business Days (or such shorter period as agreed to by the Administrative Agent and such
Defaulting Lender) after the date on which such notice is delivered to such Defaulting Lender and
the Administrative Agent.




          (b) On each such Defaulting Lender Termination Date, (i) the Commitment of such Defaulting
Lender shall be reduced to zero, (ii) such Defaulting Lender shall cease to be a “Lender” hereunder
(provided that any Defaulting Lender shall continue to be entitled to the indemnification
provisions contained herein, but only with respect to matters arising prior to the applicable
Defaulting Lender Termination Date), (iii) the Commitments of all other Lenders shall remain
unchanged and (iv) each Lender’s (other than the Defaulting Lender) Pro Rata Share of the Letter of
Credit Obligations and Swingline Loans shall be reallocated by the Administrative Agent after
giving effect to the Defaulting Lender Termination.




          (c) Except as otherwise provided in subsection (d) below, each Defaulting Lender shall
be paid all interest and/or fees owed thereto concurrently with any payment of such interest or
fees required by this Agreement on or after such Defaulting Lender Termination Date.




          (d) If on the Defaulting Lender Termination Date for a Defaulting Lender, the outstanding
principal balance of Loans is not zero, the Administrative Borrower may, notwithstanding any other
provision of this Agreement to the contrary, including without limitation Section 3.4(c),
but only with the prior written consent of the Administrative Agent, repay the entire outstanding
principal balance of Loans owing to such Defaulting Lender on the Defaulting Lender Termination
Date, together with all accrued and unpaid interest thereon.




          (e) The exercise by the Administrative Borrower of its rights under this Section 4.11
or any other provision of this Agreement applicable to a Defaulting Lender, shall not be to the
exclusion of, nor be a limitation on, any other rights or remedies that may be available to the
Borrowers with respect to a Defaulting Lender under applicable law.




ARTICLE 5

CONDITIONS PRECEDENT




     Section 5.1 Conditions Precedent to Initial Loans and Letters of Credit. The
obligation of the Lenders to make the initial Loans or of the applicable Issuing Banks to issue the
initial Letters of Credit hereunder is subject to the satisfaction of, or waiver of, immediately
prior to or concurrently with the making of such Loan or the issuance of such Letter of Credit of
each of the following conditions precedent:



          (a) the Administrative Agent shall have received (i) counterparts of this Agreement, (ii) for
the account of each Lender requesting a promissory note, a Note and (iii) counterparts of all other





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Loan Documents and all instruments and documents required to be delivered hereunder, in each
case conforming to the requirements hereunder and thereunder and executed by a duly authorized
officer or director of each party thereto or of the general partner of any partnership party
thereto, and in each case in form and substance reasonably satisfactory to the Lenders;




          (b) the Administrative Agent shall have received, in form and substance satisfactory to the
Administrative Agent, all releases, terminations and such other documents as the Administrative
Agent may reasonably request to evidence and effectuate the termination of the Existing Facility,
including, but not limited to, a payoff letter for the Existing Facility;




          (c) all requisite corporate action and proceedings in connection with this Agreement and the
other Loan Documents shall be satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received all information and copies of all documents, including
records of requisite corporate action and proceedings which the Administrative Agent may have
requested in connection therewith, such documents where requested by the Administrative Agent or
its counsel to be certified by appropriate corporate officers or Governmental Authority (and
including a copy of the certificate of incorporation or formation of each Loan Party which shall
set forth the same complete corporate name of such Loan Party as is set forth herein and
certificates of good standing in (i) the state of organization, (ii) the state where such Loan
Party’s principal place of business is located and (iii) each state where such Loan Party owns
material real property, in each case, certified by the Secretary of State (or equivalent
Governmental Authority), the bylaws or articles of each Loan Party and resolutions of the board of
directors (or equivalent governing body) of each Loan Party approving and authorizing the Loan
Documents and the transactions contemplated thereby);




          (d) no material adverse change or material adverse effect, in either case, shall have occurred
in the business, operations, financial condition, liabilities (whether actual or contingent) or
properties of the Borrowers and their Subsidiaries, taken as a whole, since December 31, 2008;




          (e) the Administrative Agent shall have received:





     (i) (A) an appraisal of the Loan Parties’ Inventory, in form and substance
reasonably satisfactory to the Administrative Agent; and (B) a completed a field
review of the Records and such other information with respect to the Collateral as
the Administrative Agent may reasonably require to determine the amount of Loans
available to the Borrowers (including, without limitation, current perpetual
inventory records and/or roll-forwards of Accounts and Inventory through the Closing
Date and test counts of the Inventory in a manner satisfactory to the Administrative
Agent, together with such supporting documentation as may be necessary or
appropriate, and other documents and information that will enable the Administrative
Agent to accurately identify and verify the Collateral), the results of which, in
each case described in the preceding subclauses (A) and (B), shall be reasonably
satisfactory to the Administrative Agent in all material respects; and




     (ii) (A) a bring-down field exam with respect to the Collateral in form and
substance, and with results, reasonably satisfactory to the Administrative Agent in
all material respects and (B) an initial Borrowing Base Certificate including,
inter alia, calculations demonstrating that Excess Availability as
of the Closing Date is not less than $300,000,000, in each case, after giving
pro forma effect to the payment of fees and expenses of the
transactions contemplated by this Agreement to occur on the Closing Date and the
initial Loans made or to be made and Letters of Credit issued or to be issued in
connection with the initial transactions hereunder;



59









 





          (f) the Loan Parties shall have received all governmental, shareholder and third party
approvals necessary in connection with the transactions contemplated by this Agreement and the
other Loan Documents, and each such approval shall be in full force and effect;




          (g) the Borrowers shall have a cash management system in place that is reasonably satisfactory
to the Administrative Agent;




          (h) the Administrative Agent shall have received (i) all filings and recordations that are
necessary to perfect the security interest of the Administrative Agent in the Collateral and (ii)
evidence, in form and substance reasonably satisfactory to the Administrative Agent, that upon such
filings and recordations, the Administrative Agent will have a valid perfected first priority Lien
upon all of the Collateral; provided that deposit accounts and securities accounts that are
Collateral shall be subject to the provisions of Section 6.3;




          (i) the Administrative Agent shall have received and reviewed Lien and judgment search results
for the jurisdiction of organization of each Loan Party and the jurisdiction of the chief executive
office of each Loan Party, which search results shall be in form and substance satisfactory to the
Administrative Agent;




          (j) the Administrative Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Loan Documents, in form and substance
reasonably satisfactory to the Administrative Agent;




          (k) the Administrative Agent shall have received, in form and substance reasonably
satisfactory to the Administrative Agent, an opinion letter of legal counsel to the Loan Parties,
with respect to the Loan Parties, which such opinions shall permit reliance by successors and
permitted assigns of each of the Administrative Agent and the Lenders;




          (l) the Administrative Agent shall have received a certificate, in form and substance
reasonably satisfactory to the Administrative Agent, executed by the chief financial officer of the
Company certifying that (i) to the knowledge of such officer, no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator or governmental
instrumentality that purports to affect any Loan Party or any transaction contemplated by the Loan
Documents, which action, suit, investigation or proceeding could reasonably be expected to have a
Material Adverse Effect and (ii) immediately after giving effect to this Agreement (including the
initial extensions of credit hereunder), the other Loan Documents, and all the transactions
contemplated therein or thereby to occur on such date, (A) no Default or Event of Default exists,
(B) all representations and warranties contained herein and in the other Loan Documents are true
and correct in all material respects, (C) the Company and its Subsidiaries taken as a whole are
Solvent;




          (m) the Administrative Agent shall have received an executed Notice of Account Designation;




          (n) the Administrative Agent shall have received, in form and substance reasonably
satisfactory thereto, financial projections prepared by management of the Company and its
Subsidiaries, which will be quarterly for the first year after the Closing Date and annually
thereafter for the term of this Agreement (and which will not be inconsistent with information
provided to the Lenders prior to the Closing Date);




          (o) the Administrative Agent shall have received, in form and substance reasonably
satisfactory thereto, copies of unaudited financial statements of the Company and its Subsidiaries
for each





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fiscal monthly period ended since December 31, 2008 (including the fiscal monthly period
ending at least fifteen (15) Business Days prior to the Closing Date);




          (p) the Administrative Agent shall have received, in form and substance reasonably
satisfactory thereto, statements demonstrating that the accounts payable of the Company and its
Subsidiaries are at a level and in a condition consistent with historical practices;




          (q) the Administrative Agent shall have received a certificate provided by the Company that
sets forth information required by the Patriot Act including, without limitation, the identity of
each Loan Party, the name and address of each Loan Party and other information requested by the
Administrative Agent that will allow the Administrative Agent or any Lender, as applicable, to
identify each Loan Party in accordance with the Act, in form and substance reasonably satisfactory
to the Administrative Agent and the Lenders;




          (r) the Administrative Agent shall have received a sources and uses table accompanied by
payment instructions;




          (s) all fees and expenses required to be paid hereunder, including without limitation, (i)
under the Fee Letter and (ii) all other fees and expenses invoiced on or before the Closing Date,
shall have been paid in full in cash or will be paid on the Closing Date; and




          (t) all other documents and legal matters in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent
and its counsel.



The Administrative Agent shall notify the Administrative Borrower and the Lenders that the
conditions specified in Section 5.1 have been satisfied or waived and that the Closing Date
has occurred, and such notice, absent manifest error, shall be conclusive and binding.




     Section 5.2 Conditions Precedent to All Loans and Letters of Credit. The obligation
of the Lenders to make the Loans, including the initial Loans, or of any Issuing Bank to issue any
Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction
of, or waiver of, immediately prior to or concurrently with the making of each such Loan or the
issuance of such Letter of Credit of each of the following conditions precedent:



          (a) all representations and warranties contained herein and in the other Loan Documents shall
be true and correct in all material respects with the same effect as though such representations
and warranties had been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct in all material respects on and as
of such earlier date); provided that any representation or warranty that is qualified as to
“materiality”, “Material Adverse Effect” or similar language shall be true and correct (after
giving effect to any qualification therein) in all respects on such respective dates;




          (b) no Default or Event of Default shall have occurred and be continuing on and as of the date
of the making of such Loan or providing each such Letter of Credit and after giving effect thereto;
and




          (c) Excess Availability shall be equal to or greater than the aggregate amount of requested
Loans to be made and requested Letters of Credit to be issued.






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ARTICLE 6

SECURITY INTEREST AND COLLECTION




     Section 6.1 Grant of Security Interest. To secure payment and performance of all
Obligations, each Loan Party hereby grants to the Administrative Agent, for itself and the benefit
of Secured Parties, a continuing security interest in, a Lien upon, and a right of set off against,
and hereby pledges and makes a collateral assignment to the Administrative Agent, for itself and
the benefit of Secured Parties, as security, all of each Loan Party’s right, title and interest in
and to the following, whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the respective Obligations at any time granted to
or held or acquired by the Administrative Agent or any Secured Party, collectively, the
“Collateral”):



          (a) all Accounts;




          (b) all Inventory;




          (c) all deposit accounts and securities accounts located in the United States;




          (d) all tax refunds, rebates or other similar payments or credits;




          (e) all contracts, contract rights, general intangibles (other than Intellectual Property),
payment intangibles, commercial tort claims, chattel paper, documents, instruments and supporting
obligations, in each case, directly relating to, or arising from, any of the items described in
clauses (a) through (d) above;




          (f) all books and records and related data processing software, in each case, directly
relating to, or arising from, any of the items described in clauses (a) through (e) above; and




          (g) all accessions to, substitutions for and all replacements, products and proceeds of any of
the items described in clauses (a) through (f) above, in any form, including without limitation
insurance proceeds, all claims against third parties for loss or damage to or destruction of or
other involuntary conversion of any kind or nature of any or all of the other Collateral, letters
of credit and letter of credit rights.




     Section 6.2 Perfection of Security Interests.



          (a) Each Loan Party irrevocably and unconditionally authorizes the Administrative Agent (or
its agent) to prepare and file at any time and from time to time such financing statements,
together with any amendments and continuations with respect thereto, with respect to the Collateral
naming the Administrative Agent or its designee as the secured party and such Loan Party as debtor,
as the Administrative Agent may require, and including any other information with respect to such
Loan Party or otherwise as the Administrative Agent may determine and as may be required by Article
9 of the UCC to perfect the security interest granted by such Loan Party to the Administrative
Agent under this Agreement, which authorization shall apply to all financing statements filed on,
prior to or after the Closing Date; provided that, with respect to Inventory located in a
jurisdiction outside of the United States, no Loan Party shall be required to take any action, and
no Lending Party shall take any action, under the laws of such jurisdiction to perfect the security
interest granted by such Loan Party. Each Loan Party hereby ratifies and approves all financing
statements previously approved by the Administrative





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Borrower naming the Administrative Agent or its designee as secured party and such Loan Party,
as the case may be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of the Administrative Agent prior to the Closing
Date and ratifies and confirms the authorization of the Administrative Agent to file such financing
statements (and amendments, if any). Each Loan Party hereby authorizes the Administrative Agent to
adopt on behalf of such Loan Party any symbol required for authenticating any electronic filing.
In the event that the description of the Collateral in any financing statement naming the
Administrative Agent or its designee as the secured party and any Loan Party as debtor includes
assets and properties of such Loan Party that do not at any time constitute Collateral, whether
hereunder, under any of the other Loan Documents or otherwise, the filing of such financing
statement shall nonetheless be deemed authorized by such Loan Party to the extent of the Collateral
included in such description and it shall not render the financing statement ineffective as to any
of the Collateral or otherwise affect the financing statement as it applies to any of the
Collateral; provided upon the request of such Loan Party, the Administrative Agent shall, or shall
cause its designee as the secured party to, promptly file an amendment to any such financing
statement to eliminate such assets and properties from such description. In no event shall any
Loan Party at any time file, or permit or cause to be filed, any continuation, amendment or
termination with respect to any financing statement naming the Administrative Agent or its designee
as secured party and such Loan Party as debtor.




          (b) In the event that any Loan Party shall be entitled to or shall receive any chattel paper
or instrument that constitutes Collateral, in each case having an individual value of at least
$1,000,000, or, when aggregated together with the value of all other such chattel paper and
instruments not yet delivered to the Administrative Agent pursuant to this Section, a value of at
least $10,000,000, then upon the receipt thereof by or on behalf of any Loan Party (including by
any agent or representative), such Loan Party shall promptly deliver, or cause to be delivered, to
the Administrative Agent, all such tangible chattel paper and instruments, accompanied by such
instruments of transfer or assignment duly executed in blank as the Administrative Agent may from
time to time reasonably specify, in each case except as the Administrative Agent may otherwise
agree. At the Administrative Agent’s option, each Loan Party shall, or the Administrative Agent
may at any time on behalf of any Loan Party, cause the original of any such instrument or chattel
paper to be conspicuously marked in a form and manner acceptable to the Administrative Agent with
the following legend referring to chattel paper or instruments as applicable: “This [chattel
paper][instrument] is subject to the security interest of Wachovia Bank, National Association, as
the Administrative Agent and any sale, transfer, assignment or encumbrance of this [chattel
paper][instrument] violates the rights of such secured party.”




          (c) In the event that any Loan Party shall at any time hold or acquire an interest in any
electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) that constitutes
Collateral, in each case having an individual value of at least $1,000,000, or, when aggregated
together with the value of all other such chattel paper and transferable records not yet subject to
the control of the Administrative Agent pursuant to this Section, a value of at least $5,000,000,
such Loan Party shall promptly notify the Administrative Agent thereof in writing. Promptly upon
the Administrative Agent’s request, such Loan Party shall take, or cause to be taken, such actions
as the Administrative Agent may reasonably request to give the Administrative Agent control of such
electronic chattel paper under Section 9-105 of the UCC and control of such transferable record
under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.




          (d) On or prior to the date that is one hundred twenty (120) days after the Closing Date, the
Administrative Agent shall have received, in form and substance reasonably satisfactory to the





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Administrative Agent, (i) Deposit Account Control Agreements by and among the Administrative
Agent, each applicable Loan Party and each bank where such Loan Party has a deposit account (other
than any Excluded Account, as defined below) and (ii) Investment Property Control Agreements by and
among the Administrative Agent, each applicable Loan Party and each securities intermediary that
maintains a securities account of such Loan Party (other than any Excluded Account), in each case,
duly authorized, executed and delivered by the Administrative Agent, such Loan Party and such bank
or securities intermediary, as applicable; provided that, if a Cash Dominion Period occurs
within such 120 day period, the Loan Parties will use their commercially reasonable efforts to
obtain the Deposit Account Control Agreements and Investment Property Control Agreements required
above. Subject to Section 6.3(a), Loan Parties shall not, directly or indirectly, after
the Closing Date open, establish or maintain any deposit account or securities account (other than
an Excluded Account, as defined below) unless on or before the opening of such deposit account or
securities account, such Loan Party shall deliver to the Administrative Agent a Deposit Account
Control Agreement or Investment Property Control Agreement, as applicable, with respect to such
deposit account or securities account, duly authorized, executed and delivered by such Loan Party
and the bank at which such deposit account is opened and maintained or the securities intermediary
at which such securities account is maintained, as applicable. The terms of this subsection
(d) shall not apply to any of the following (each an “Excluded Account”): (A) deposit
accounts specifically and exclusively used for, payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of any Loan Party’s employees, (B) the Store Bank Accounts
which, individually or in the aggregate, do not at any time have more than $5,000,000 on deposit
therein, (C) any deposit account or securities account that is not located within the United States
of America which, individually or in the aggregate, does not at any time have more than $5,000,000
on deposit therein, (D) any deposit account or securities account that is located within the United
States of America which, individually or in the aggregate, does not have at any time have more than
$2,000,000 on deposit therein or (E) any disbursement account that is used solely for the purpose
of paying obligations of one or more of the Loan Parties that have become due and payable.




          (e) In the event that any Loan Party shall be entitled to or shall receive any right to
payment under any letter of credit, banker’s acceptance or any similar instrument that constitutes
Collateral, in each case having an individual value of at least $1,000,000, or, when aggregated
together with the value of all other such letters of credit, banker’s acceptances and other similar
instruments not yet delivered to the Administrative Agent pursuant to this Section, a value of at
least $5,000,000, whether as beneficiary thereof or otherwise after the Closing Date, such Loan
Party shall promptly notify the Administrative Agent thereof in writing. Such Loan Party shall
promptly, as the Administrative Agent may specify in writing, either (i) deliver, or cause to be
delivered to the Administrative Agent, with respect to any such letter of credit, banker’s
acceptance or similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any confirming or negotiating
bank), in form and substance reasonably satisfactory to the Administrative Agent, consenting to the
assignment of the proceeds of the letter of credit to the Administrative Agent by such Loan Party
and agreeing to make all payments thereon directly to the Administrative Agent or as the
Administrative Agent may otherwise direct or (ii) cause the Administrative Agent to become, at the
Borrowers’ expense, the transferee beneficiary of the letter of credit, banker’s acceptance or
similar instrument (as the case may be).




          (f) In the event that any Loan Party shall at any time after the Closing Date have any
commercial tort claims that constitute Collateral (excluding any commercial tort claim where a
Responsible Officer of such Loan Party has reasonably determined that the amount likely to be
recovered in respect of such claim will not exceed $2,000,000), such Loan Party shall promptly
notify the Administrative Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include the express grant by
such Loan Party to the Administrative Agent of a security interest in such commercial tort claim
(and the proceeds thereof). In





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the event that such notice does not include such grant of a security interest, the sending
thereof by such Loan Party to the Administrative Agent shall be deemed to constitute such grant to
the Administrative Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included therein.




          (g) Except as set forth in Schedule 8.2, the Loan Parties do not have any Inventory
valued in excess of $200,000 in the custody, control or possession of a third party as of the
Closing Date, except for goods located in the United States in transit to a location of a Loan
Party set forth in Schedule 8.2 in the ordinary course of business of such Loan Party in
the possession of the carrier transporting such goods.




          (h) Except as otherwise expressly provided in this Agreement or any other Loan Document, the
Loan Parties shall take any other actions reasonably requested by the Administrative Agent from
time to time to cause the attachment, perfection and first priority of, and the ability of the
Administrative Agent to enforce, the security interest of the Administrative Agent in any and all
of the Collateral (subject only to the Liens permitted under Section 10.2), including,
without limitation, (i) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the UCC and other applicable law, to the extent, if any, that
any Loan Party’s signature thereon is required therefor, (ii) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of the Administrative
Agent to enforce, the security interest of the Administrative Agent in such Collateral, and (iii)
obtaining the consents and approvals of any Governmental Authority or third party, including,
without limitation, any consent of any licensor, lessor or other person obligated on Collateral.




     Section 6.3 Collection of Accounts.



          (a) The Borrowers shall promptly deposit and direct their respective account debtors to
directly remit all payments on Accounts and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are made, whether by cash, check or
other manner, into one or more deposit accounts subject to a Deposit Account Control Agreement
pursuant to Section 6.2(d) (the “Blocked Accounts”). Each Deposit Account Control
Agreement entered into with respect to a Blocked Account shall provide the Administrative Agent
with the ability, during a Cash Dominion Period, to direct that all payments to the Blocked
Accounts shall be swept daily to the Administrative Agent Payment Account. Each Loan Party agrees
that during a Cash Dominion Period all payments made to such Blocked Accounts or other funds
received and collected by the Administrative Agent or any Lender, whether in respect of the
Accounts, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to
the Administrative Agent and the Lenders in respect of the Obligations and therefore shall
constitute the property of the Administrative Agent and the Lenders to the extent of then
outstanding Obligations.




          (b) Except during a Cash Dominion Period, the Administrative Agent will not give notice under
any Deposit Account Control Agreement terminating the Borrowers’ right to have access to such
deposit accounts or give instructions with respect thereto. During any Cash Dominion Period, the
Borrowers, promptly upon the request of the Administrative Agent, shall deliver to the
Administrative Agent a schedule of all deposit accounts (other than deposit accounts described in
clauses (A) and (E) of the definition of Excluded Account), that are maintained by the Loan
Parties, which schedule shall include, with respect to each depository (i) the name and address of
such depository, (ii) the account name and number(s) maintained with such depository and (iii) a
contact person at such depository.






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          (c) For purposes of calculating (i) the amount of the Loans and Letters of Credit available to
the Borrowers and (ii) the amount of interest on the Obligations, such payments will be applied
(conditional upon final collection) to the Obligations on the Business Day of receipt by the
Administrative Agent of immediately available funds in the Administrative Agent Payment Account,
provided such payments and notice thereof are received not later than 2:00 p.m. on such day. All
payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fees shall continue to accrue.




          (d) During a Cash Dominion Period, each Loan Party and their respective employees, agents and
Subsidiaries shall, acting as trustee for the Administrative Agent, receive, as the property of the
Administrative Agent, any monies, checks, notes, drafts or any other payment relating to and/or
proceeds of Collateral which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in a Blocked Account, or remit the
same or cause the same to be remitted, in kind, to the Administrative Agent. In no event shall the
same be commingled with any Loan Party’s other funds. The Borrowers agree to reimburse the
Administrative Agent on demand for any amounts owed or paid to any bank or other financial
institution at which a Blocked Account or any other deposit account or investment account is
established or any other bank, financial institution or other person involved in the transfer of
funds to or from the Blocked Accounts arising out of the Administrative Agent’s payments to or
indemnification of such bank, financial institution or other person. The obligations of the
Borrowers to reimburse the Administrative Agent for such amounts pursuant to this Section
6.3 shall survive the termination of this Agreement.




ARTICLE 7

COLLATERAL REPORTING AND COVENANTS




     Section 7.1 Collateral Reporting.



          (a) The Administrative Borrower shall provide the Administrative Agent with the following
documents in a form reasonably satisfactory to the Administrative Agent: (A) as soon as available
after the end of each fiscal month (but in any event within fifteen (15) Business Days after the
end thereof), a Borrowing Base Certificate and (B) each other report described on Schedule
7.1 (as such Schedule may be amended, restated, updated, supplemented or otherwise modified
from time to time by the Administrative Agent and the Borrowers) within the time periods set forth
for delivery thereof in such Schedule.




          (b) If any Loan Party’s records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, such Loan Party hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records, reports, and related
documents to the Administrative Agent and to follow the Administrative Agent’s instructions with
respect to further services at any time that an Event of Default has occurred and is continuing.




          (c) Upon the occurrence and during the continuation of an Event of Default or if Excess
Availability is less than the Threshold Amount, the Administrative Agent may require more frequent
reporting of certain of the foregoing information set forth in this Section 7.1, such
frequency to be determined in the Administrative Agent’s reasonable discretion.




     Section 7.2 Accounts Covenants.



          (a) The Administrative Borrower shall notify the Administrative Agent promptly (which notice
may include disclosure in a Borrowing Base Certificate if delivery thereof would constitute prompt
notice pursuant to this clause (a)) of: (i) the assertion of any claims, offsets, defenses or





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counterclaims by any account debtor, or any disputes with account debtors, in each case, where
the amount in controversy is $5,000,000 or more, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information known to any Loan Party relating to the financial
condition of any account debtor obligated in respect of Accounts having an aggregate value of
$5,000,000 or more and (iii) any event or circumstance which, to the knowledge of any Responsible
Officer of any Loan Party, would cause the Administrative Agent to consider any then existing
Accounts having a value of $5,000,000 or more as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor, except in the ordinary course of a Loan Party’s business in accordance with its
customary credit practices and policies or as otherwise disclosed to the Administrative Agent. So
long as no Event of Default has occurred and is continuing, Loan Parties may settle, adjust or
compromise any claim, offset, counterclaim or dispute with any account debtor. At any time that an
Event of Default has occurred and is continuing, the Administrative Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute
with account debtors or grant any credits, discounts or allowances.




          (b) The Administrative Agent shall have the right at any time or times, in the name of any
applicable Loan Party, in the Administrative Agent’s name or in the name of a nominee of the
Administrative Agent, to verify the validity, amount or any other matter relating to any Accounts
or other Collateral, by mail, telephone, facsimile transmission or otherwise.




     Section 7.3 Inventory Covenants; Appraisals, Etc. With respect to the Inventory:



          (a) each Loan Party shall at all times maintain inventory records reasonably satisfactory to
the Administrative Agent, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory and such Loan Party’s cost therefore and daily (or, solely
with respect to a Loan Party’s records related to raw materials Inventory, at such intervals as are
consistent with such Loan Party’s customary credit practices and policies with respect thereto as
in effect on the Closing Date (which in no event shall be longer than monthly) and as disclosed to
the Administrative Agent on or prior to the Closing Date) withdrawals therefrom and additions
thereto (it being agreed and acknowledged that the inventory records of the Loan Parties as in
effect on the Closing Date (and as delivered, or otherwise made available, to the Administrative
Agent prior to the Closing Date) are reasonably satisfactory to the Administrative Agent);




          (b) each Loan Party shall either (i) conduct a physical count of the Inventory at least once
each year (or in accordance with its customary credit practices and policies with respect thereto)
or (ii) conduct regular cycle counts of Inventory in accordance with its customary credit practices
and policies with respect thereto and, in each case of clauses (i) or (ii) above, promptly
following the Administrative Agent’s request, or in connection with the next regularly scheduled
field examination completed pursuant to Section 7.6, shall supply the Administrative Agent
with a report in form and detail reasonably satisfactory to the Administrative Agent concerning
such physical count or cycle count, as applicable;




          (c) upon the Administrative Agent’s request (which shall in any event be at least one (1) time
in each twelve (12) consecutive fiscal month period), the Borrowers shall, at their expense, no
more than two (2) times in any twelve (12) consecutive fiscal month period, deliver or cause to be
delivered to the Administrative Agent written appraisals as to the Inventory in form, scope and
methodology reasonably acceptable to the Administrative Agent and by an appraiser reasonably
acceptable to the Administrative Agent, addressed to the Administrative Agent and the Lenders and
upon which the Administrative Agent and the Lenders are expressly permitted to rely;
provided that (i) if Excess Availability is less than the Threshold Amount for any period
of ten (10) consecutive Business Days, the Administrative Agent shall be permitted to request, and
the Borrowers shall be required to bear





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the cost of, three (3) such appraisals in any twelve (12) consecutive fiscal month period and
(ii) upon the occurrence and during the continuation of an Event of Default, there shall be no
limit on the number of appraisals which may be requested by the Administrative Agent or the
Required Lenders, and the Borrowers shall be required to bear the cost of all such appraisals;




          (d) Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care
and caution and in accordance with applicable standards of any insurance and in conformity in all
material respects with applicable laws (including the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related thereto);




          (e) none of the Inventory or other Collateral constitutes farm products or the proceeds
thereof; and




          (f) each Loan Party assumes all responsibility and liability arising from or relating to the
production, use, sale or other disposition of the Inventory.




     Section 7.4 Power of Attorney. Each Loan Party hereby irrevocably designates and
appoints the Administrative Agent (and all persons designated by the Administrative Agent) as such
Loan Party’s true and lawful attorney-in-fact, and authorizes the Administrative Agent, in such
Loan Party’s or the Administrative Agent’s name, to: (a) at any time an Event of Default has
occurred and is continuing (i) demand payment on Accounts or other Collateral, (ii) enforce payment
of Accounts by legal proceedings or otherwise, (iii) exercise all of such Loan Party’s rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Administrative Agent reasonably deems
advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and release
any Account, (vii) prepare, file and sign such Loan Party’s name on any proof of claim in
bankruptcy or other similar document against an account debtor or other obligor in respect of any
Accounts or other Collateral, (viii) notify the post office authorities to change the address for
delivery of remittances from account debtors or other obligors in respect of Accounts or other
proceeds of Collateral to an address designated by the Administrative Agent, and open and dispose
of all mail addressed to such Loan Party and handle and store all mail relating to the Collateral;
(ix) endorse such Loan Party’s name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining thereto or any other
Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or
non-negotiable documents, (x) clear Inventory the purchase of which was financed with a Letter of
Credit through U.S. Customs or foreign export control authorities in such Loan Party’s name, the
Administrative Agent’s name or the name of the Administrative Agent’s designee, and to sign and
deliver to customs officials powers of attorney in such Loan Party’s name for such purpose, and to
complete in such Loan Party’s or the Administrative Agent’s name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds thereof; (xi) sign
such Loan Party’s name on any verification of Accounts and notices thereof to account debtors or
any secondary obligors or other obligors in respect thereof, and (xii) do all acts and things which
are necessary, in the Administrative Agent’s reasonable determination, to fulfill such Loan Party’s
obligations under this Agreement and the other Loan Documents and (b) at any time during a Cash
Dominion Period to (i) take control in any manner of any item of payment in respect of Accounts or
constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by the Administrative Agent or any Lender, (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in respect of Accounts or
other proceeds of Collateral are sent or received, and (iii) endorse such Loan Party’s name upon
any items of payment in respect of Accounts or constituting Collateral or otherwise received by the
Administrative Agent and any Lender and deposit the same in the Administrative Agent Payment
Account for application to the Obligations. Each Loan Party hereby releases the Administrative
Agent and the Lenders and their respective officers, employees and designees from any liabilities
arising from any act or acts under this



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power of attorney and in furtherance thereof, whether of omission or commission, except to the
extent resulting from the Administrative Agent’s or any Lender’s own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of competent
jurisdiction.




     Section 7.5 Right to Cure. The Administrative Agent may, at its option, upon notice
to the Administrative Borrower, upon the occurrence and during the continuation of an Event of
Default, (a) cure any default by any Loan Party under any Material Contract with a third party that
affects the Collateral, its value or the ability of the Administrative Agent to collect, sell or
otherwise dispose of the Collateral or the rights and remedies of the Administrative Agent or any
Lender therein or the ability of any Loan Party to perform its obligations hereunder or under any
of the other Loan Documents, (b) pay or bond on appeal any judgment entered against any Loan Party,
to the extent such judgment is secured by or could reasonably be expected to result in a Lien on
Collateral, (c) discharge taxes, liens, security interests or other encumbrances at any time levied
on or existing with respect to the Collateral and (d) pay any amount, incur any expense or perform
any act which, in the Administrative Agent’s reasonable judgment, is necessary or appropriate to
preserve, protect, insure or maintain the Collateral and the rights of the Administrative Agent and
the Lenders with respect thereto. The Administrative Agent may add any amounts so expended to the
Obligations and charge any Borrower’s account therefor, such amounts to be repayable by the
Borrowers on demand. The Administrative Agent and the Lenders shall be under no obligation to
effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Loan Party. Any payment made or other action taken by the
Administrative Agent or any Lender under this Section 7.5 shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.



     Section 7.6 Access to Premises; Field Audits. From time to time as requested by the
Administrative Agent, at the cost and expense of the Borrowers, (a) the Administrative Agent or its
designee shall have complete access to all of each Loan Party’s premises during normal business
hours and after notice to the Administrative Borrower, or at any time and without notice to the
Administrative Borrower if an Event of Default has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of each Loan Party’s books and records,
including the Records, and (b) each Loan Party shall promptly furnish to the Administrative Agent
such copies of such books and records or extracts therefrom as the Administrative Agent may
reasonably request, and the Administrative Agent or the Administrative Agent’s designee may use
during normal business hours such of any Loan Party’s personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing and, if an Event of Default has occurred and is
continuing, for the collection of Accounts and realization of other Collateral. In addition to the
foregoing, the Administrative Agent shall be permitted to conduct no more than two (2) field
examinations (it being understood that for the purposes hereof a single field examination may
consist of examinations conducted at multiple relevant sites and involving each of the relevant
Loan Parties and their assets) during any twelve (12) consecutive fiscal month period (and in any
event, the Administrative Agent shall conduct at least one (1) field examination in each twelve
(12) consecutive fiscal month period), each at the Borrowers’ expense; provided that (i) if
Excess Availability is less than the Threshold Amount for any period of ten (10) consecutive
Business Days, the Administrative Agent shall be permitted to conduct three (3) such field
examinations during any twelve (12) fiscal consecutive month period, each at the Borrowers’ expense
and (ii) upon the occurrence and during the continuation of an Event of Default, there is no limit
on the number of field examinations which may be conducted by the Administrative Agent, each at the
Borrowers’ expense. In addition to the foregoing, if an Event of Default has occurred and is
continuing, the Administrative Agent will provide the Lenders with reasonable notice of any
scheduled field examination, collateral audit or other due diligence visit to the Loan Parties’
premises, and one representative of each Lender (or such Lender’s designee) shall be permitted to
accompany the Administrative Agent (or the Administrative Agent’s designee) on such field
examination, collateral audit or other due diligence visit.



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ARTICLE 8

REPRESENTATIONS AND WARRANTIES




     Each Loan Party, on behalf of itself and each of its Subsidiaries, hereby represents and
warrants to the Administrative Agent, the Lenders and the Issuing Banks the following (which shall
survive the execution and delivery of this Agreement):



     Section 8.1 Corporate Existence, Power and Authority. Each Loan Party and each
Domestic Subsidiary thereof is a corporation, limited liability company, limited partnership or
other legal entity duly organized and in good standing under the laws of its jurisdiction of
organization and is duly qualified as a foreign corporation, limited liability company, limited
partnership, or other legal entity and in good standing in all states or other jurisdictions where
the nature and extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to so qualify would
not have a Material Adverse Effect. The execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated hereunder and
thereunder (a) are all within each Loan Party’s corporate, limited liability company, limited
partnership or other comparable powers, (b) have been duly authorized, (c) are not in contravention
of law or the terms of any Loan Party’s certificate of incorporation, certificate of formation,
bylaws, operating agreement, limited partnership agreement or other organizational documentation,
or any indenture, agreement, undertaking or Material Contract to which any Loan Party is a party or
by which any Loan Party or its property is bound and (d) will not result in the creation or
imposition of, or require or give rise to any obligation to grant, any Lien upon any property of
any Loan Party (other than Liens in favor of the Administrative Agent). This Agreement and the
other Loan Documents to which any Loan Party is a party constitute legal, valid and binding
obligations of such Loan Party enforceable in accordance with their respective terms;
provided that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of
creditors’ rights generally.



     Section 8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.



          (a) The exact legal name of each Loan Party as of the Closing Date is as set forth on the
signature page of this Agreement and in Schedule 8.2. No Loan Party has, during the five
(5) year period ending on the date of this Agreement, been known by or used any other corporate or
fictitious name or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out of the ordinary
course of business, except as set forth in Schedule 8.2.




          (b) As of the Closing Date, each Loan Party is an organization of the type and organized in
the jurisdiction set forth in Schedule 8.2. Schedule 8.2 accurately sets forth as
of the Closing Date the organizational identification number of each Loan Party or accurately
states that such Loan Party has none and accurately sets forth the federal employer identification
number of each Loan Party.




          (c) As of the Closing Date, the chief executive office and primary mailing address of each
Loan Party and each Loan Party’s Records concerning Accounts are set forth in Schedule 8.2
and, as of the Closing Date, its only other locations of Collateral consisting of Inventory with a
Value in excess of $200,000 at any one such location, if any, are set forth in Schedule
8.2.




     Section 8.3 Financial Statements; No Material Adverse Effect. All financial
statements relating to the Loan Parties and their Subsidiaries which have been or may hereafter be
delivered by any Loan Party to the Administrative Agent and the Lenders have been prepared in
accordance with GAAP (except as to any (a) monthly financial statements and (b) quarterly financial
statements, to the extent



70









 




such quarterly statements are subject to normal quarter-end and year-end adjustments and do
not include any notes) and fairly present in all material respects the financial condition and the
results of operation of the Loan Parties and their Subsidiaries as at the dates and for the periods
set forth therein. Since December 31, 2008 there has been no act, condition or event having, or
that could reasonably be expected to have, a Material Adverse Effect. The projections that have
been delivered to the Administrative Agent pursuant to Section 5.1(p) or any projections
hereafter delivered to the Administrative Agent have been prepared in light of the past operations
of the businesses of Loan Parties and are based upon estimates and assumptions stated therein, all
of which Loan Parties have determined to be reasonable and fair in light of then current conditions
and current facts and reflect the good faith and reasonable estimates of Loan Parties of the future
financial performance of the Company and its Subsidiaries and of the other information projected
therein for the periods set forth therein (it being understood that actual results may differ from
those set forth in such projections).




     Section 8.4 Priority of Liens. The Liens granted to the Administrative Agent under
this Agreement and the other Loan Documents constitute valid and (except and only to the extent as
otherwise permitted under Section 6.2(b) through (f)) perfected first priority
Liens and security interests in and upon the Collateral, subject only to the Liens permitted under
Section 10.2.



     Section 8.5 Tax Returns. Each Loan Party and each Domestic Subsidiary thereof has
filed, or caused to be filed, in a timely manner all Federal and all material State, county, local
and foreign income, excise, property and other material tax returns which are required to be filed
by it. All material information in such tax returns is complete and accurate in all material
respects. Each Loan Party and each Domestic Subsidiary thereof has paid or caused to be paid all
material taxes due and payable or claimed due and payable in any assessment received by it, except
taxes the validity of which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Loan Party or such Domestic Subsidiary and with respect to which
adequate reserves have been set aside on its books to the extent required under GAAP or other
applicable accounting principles. Adequate provision has been made for the payment of all accrued
and unpaid Federal, State, county, local, foreign and other material taxes whether or not yet due
and payable and whether or not disputed.



     Section 8.6 Litigation. Except for matters existing on the Closing Date and set forth
in Schedule 8.6, there is no action, suit, proceeding or investigation pending, or to the
knowledge of any of the Loan Parties threatened in writing, against or affecting any Borrower or
any of their respective Domestic Subsidiaries before any court or arbitrator or any governmental
body, agency or official which could reasonably be expected to have a Material Adverse Effect.



     Section 8.7 Compliance with Applicable Laws.



          (a) The Loan Parties and their Domestic Subsidiaries are in compliance with the requirements
of all applicable laws, rules, regulations and orders of any Governmental Authority relating to
their respective businesses, including, without limitation, those set forth in or promulgated
pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and regulations thereunder, and
all Environmental Laws, except for noncompliance which could not reasonably be expected to have a
Material Adverse Effect.




          (b) The Loan Parties and their Domestic Subsidiaries have obtained all permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental Authority required
for the lawful conduct of its business (the “Permits”), except for those the failure to
obtain could not reasonably be expected to have a Material Adverse Effect. All such Permits are
valid and subsisting and in full force and effect. There are no actions, claims or proceedings
pending or, to the knowledge of





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any Responsible Officer of any Loan Party, threatened that seek the revocation, cancellation,
suspension or modification of any such Permits.




     Section 8.8 Environmental Compliance.



          (a) No Loan Party and no Domestic Subsidiary thereof has generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its
premises (whether or not owned by it) in any manner which at any time violates in any respect any
applicable Environmental Law or Permit, except any violation which could not reasonably be expected
to have a Material Adverse Effect. The operations of each Loan Party and each Domestic Subsidiary
thereof comply with all Environmental Laws and all Permits, except for noncompliance which could
not reasonably be expected to have a Material Adverse Effect.




          (b) There has been no investigation by any Governmental Authority or any proceeding,
complaint, order, directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or, to the knowledge of any Responsible Officer of any Loan Party,
threatened, with respect to any non compliance with or violation of the requirements of any
Environmental Law by any Loan Party or any Domestic Subsidiary thereof or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials
or any other environmental, health or safety matter, which, in the case of any of the foregoing,
could reasonably be expected to have a Material Adverse Effect.




     Section 8.9 Employee Benefits.



          (a) Each Plan is in compliance with the applicable provisions of ERISA, the Code and other
Federal or State law, except where any noncompliance could not reasonably be expected to have a
Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service and to the
knowledge of any Responsible Officer of any Loan Party, nothing has occurred which would cause the
loss of such qualification. Each Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.




          (b) There are no pending, or to the knowledge of any Responsible Officer of any Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan. There has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan that could reasonably be expected to result in material liability to
any Loan Party.




          (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) based on the
latest valuation of each Pension Plan and on the actuarial methods and assumptions employed for
such valuation (determined in accordance with the assumptions used for funding such Pension Plan
pursuant to Section 412 of the Code), the aggregate current value of accumulated benefit
liabilities of such Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate
current value of the assets of such Pension Plan; (iii) each Loan Party, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any liability under Title IV
of ERISA with respect to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) each Loan Party, and their ERISA Affiliates, have not incurred and do not reasonably
expect to incur, any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) each Loan Party, and





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their ERISA Affiliates, have not engaged in a transaction that would be subject to Section
4069 or 4212(c) of ERISA.




     Section 8.10 Bank Accounts. As of the Closing Date, all of the deposit accounts and
securities accounts in the name of or used by any Loan Party maintained at any bank, other
financial institution or securities intermediary, excluding any such accounts described in clauses
(A), (B) and (E) of the definition of Excluded Accounts, are set forth in Schedule 8.10.



     Section 8.11 Intellectual Property. Each Loan Party owns or licenses or otherwise has
the right to use all of its Material Intellectual Property.



     Section 8.12 Subsidiaries; Affiliates; Capitalization; Solvency.



          (a) As of the Closing Date, the Company has no Subsidiaries except for those Subsidiaries
listed on Schedule 8.12, which accurately sets forth each such Subsidiary’s complete name,
jurisdiction of creation and organization and beneficial ownership of the Capital Stock thereof.




          (b) As of the Closing Date, all of the issued and outstanding shares of Capital Stock of each
Loan Party and each of their Subsidiaries have been duly authorized, in the case of corporations,
and are fully paid and non-assessable, and are free and clear of all Liens, except for Liens
permitted under Section 10.2.




          (c) The Company and its Subsidiaries, taken as a whole, are Solvent and will continue to be
Solvent after the creation of the Obligations, the security interests of the Administrative Agent
and the other transactions contemplated hereunder.




     Section 8.13 Labor Disputes.



          (a) Set forth on Schedule 8.13 is a list (including dates of termination) of all
collective bargaining or similar agreements between or applicable to each Loan Party and any union,
labor organization or other bargaining agent in respect of the employees of any Loan Party on the
Closing Date.




          (b) There is (i) no significant unfair labor practice complaint pending against any Loan Party
or, to the knowledge of any Responsible Officer of any Loan Party, threatened against it, before
the National Labor Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is pending on the Closing
Date against any Loan Party or, to the knowledge of any Responsible Officer of any Loan Party,
threatened against it, and (ii) no significant strike, labor dispute, slowdown or stoppage is
pending against any Loan Party or, to the knowledge of any Responsible Officer of any Loan Party,
threatened against any Loan Party, in the case of either of clause (i) or (ii), which could
reasonably be expected to have a Material Adverse Effect.




     Section 8.14 Material Contracts. Schedule 8.14 sets forth all Material
Contracts to which any Loan Party is a party or is bound as of the Closing Date. The Loan Parties
have delivered true, correct and complete copies of such Material Contracts to the Administrative
Agent on or before the Closing Date. As of the Closing Date, no Loan Party is in breach of or in
default under any Material Contract and has not received any notice of the intention of any other
party thereto to terminate any Material Contract.



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     Section 8.15 Title to Property. Each Loan Party has good and marketable title to or
valid leasehold interests in all of the real and personal property that is necessary to the conduct
of such Loan Party’s business, subject to no Liens other than permitted Liens pursuant to
Section 10.2.



     Section 8.16 Payable Practices. No Loan Party has made any material change in its
historical accounts payable practices with respect to the extension of payment past the due date
for such account payable from those in effect immediately prior to the Closing Date other than such
changes deemed prudent by such Loan Party exercising its reasonable business judgment;
provided that such changes are not made for the primary purpose of temporarily increasing
Excess Availability under this Agreement.



     Section 8.17 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Loan Party in writing to the Administrative Agent or any Lender in connection
with this Agreement or any of the other Loan Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished will be, when taken as a whole, true,
accurate and complete in every material respect on the date as of which such information is dated
or certified and does not omit any material fact necessary in order to make such information not
misleading.



     Section 8.18 Investment Company Act. No Loan Party is an “investment company”
registered or required to be registered under the Investment Company Act of 1940, as amended, or
is, directly or indirectly, controlled by such a company.



     Section 8.19 Accounts; Inventory. Each Account included in the Borrowing Base as an
Eligible Account meets all of the requirements of an Eligible Account set forth in this Agreement.
Each item of Inventory included in the Borrowing Base as Eligible Inventory meets all of the
requirements of Eligible Inventory set forth in this Agreement.



     Section 8.20 Anti-Terrorism Laws. Neither the making of the Loans hereunder nor the
Borrowers’ use of the proceeds thereof will violate the Patriot Act, OFAC, the Trading with the
Enemy Act, as amended, any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), or any enabling legislation in force in the
United States or executive order relating thereto, or is in violation of any Federal statute or
Presidential Executive Order, including without limitation Executive Order 13224 66 Fed. Reg. 49079
(September 25, 2001) (Blocking Property and Prohibiting Transactions with Persons who Commit,
Threaten to Commit or Support Terrorism), in each case, to the extent applicable to any Borrower.
None of the Borrowers, any Subsidiary of any Borrower or any Affiliate of any Borrower: (a) is a
Sanctioned Person, (b) has any of its assets in Sanctioned Entities, or (c) derives any of its
operating income from investments in, or transactions with Sanctioned Persons or Sanctioned
Entities, in each case, that would constitute a violation of applicable laws. The proceeds of any
Loan will not be used and have not been used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.



     Section 8.21 Senior Indebtedness. The monetary Obligations hereunder rank at least
pari passu in right of payment (to the fullest extent permitted by law) with all other senior
indebtedness of the Borrowers; provided that the prior secured claims of any other senior
indebtedness solely with respect to particular collateral will not be deemed to result in such
Obligations not being at least pari passu in right of payment to such other senior indebtedness.



     Section 8.22 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Loan Documents shall survive the execution and
delivery of this Agreement and shall be deemed to have been made again to the Administrative Agent
and the Lenders on the date of the making of a Loan or the issuance of a Letter of Credit (and on
the effective



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date of any Facility Increase) and shall be conclusively presumed to have been relied on by
the Administrative Agent and the Lenders regardless of any investigation made or information
possessed by the Administrative Agent or any Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or warranties which any
Loan Party shall now or hereafter give, or cause to be given, to the Administrative Agent or any
Lender under any other Loan Documents.




ARTICLE 9

AFFIRMATIVE COVENANTS




     Section 9.1 Maintenance of Existence.



          (a) Except as otherwise permitted pursuant to Section 10.4 or 10.5, each Loan
Party shall, and shall cause each of its Domestic Subsidiaries to, at all times (i) preserve, renew
and keep in full force and effect its legal existence and, (ii) except those that expire or
otherwise terminate in accordance with their terms, or for which the failure to maintain could not
reasonably be expected to have a Material Adverse Effect, maintain in full force and effect all
registrations, approvals, authorizations, leases, contracts, consents and Permits necessary to
carry on the business as presently or proposed to be conducted.




          (b) No Loan Party shall, change its name, its type of organization, its jurisdiction of
organization or its legal structure unless each of the following conditions is satisfied: (A) the
Administrative Agent shall have received prior written notice from the Administrative Borrower of
such proposed change, which notice shall accurately set forth the new name, type of organization,
jurisdiction or structure, as applicable; and (B) not more than 30 days following the effectiveness
of such change, the Administrative Agent shall have received a copy of the amendment to the
certificate of incorporation, certificate of formation or other organizational document of such
Loan Party providing for such change certified by the Secretary of State or other applicable
government official of the jurisdiction of incorporation or organization of such Loan Party or
other similar Governmental Authority.




          (c) No Loan Party shall change its chief executive office or its primary mailing address or
organizational identification number (or if it does not have one, shall not acquire one) unless the
Administrative Agent shall have received prior written notice from the Administrative Borrower of
such proposed change, which notice shall accurately set forth such change and the Administrative
Agent shall have received such agreements as the Administrative Agent may reasonably require in
connection therewith.




     Section 9.2 Compliance with Laws, Regulations, Etc. Each Loan Party shall, and shall
cause each of its Domestic Subsidiaries to, at all times, comply with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe all requirements of
any Governmental Authority, in each case, except where the failure to so comply or observe could
not reasonably be expected to have a Material Adverse Effect.



     Section 9.3 Payment of Taxes and Claims. Each Loan Party shall, and shall cause each
of its Domestic Subsidiaries to, duly pay and discharge all Federal taxes and all other material
taxes, assessments and other similar governmental charges upon or against it or its properties or
assets, except for taxes, assessments and governmental charges the validity of which is being
contested in good faith by appropriate proceedings diligently pursued, as the case may be, and with
respect to which adequate reserves have been set aside on its books to the extent required by GAAP.




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     Section 9.4 Insurance. Each Loan Party shall, and shall cause each of its
Domestic Subsidiaries to, at all times, maintain with financially sound and reputable insurers
insurance against loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by Persons of established reputation engaged in the same or
similar businesses and similarly situated (including, without limitation, hazard and business
interruption insurance) subject to the Loan Parties’ right to self-insure with respect to loss or
damage to property in an amount customarily self-insured against by similarly situated Persons.
Loan Parties shall furnish certificates, policies or endorsements to the Administrative Agent as
the Administrative Agent shall reasonably require as proof of such insurance, and, if any Loan
Party fails to do so, the Administrative Agent is authorized, but not required, to obtain such
insurance at the expense of the Borrowers. All policies insuring loss or damage to Collateral
shall provide for at least thirty (30) days prior written notice to the Administrative Agent of any
cancellation or reduction of coverage and that the Administrative Agent may act as attorney for
each Loan Party in obtaining, and at any time an Event of Default has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. The Loan Parties shall cause the
Administrative Agent to be named as a loss payee on any policies of property insurance covering the
Collateral and an additional insured on any policies of general liability insurance (but without
any liability for any premiums) and the Loan Parties shall obtain non-contributory lender’s loss
payable endorsements to all insurance policies for property insurance covering the Collateral in
form and substance reasonably satisfactory to the Administrative Agent. Such lender’s loss payable
endorsements shall specify that the proceeds of such insurance shall be payable to the
Administrative Agent as its interests may appear and further specify that the Administrative Agent
and the Lenders shall be paid regardless of any act or omission by any Loan Party or any of its
Affiliates.



     Section 9.5 Financial Statements and Other Information.



          (a) Each Loan Party shall, and shall cause any Subsidiary to, keep proper books and records in
which true and complete entries shall be made of all dealings or transactions of or in relation to
the Collateral and the business of such Loan Party and its Subsidiaries in accordance with GAAP
(other than the books and records of Foreign Subsidiaries that are kept in accordance with local
accounting rules and converted to GAAP monthly). The Company shall furnish or cause to be
furnished to the Administrative Agent, the following:




               (i) promptly upon becoming available and in any event within one (1) Business Day after the
same is required to be filed with the Securities and Exchange Commission but in no event later than
one hundred twenty (120) days after the end of each fiscal year of the Company, an audited
consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year
and the related statements of income and loss, statements of cash flow and statements of
shareholders’ equity for such fiscal year and a report containing management’s discussion and
analysis of such financial statements for the fiscal year then ended, including the accompanying
notes thereto, fairly presenting in all material respects the consolidated financial position and
the results of the operations of the Company and its Subsidiaries as of the end of and for such
fiscal year, in each case, setting forth in comparative form the figures for the corresponding
period or periods of the preceding fiscal year certified by the chief financial officer, treasurer,
or corporate controller of the Company as fairly presenting, in all material respects, the
consolidated financial condition and results of operations of the Company and its Subsidiaries,
together with the unqualified opinion of KPMG LLP or other independent public accountants of
nationally recognized standing selected by the Administrative Borrower, that such audited
consolidated financial statements have been prepared in accordance with GAAP, and present fairly in
all material respects the results of operations and financial condition of the Company and its
Subsidiaries as of the end of and for the fiscal year then ended. Each of the foregoing shall be
accompanied by (A) a Compliance Certificate, along with a schedule in form reasonably satisfactory
to the Administrative Agent of the calculation of the Fixed Charge Coverage Ratio (computed for the
consecutive 12-fiscal



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month period then ending) and (B) a representation by the chief financial officer, controller
or treasurer of the Company that no Event of Default has occurred or is continuing;




               (ii) promptly upon becoming available and in any event within one (1) Business Day after the
same is required to be filed with the Securities and Exchange Commission but in no event later than
sixty (60) days after the end of each fiscal quarter of the Company, an unaudited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such fiscal quarter and the
related unaudited consolidated statements of income and loss and statements of cash flow for such
fiscal quarter, fairly presenting in all material respects the consolidated financial position and
the results of the operations of the Company and its Subsidiaries as of the end of and through such
fiscal quarter, in each case setting forth in comparative form the figures for the corresponding
period or periods of the preceding fiscal year, certified by the chief financial officer,
treasurer, or corporate controller of the Company as fairly presenting, in all material respects,
the consolidated financial condition and results of operations of the Company and its Subsidiaries,
subject to normal year-end adjustments and absence of footnote disclosure, and accompanied by (A) a
Compliance Certificate, along with a schedule in form reasonably satisfactory to the Administrative
Agent of the calculation of the Fixed Charge Coverage Ratio (computed for the consecutive 12-fiscal
month period then ending) and (B) a representation by the chief financial officer, controller or
treasurer of the Company that no Event of Default has occurred or is continuing;



               (iii) promptly upon becoming available and in any event fifteen (15) Business Days after the
end of each fiscal month of the Company, an unaudited consolidated balance sheet of the Company and
its Subsidiaries for such fiscal month, and the related unaudited consolidated statements of income
and loss and a summary of cash flow items for such fiscal month in substantially the same form as
delivered to the Administrative Agent prior to the Closing Date (or such other form as may be
mutually agreed to by the Administrative Agent and the Administrative Borrower), fairly presenting
in all material respects the consolidated financial position and the results of the operations of
the Company and its Subsidiaries as of the end of and through such fiscal month, in each case
setting forth in comparative form the figures for the corresponding period or periods of the
preceding fiscal year, accompanied by (A) a Compliance Certificate, along with a schedule in form
reasonably satisfactory to the Administrative Agent of the calculation of the Fixed Charge Coverage
Ratio (computed for the consecutive 12-fiscal month period then ending) and (B) a representation by
the chief financial officer, controller or treasurer of the Company that no Event of Default has
occurred or is continuing;



               (iv) promptly upon becoming available, but in no event later than forty (40) days after the
end of each fiscal year (commencing with the fiscal year of the Borrowers ending December 31,
2009), a projected consolidated financial budget (including forecasted balance sheets, statements
of income and loss and summary cash flow items) of the Company and its Subsidiaries for such fiscal
year, in a format reasonably acceptable to the Administrative Agent, together with such supporting
information as the Administrative Agent may reasonably request. Such projected financial budget
shall also include projected borrowings and Letter of Credit usage and shall be prepared on a
quarterly basis. Such projected financial budget shall represent the reasonable estimate by Loan
Parties of the future financial performance of the Company and its Subsidiaries for the periods set
forth therein and shall have been prepared on the basis of assumptions that the Loan Parties
believe are fair and reasonable as of the date of preparation in light of current and reasonably
foreseeable business conditions (it being understood that actual results may differ from those set
forth in such projected financial budget). The Company shall provide to the Administrative Agent
an update to such projected financial budget, upon the occurrence and during the continuation of an
Event of Default, upon the request of the Administrative Agent; and



               (v) at each time financial statements are delivered pursuant to the foregoing clauses (i),
(ii), (iii) and (iv), the Company shall also deliver to the Administrative Agent a reconciliation



77









 




in form and substance reasonably satisfactory to the Administrative Agent that reflects any
reclassification of leases as a result of the adoption of changes in GAAP outlined by the Financial
Accounting Standards Board in its press release dated March 19, 2009.




          (b) The Loan Parties shall, and shall cause each Domestic Subsidiary thereof to, promptly
notify the Administrative Agent in writing of the details of (i) any loss, damage, investigation,
action, suit, proceeding or claim (x) relating to Collateral having a value of more than
$25,000,000, or (y) which could reasonably be expected to have a Material Adverse Effect, (ii) any
Material Contract being terminated or amended in any manner materially adverse to the Company and
its Subsidiaries or any new Material Contract entered into (in which event the Loan Parties shall
provide the Administrative Agent with a copy of such Material Contract, if requested by the
Administrative Agent), (iii) any order, judgment or decree requiring the payment of more than
$25,000,000 and not adequately covered by insurance shall have been entered against any Loan Party
or any of its Domestic Subsidiaries or any of its or their respective properties or assets, (iv)
any notification of a violation of laws or regulations received by any Responsible Officer of a
Loan Party that could reasonably be expected to have a Material Adverse Effect, (v) any ERISA
Event, (vi) upon any Responsible Officer having knowledge thereof, the occurrence of any Material
Release or Non-Compliance and (vii) upon any Responsible Officer having knowledge thereof, the
occurrence of any Default or Event of Default.



          (c) Promptly after the sending or filing thereof, the Borrowers shall send to the
Administrative Agent copies of (i) all material reports which the Company or any of its
Subsidiaries sends to its security holders generally, (ii) all material reports and registration
statements which the Company or any of its Subsidiaries files with the Securities Exchange
Commission, any national or foreign securities exchange or the National Association of Securities
Dealers, Inc. and (iii) all material press releases.



          (d) Each Loan Party shall, and shall cause each Domestic Subsidiary to, furnish or cause to be
furnished to the Administrative Agent such budgets, forecasts, projections and other information
respecting the Collateral and the business of Loan Parties, as the Administrative Agent may, from
time to time, reasonably request.



          (e) Subject to the requirements of Section 14.9, the Administrative Agent is hereby
authorized to deliver a copy of any financial statement or any other information relating to the
business of Loan Parties to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant or any Affiliate of any Lender or Participant.
Each Loan Party shall use its commercially reasonable efforts to cause its auditors to deliver to
the Administrative Agent any communications provided to the audit committee of the Company relating
to material weaknesses (but not inconsequential items) arising in connection with any annual audit.
Any documents, schedules, invoices or other papers delivered to the Administrative Agent or any
Lender may be destroyed or otherwise disposed of by the Administrative Agent or such Lender one (1)
year after the same are delivered to the Administrative Agent or such Lender, except as otherwise
designated by the Administrative Borrower to the Administrative Agent or such Lender in writing.



          (f) Information required to be delivered pursuant to Section 9.5(a)(i),
(a)(ii) and (c)(ii) shall be deemed to have been delivered if such information, or
one or more annual, quarterly or other reports containing such information, shall have been posted
on the Company’s website on the internet (currently http://www.mohawkind.com) or by the
Administrative Agent on an IntraLinks, SyndTrak Online or similar site to which the Lenders have
been granted access or shall be available on the website of the Securities and Exchange Commission
at http://www.sec.gov; provided that the Company shall deliver paper copies of such
information to the Administrative Agent or any Lender that reasonably requests such delivery; and
provided further that such information shall only be deemed to



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have been delivered when posted on any such website upon notification by the Company to the
Administrative Agent and the Lenders of such posting.




     Section 9.6 Compliance with ERISA. Each Loan Party shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal and State law, except to the extent that
noncompliance would not result in a material liability to such Loan Party or such ERISA Affiliate;
(b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) not terminate any Pension Plan so as to incur any material liability to the
Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction
involving any Plan or any trust created thereunder which would subject such Loan Party or such
ERISA Affiliate to a material tax or other material liability on prohibited transactions imposed
under Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it
is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Plan;
(f) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (g)
not allow or suffer to exist any occurrence of a reportable event or any other event or condition
which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any
Plan that is a single employer plan, which termination could result in any material liability to
the Pension Benefit Guaranty Corporation.



     Section 9.7 Intellectual Property. Each Loan Party shall, and shall cause each of its
Domestic Subsidiaries to, maintain all ownership, licensing and other rights necessary to use all
of its Material Intellectual Property.



     Section 9.8 Further Assurances. At the reasonable request of the Administrative Agent
at any time and from time to time, each Loan Party shall, and shall cause each of its Domestic
Subsidiaries to, at its expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain and enforce the Liens and
the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of
this Agreement or any of the other Loan Documents.



     Section 9.9 Additional Borrowers and Guarantors; Release.



          (a) Within 30 days (or such later date as may be agreed to by the Administrative Agent in its
sole discretion) of any Person becoming a direct or indirect Material Subsidiary of the Company,
the Administrative Borrower will provide the Administrative Agent with written notice thereof and
shall (i) cause such Material Subsidiary to execute and deliver to the Administrative Agent a
joinder agreement in substantially the form of Exhibit E hereto, causing such Material
Subsidiary to become a party to this Agreement, as a joint and several “Borrower” (provided
that only a wholly-owned Subsidiary shall be permitted to be a Borrower), granting a first priority
Lien upon its Collateral, subject to permitted Liens under Section 10.2, (ii) cause such
Material Subsidiary that is added as a Borrower to execute and deliver to the Administrative Agent
Notes in favor of the Lenders, if so requested by the Lenders and (iii) deliver such other
documentation as the Administrative Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements, Deposit Account Control
Agreements, Investment Property Control Agreements, Credit Card Processor Agreements, certified
resolutions and other organizational and authorizing documents of such Material Subsidiary and upon
the request of the Administrative Agent favorable opinions of counsel to such Material Subsidiary
(which shall cover, among other things, the legality, validity, binding effect and enforceability
of the documentation referred to above), all in form, content and scope reasonably satisfactory to
the Administrative Agent; provided that in lieu of the foregoing, at the option of the
Company, the Company shall cause such Material Subsidiary to execute and deliver to the
Administrative Agent a joinder



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agreement in substantially the form of Exhibit E causing such Material Subsidiary to
become a party to the Guaranty as a joint and several “Guarantor”, and each of the documents
described in clauses (ii) and (iii) above, as applicable and with the same effect
set forth above, all as the Administrative Agent reasonably shall request. The requirements of
this Section shall not apply to (x) any Foreign Subsidiary or (y) any Subsidiary prohibited from
providing a guarantee by law or contract (after the Borrowers’ use of commercially reasonable
efforts to have such contractual prohibition waived).




          (b) The Administrative Borrower may request in writing that the Administrative Agent release,
and upon receipt of such request the Administrative Agent shall release, a Borrower as a “Borrower”
or a Guarantor from the Guaranty so long as: (i) such Borrower or Guarantor has ceased to be, or
simultaneously with such release will cease to be, a Subsidiary pursuant to a transaction permitted
by Section 10.4 or 10.5, (ii) in the case of a Guarantor, such Guarantor has ceased
to be, or simultaneously with its release from the Guaranty will cease to be, a Material
Subsidiary, (iii) no Default or Event of Default shall have occurred and be continuing or would
occur as a result of such release, and (iv) the Administrative Agent shall have received such
written request at least ten (10) Business Days (or such shorter period as may be acceptable to the
Administrative Agent) prior to the requested date of release, together, in the case of a release of
a Borrower, with such information as shall be required for the Administrative Agent to adjust the
Borrowing Base to reflect such release.



          (c) The Administrative Borrower may, at any time, cause any Domestic Subsidiary that is not a
Material Subsidiary to become a party to this Agreement as either a joint and several “Borrower” or
a joint and several “Guarantor”; provided that only a wholly-owned Subsidiary shall be
permitted to be a Borrower and provided further that the Administrative Borrower
and such Domestic Subsidiary shall comply with the applicable requirements set forth in Section
9.9(a) and provided further that, notwithstanding anything to the contrary set
forth in Section 9.9(b), any Borrower or Guarantor that becomes a party to this Agreement
pursuant to this Section 9.9(c) shall only be released if such Borrower or Guarantor has
ceased to be, or simultaneously with such release will cease to be, a Subsidiary pursuant to a
transaction permitted by Section 10.4 or 10.5 or as the Administrative Agent shall
otherwise agree in its reasonable discretion.



     Section 9.10 Use of Proceeds. Loans made or Letters of Credit provided to or for the
benefit of any Borrower pursuant to the provisions hereof shall be used by such Borrower only for
general corporate purposes of such Borrower not otherwise prohibited by the terms hereof, including
to finance Permitted Acquisitions and the refinancing of the Existing Facility. None of the
proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock or for the purposes of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any Margin Stock or for any other purpose which might cause any of the Loans to
be considered a “purpose credit” within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, as amended.



     Section 9.11 Fixed Charge Coverage Ratio. If at any time Excess Availability is less
than the Financial Covenant Threshold Amount (a “Financial Covenant Trigger Event”), the
Company shall maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.00 as of the immediately
preceding fiscal month end for which financial statements are available and as of each subsequent
fiscal month end thereafter; provided that (a) a breach of such covenant when so tested
shall not be cured by a subsequent increase of Excess Availability above the Financial Covenant
Threshold Amount and (b) such requirement to maintain a Fixed Charge Coverage Ratio of at least
1.10 to 1.00 shall no longer apply for subsequent periods if Excess Availability on each day during
any period of forty-five (45) consecutive days commencing after the date of such Financial Covenant
Trigger Event is greater than or equal to the Financial Covenant Threshold Amount, after which time
the requirement to comply with the Fixed



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Charge Coverage Ratio for purposes of this Section 9.11 shall not apply unless a
subsequent Financial Covenant Trigger Event occurs.




ARTICLE 10

NEGATIVE COVENANTS




     Section 10.1 Limitations on Indebtedness. No Loan Party shall, nor shall it permit
any Domestic Subsidiary to, incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any Indebtedness, except:



          (a) the Obligations;



          (b) Indebtedness entered into in the ordinary course of business pursuant to a Hedge Agreement
in order to manage existing or anticipated interest rate, exchange rate or commodity price risks;
provided that (i) such arrangements are not for speculative purposes, and (ii) such
Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes part of the
Obligations arising under or pursuant to Hedge Agreements with a Bank Product Provider that are
secured under the terms hereof;



          (c) Indebtedness existing on the Closing Date and listed on Schedule 10.1 and any
Permitted Refinancing Indebtedness in respect of any such Indebtedness;



          (d) Indebtedness incurred in connection with Capital Leases and Indebtedness incurred to
finance the construction, purchase or lease of, or repairs, improvements or additions to, property,
plant or equipment of such Person, together with associated transactions costs (provided
that such Indebtedness is incurred not more than one hundred eighty (180) days after the later of
the acquisition, completion of construction, repair, improvement, addition or commencement of full
operation of such property, plant or equipment), in an aggregate amount, including any Permitted
Refinancing Indebtedness in respect thereof, not to exceed $100,000,000 at any time outstanding;



          (e) Indebtedness of a Person existing at the time such Person became a Subsidiary or
Indebtedness assumed in connection with the acquisition of assets, to the extent that (i) such
Indebtedness was not incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or the acquisition (whether by purchase, merger or otherwise) of such assets and (ii) no
Loan Party or any Subsidiary thereof (other than such Person or any other Person that such Person
merges with or that acquires the assets of such Person) shall have any liability or other
obligation with respect to such Indebtedness, except as permitted by Section 10.1(f), and
any Permitted Refinancing Indebtedness in respect thereof;



          (f) guarantees with respect to Indebtedness permitted pursuant to subsections (a)
through (e), (i), (l), (m) and (o) of this Section
10.1 and guarantees of obligations of Non-Loan Parties to the extent such guarantees are
permitted pursuant to Section 10.3;



          (g) (i) intercompany Indebtedness owed by any Loan Party to another Loan Party, (ii)
intercompany Indebtedness owed by any Non-Loan Party to any Loan Party in the form of Investments
permitted pursuant to Sections 10.3(p) and (q), (iii) unsecured intercompany
Indebtedness owed by any Loan Party to any Non-Loan Party (provided that such Indebtedness
shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative
Agent) and (iv) intercompany Indebtedness owed by any Non-Loan Party to another Non-Loan Party;



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          (h) Indebtedness arising from the honoring by a bank or other financial institution of a
check, draft or other similar instrument drawn against insufficient funds in the ordinary course of
business;



          (i) Subordinated Indebtedness; provided that in the case of each incurrence of such
Subordinated Indebtedness, (i) no Default or Event of Default shall have occurred and be continuing
or would be caused by the incurrence of such Subordinated Indebtedness and (ii) such Subordinated
Indebtedness does not mature or require principal payments to be made at any time prior to the date
that is three months after the Maturity Date;



          (j) Indebtedness under performance bonds, surety bonds, release, appeal and similar bonds,
statutory obligations or with respect to workers’ compensation claims, in each case incurred in the
ordinary course of business, and reimbursement obligations in respect of any of the foregoing
(including in respect of letters of credit issued in support of any of the foregoing);



          (k) Indebtedness consisting of promissory notes issued to current or former officers,
directors and employees (or their respective family members, estates or trusts or other entities
for the benefit of any of the foregoing) of any Loan Party or its Subsidiaries to purchase or
redeem Capital Stock or options of the Company permitted pursuant to Section 10.6(d);



          (l) Indebtedness under the Existing Senior Notes and any Permitted Refinancing Indebtedness in
respect thereof;



          (m) Indebtedness arising from agreements providing for indemnification or purchase price
adjustments, in each case, incurred or assumed in connection with Permitted Acquisitions or the
sale, transfer or other disposition of any assets permitted by Section 10.4 or
10.5;



          (n) Indebtedness incurred to finance insurance premiums in the ordinary course of business;
and



          (o) additional Indebtedness not otherwise permitted pursuant to this Section 10.1.



          Section 10.2 Limitations on Liens. No Loan Party shall, nor shall it permit any
Domestic Subsidiary to, create, incur, assume or suffer to exist any Lien of any nature whatsoever
on any of its assets or properties, including the Collateral, except:



          (a) Liens created pursuant to the Loan Documents;



          (b) Liens in existence on the Closing Date and described on Schedule 10.2, including
Liens incurred in connection with any Permitted Refinancing Indebtedness pursuant to Section
10.1(c);



          (c) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of ERISA or Environmental Laws) (i) not yet due or as to
which the period of grace, if any, related thereto has not expired or (ii) which are being
contested in good faith and by appropriate proceedings if adequate reserves are maintained to the
extent required by GAAP;



          (d) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of business, that (i) secure
amounts that are not overdue, or if overdue are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP, (ii) if the use of
the



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asset subject to such Lien is material to the operation of the business of the Company or any
of its Subsidiaries, such Lien does not impair the use of such asset by the Company or such
Subsidiary and (iii) do not secure Indebtedness;




          (e) Liens consisting of deposits or pledges made in the ordinary course of business in
connection with, or to secure payment of, obligations under workers’ compensation, unemployment
insurance and other types of social security or similar legislation, or to secure the performance
of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds
(other than bonds related to judgments or litigation unless permitted by Section 10.2(i)),
performance bonds and other obligations of a like nature incurred in the ordinary course of
business, in each case, so long as no foreclosure sale or similar proceeding has been commenced
with respect to any portion of the Collateral on account thereof;



          (f) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights
or restrictions of record on the use of real property, which in the aggregate are not substantial
in amount and which do not, in any case, detract from the value of such property or impair the use
thereof in the ordinary conduct of business;



          (g) Liens on assets other than the Collateral securing Indebtedness permitted under
Section 10.1(d); provided that (i) such Liens and the Indebtedness secured thereby
are incurred not more than one hundred eighty (180) days after the later of the acquisition,
completion of construction, repair, improvement, addition or commencement of full operation of such
property, plant or equipment, (ii) such Liens do not at any time encumber any property other than
the property constructed, purchased, leased, repaired, improved or added to by such Indebtedness
and (iii) the principal amount of Indebtedness secured by any such Lien shall at no time exceed the
cost of acquiring, constructing, repairing or improving such property, plant or equipment,
including, without limitation, any related transaction costs;



          (h) Liens securing judgments for the payment of money not constituting an Event of Default
under Section 11.1(e) or securing appeal or other surety bonds relating to such judgments;
provided that (i) such Liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as
are required by GAAP have been made therefor and (iii) a stay of enforcement of any such Liens is
in effect;



          (i) Liens on acquired assets other than Collateral securing Indebtedness permitted under
Section 10.1(e); provided that such Liens (i) are not incurred in connection with,
or in anticipation of, a Person becoming a Subsidiary or the acquisition of the assets subject to
such Lien, (ii) are applicable only to the assets of such Subsidiary or assets acquired (and
proceeds thereof) and (iii) do not attach to any other property or assets of the Loan Parties or
any of their Subsidiaries;



          (j) Liens on assets of Non-Loan Parties; provided that such Liens do not extend to, or
encumber, assets that constitute Collateral or the Capital Stock of the Loan Parties or any of such
Loan Parties’ Domestic Subsidiaries;



          (k) (i) Liens of a collecting bank arising in the ordinary course of business under Section
4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction, (ii) Liens of any
depositary bank in connection with statutory, common law and contractual rights of set-off and
recoupment with respect to any deposit account of any Loan Party or any Domestic Subsidiary thereof
and (iii) Liens or rights of setoff against credit balances of any Borrower with Credit Card
Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card
Processors to any Borrower in the ordinary course of business (but not Liens on or rights of setoff
against any other



83









 




property or assets of any Borrower), pursuant to the Credit Card Agreements to secure the
obligations of a Borrower to the Credit Card Issuers or Credit Card Processors as a result of fees
and chargebacks;




          (l) (i) contractual or statutory Liens of lessors to the extent relating to the property and
assets relating to any lease agreements with such lessors and (ii) contractual Liens of suppliers
(including sellers of goods) or customers to the extent limited to the property or assets relating
to such contract;



          (m) any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any
assets under any license or lease agreement entered into in the ordinary course of business;
provided that the same do not interfere in any material respect with the business of the
Loan Parties and their Domestic Subsidiaries or detract from the value of the relevant assets of
the Loan Parties and their Domestic Subsidiaries if such assets are material to the business of the
Company and its Subsidiaries;



          (n) Liens on Margin Stock;



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



          (p) Liens on assets other than Collateral securing Indebtedness permitted under Section
10.1(l); and



          (q) Liens not otherwise permitted hereunder on assets other than the Collateral securing
Indebtedness in an aggregate principal amount, together with the principal amount of all
outstanding Indebtedness secured by Liens permitted under Section 10.2(p), not to exceed
10% of Consolidated Total Assets at any time outstanding.


In connection with any real property owned by any Loan Party that is subject to a Lien created
after the Closing Date and permitted by this Section 10.2, if requested by the
Administrative Agent, the holders of such Lien and underlying Indebtedness shall have entered into
an intercreditor agreement with the Administrative Agent providing for access and use of such real
property and any license described in Section 11.2(g) during an Event of Default on terms
reasonably satisfactory to the Administrative Agent; provided that such requirement shall
not apply to (i) industrial revenue bonds secured by a Lien on such real property and (ii) other
Indebtedness secured by a Lien on such real property in an aggregate outstanding principal amount
not to exceed $25,000,000 at any time.




     Section 10.3 Limitations on Investments. No Loan Party shall, nor shall it permit any
Domestic Subsidiary to, directly or indirectly, make or agree to make, any Investment in any other
Person, except:



          (a) Investments existing on the Closing Date and described on Schedule 10.3;



          (b) Investments (i) made after the Closing Date to or in any Loan Party and (ii) Investments
by Non-Loan Parties in other Non-Loan Parties;



          (c) Investments in cash and Cash Equivalents;



          (d) Investments in the form of Capital Expenditures not prohibited by the terms of this
Agreement;



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          (e) deposits made in the ordinary course of business to secure the performance of leases or
other obligations as permitted by Section 10.2;



          (f) Hedge Agreements permitted pursuant to Section 10.1;



          (g) Investments in the form of Permitted Acquisitions;



          (h) Investments in the form of loans and advances to employees in the ordinary course of
business;



          (i) (x) guaranties of the Loan Parties and their Domestic Subsidiaries permitted pursuant to
Section 10.1 and (y) unsecured guaranties of the Loan Parties and their Domestic
Subsidiaries of obligations of Non-Loan Parties in respect of accounts payable and operating
leases;



          (j) stock or obligations issued to any Loan Party by any Person (or the representative of such
Person) in respect of Indebtedness of such Person owing to such Loan Party in connection with the
insolvency, bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person;



          (k) Investments arising out of the receipt by any Loan Party or any Domestic Subsidiary of
non-cash consideration for the sale or other disposition of assets permitted under Section
10.5;



          (l) Investments represented by guarantees by the Company or any of its Subsidiaries of
operating leases or of other obligations that do not constitute Indebtedness, in each case, entered
into in the ordinary course of business;



          (m) extensions of trade credit in the ordinary course of business and consistent with
customary credit practices and policies;



          (n) Investments in the form of Indebtedness permitted pursuant to Section 10.1(f);



          (o) Investments of a Person existing at the time such Person becomes a Subsidiary pursuant to
a Permitted Acquisition so long as such Investments were not made in connection with, or in
contemplation of, such Person becoming a Subsidiary;



          (p) Investments by Loan Parties to or in Non-Loan Parties made by such Loan Party in
connection with the funding of a Permitted Acquisition or an Acquisition by a Foreign Subsidiary;
provided that:




     (i) if the Investment includes the incurrence or assumption of Indebtedness
permitted pursuant to Section 10.1, consists of Capital Stock of the Company
or is funded from the proceeds of any issuance of Capital Stock of the Company (or a
combination thereof), then (A) both 30-Day Excess Availability and Excess
Availability on the date of such Investment shall not be less than $150,000,000 and
(B) such Investment shall not be funded, in whole or in part, from the proceeds of
any Loan hereunder; and




     (ii) if the Investment is provided from any source not described in the
preceding clause (i), then immediately before and after making such Investment,
either (A) both 30-Day Excess Availability and Excess Availability on the date of
such Investment (calculated on a pro forma basis to include the
borrowing of any Loans used



85









 







to finance such Investment) shall not be less than $300,000,000 or (B) (1) both
30-Day Excess Availability and Excess Availability on the date of such Investment
(calculated on a pro forma basis to include the borrowing of any
Loans used to finance such Investment) shall not be less than twenty-five percent
(25%) of the Aggregate Commitment and (2) the Company shall have a Fixed Charge
Coverage Ratio equal to or greater than 1.10 to 1.00 (calculated for the fiscal
month most recently ended prior to the making of such Investment for which financial
statements have been delivered pursuant to Section 9.5,
on a pro forma basis
after making such Investment);



          (q) Investments by Loan Parties to or in Non-Loan Parties and other additional Investments not
otherwise permitted pursuant to this Section 10.3; provided that at the time any
such Investment is made and immediately after giving effect thereto (i) no Default or Event of
Default shall have occurred and be continuing or would result therefrom, (ii) if both 30-Day Excess
Availability and Excess Availability on the date of such Investment (calculated on a pro
forma basis to include the borrowing of any Loans used to finance such Investment) are
greater than or equal to $300,000,000, then this clause (q) shall not limit such Investment, (iii)
if either 30-Day Excess Availability or Excess Availability on the date of such Investment
(calculated on a pro forma basis to include the borrowing of any Loans used to
finance such Investment) is less than $300,000,000, but both are greater than or equal to
$150,000,000, then such Investment shall not cause the aggregate amount of all Investments
outstanding pursuant to this clause (q) to exceed $50,000,000 and (iv) if either 30-Day Excess
Availability or Excess Availability on the date of such Investment (calculated on a pro
forma basis to include the borrowing of any Loans used to finance such Investment) is less
than $150,000,000, then such Investment shall not be permitted pursuant to this clause (q). For
the avoidance of doubt, the restrictions set forth above shall not prohibit or require a reduction
of outstanding Investments that were permitted to be made by this clause (q) at the time such
Investments were made; and



          (r) Investments by Loan Parties to or in Non-Loan Parties made or received in connection with
the transfer of the Capital Stock of Dal-Tile Mexico S.A. de C.V. and/or Dal-Tile of Canada Inc. to
a Non-Loan Party; including, without limitation, an Investment received by the Company in exchange
for its Capital Stock which Capital Stock is used as consideration for such transfer.



     For purposes of determining the amount of any Investment outstanding for purposes of this
Section 10.3, such amount shall be deemed to be the amount of such Investment when made,
purchased or acquired less any amount realized in respect of such Investment upon the sale,
collection or return of capital (not to exceed the original amount invested).



     Section 10.4 Limitations on Fundamental Changes. No Loan Party shall, nor shall it
permit any Domestic Subsidiary to, directly or indirectly, merge or consolidate with or into any
other Person or dissolve or liquidate (or suffer any liquidation or dissolution) except:



          (a) so long as no Default or Event of Default shall have occurred and be continuing or would
result therefrom, (i) any Loan Party or any Non-Loan Party may merge with and into or consolidate
with any Loan Party; provided that the Loan Party shall be the continuing or surviving
Person and (ii) any Non-Loan Party may merge with and into or consolidate with any other Non-Loan
Party; provided that when a Domestic Subsidiary is merging or consolidating with another
Subsidiary, a Domestic Subsidiary shall be the continuing or surviving Person;



          (b) so long as no Default or Event of Default shall have occurred and be continuing or would
result therefrom, (i) any Loan Party or any Non-Loan Party may dispose of all or substantially all
of its assets (upon voluntary liquidation, dissolution or otherwise) to any Loan Party and (ii) any
Non-



86









 




Loan Party may dispose of all or substantially all of its assets (upon voluntary liquidation,
dissolution or otherwise) to any other Non-Loan Party;




          (c) dispositions permitted by Section 10.5 and Restricted Payments permitted by
Section 10.6;



          (d) any wholly-owned Subsidiary of any Loan Party may merge with or into the Person such
wholly-owned Subsidiary was formed to acquire in connection with a Permitted Acquisition;
provided that (i) a Loan Party shall be the continuing or surviving entity or (ii) the
continuing or surviving entity shall become a Loan Party if and when required to do so under
Section 9.9; and



          (e) any Person may merge into a Loan Party in connection with a Permitted Acquisition;
provided that the Loan Party shall be the continuing or surviving Person.



     Section 10.5 Limitations on Asset Dispositions. No Loan Party shall, nor shall it
permit any Domestic Subsidiary to, directly or indirectly, sell, issue, assign, lease, license,
transfer, abandon, or otherwise dispose of any Capital Stock, Indebtedness, or any or all of its
assets (whether in one transaction or a series of transactions) to any other Person except:



          (a) the sale of inventory in the ordinary course of business;



          (b) the sale or other disposition of obsolete, worn-out or surplus assets or other assets no
longer used or usable in the business of the Loan Parties and their Subsidiaries, and the
abandonment, sale or other disposition of patents, trademarks or other Intellectual Property that
are, in the reasonable judgment of the Company, no longer economically practicable to maintain or
useful in the conduct of the business of the Loan Parties and their Subsidiaries;



          (c) the disposition of assets pursuant to any transaction permitted pursuant to Sections
10.1, 10.3, 10.4 and 10.6;



          (d) a Loan Party or any Domestic Subsidiary may write-off, discount, sell or otherwise dispose
of defaulted or past due receivables and similar obligations in the ordinary course of business and
not as part of an accounts receivable financing transaction;



          (e) to the extent constituting a sale or other disposition of assets, (i) issuances of Capital
Stock in the ordinary course of business and (ii) the issuance of Capital Stock of the Company or
any Subsidiary pursuant to an employee stock incentive plan or grant or similar equity plan or
401(k) plans of the Company or any Subsidiary for the benefit of directors, officers, employees or
consultants;



          (f) the disposition of any Hedge Agreement;



          (g) dispositions of Investments in cash and Cash Equivalents;



          (h) so long as no Default or Event of Default has occurred and is continuing or would result
therefrom, (i) any Loan Party or any Non-Loan Party may transfer Capital Stock, Indebtedness or
assets to any Loan Party (provided that, in connection with any such transfer from a
Non-Loan Party to a Loan Party, such Loan Party shall not pay more than an amount equal to the fair
market value of such Capital Stock, Indebtedness or assets as determined at the time of such
transfer), (ii) any Non-Loan Party may transfer Capital Stock, Indebtedness or assets to any other
Non-Loan Party and (iii) any Loan Party may transfer Capital Stock, Indebtedness or assets (other
than Collateral or any Capital Stock of a Domestic Subsidiary) to any Non-Loan Party
(provided that, in connection with any such



87









 




transfer, such Loan Party shall not receive consideration valued in an amount less than the
fair market value of such Capital Stock, Indebtedness or assets as determined at the time of such
transfer);




          (i) any trade-in of equipment in exchange for other equipment of reasonably equivalent or
greater value in the ordinary course of business;



          (j) licenses and sublicenses of Intellectual Property rights in the ordinary course of
business not interfering, individually or in the aggregate, in any material respect with the
conduct of the business of the Loan Parties and their Domestic Subsidiaries;



          (k) leases, subleases, licenses or sublicenses of real or personal property granted by the
Loan Parties or any of their Domestic Subsidiaries to others in the ordinary course of business not
interfering in any material respect with the business of the Loan Parties and their Domestic
Subsidiaries;



          (l) transfers or other dispositions of property subject to condemnation, takings or casualty
events;



          (m) dispositions of assets (other than Collateral) pursuant to Sale and Lease-Back
Transactions; and



          (n) additional dispositions of assets (other than Collateral) not otherwise permitted pursuant
to this Section 10.5 in an aggregate amount (based on the net book value of all such
assets) not to exceed 5% of Consolidated Total Assets in any Fiscal Year; provided that no
(i) Default or Event of Default shall have occurred and be continuing or would result therefrom and
(ii) the non-cash consideration received in connection therewith shall not exceed 25% of the total
consideration received in connection with such disposition.


Notwithstanding the foregoing, in connection with any disposition (other than a non-exclusive
license) of a Material Trademark, if Excess Availability (calculated on a pro forma
basis to exclude Eligible Inventory (x) disposed of in connection therewith or (y) which would no
longer constitute Eligible Inventory as a result of the disposition of such Material Trademark) is
less than $300,000,000, then the Administrative Borrower shall notify the Administrative Agent of
such disposition and shall concurrently provide an updated Borrowing Base Certificate reflecting
such disposition.




     Section 10.6 Limitations on Restricted Payments. No Loan Party shall, nor shall it
permit any Domestic Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except:



          (a) any Loan Party or any Non-Loan Party may declare and pay dividends in shares of its own
Capital Stock;



          (b) any Subsidiary of any Loan Party may pay dividends to such Loan Party;



          (c) Non-Loan Parties may make Restricted Payments to Loan Parties and to other Non-Loan
Parties;



          (d) the Company may redeem, retire or otherwise acquire shares of its Capital Stock or options
or other equity or phantom equity in respect of its Capital Stock from present or former officers,
employees, directors or consultants (or their family members or trusts or other entities for the
benefit of any of the foregoing) or make severance payments to such Persons in connection with the



88









 




death, disability or termination of employment or consultancy of any such officer, employee,
director or consultant; and




          (e) the Company may declare and pay cash dividends to the holders of its Capital Stock and the
Company and each of its Domestic Subsidiaries may repurchase, redeem, retire or otherwise acquire
for value any of its Capital Stock; provided that immediately before and after giving
effect to the payment of such dividends or such repurchase, redemption, retirement or acquisition,
(i) no Default or Event of Default shall have occurred and be continuing or would result therefrom
and (ii) either:




     (A) both 30-Day Excess Availability and Excess Availability (calculated on a
pro forma basis after giving effect to the payment of such dividends
or such repurchase, redemption, retirement or acquisition) shall not be less than
$300,000,000; or




     (B) (1) both 30-Day Excess Availability and Excess Availability (calculated on
a pro forma basis after giving effect to the payment of such
dividends or such repurchase, redemption, retirement or acquisition) shall not be
less than twenty-five percent (25%) of the Aggregate Commitment and (2) the Company
shall have a Fixed Charge Coverage Ratio equal to or greater than 1.10 to 1.00
(calculated on a pro forma basis after giving effect to the payment
of such dividends or such repurchase, redemption, retirement or acquisition).



     Section 10.7 Transactions with Affiliates. No Loan Party shall, nor shall it permit
any Domestic Subsidiary to, directly or indirectly enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of assets, the rendering of any service or the
payment of any management, advisory or similar fees, with any Affiliate of any Loan Party or any of
its Domestic Subsidiaries, other than:



          (a) transactions among Loan Parties and other transactions permitted by Sections 10.1,
10.3, 10.4, 10.5 (other than clauses (j), (k), (m) and (n) thereof) and
10.6;



          (b) transactions existing on the Closing Date and described on Schedule 10.7;



          (c) licenses of Intellectual Property to Non-Loan Parties not interfering, individually or in
the aggregate, in any material respect with the conduct of the business of the Loan Parties and
their Domestic Subsidiaries;



          (d) other transactions in the ordinary course of business on terms as favorable as would be
obtained by it on a comparable arm’s-length transaction with an independent, unrelated third party
as determined in good faith by a Responsible Officer of the applicable Loan Party or any of its
Domestic Subsidiaries;



          (e) employment, service and severance arrangements (including equity incentive plans and
employee benefit plans and arrangements) and employee discount purchase programs with their
respective directors, officers and employees in the ordinary course of business and discount
purchase programs with their Affiliates in the ordinary course of business;



          (f) charitable contributions made to their Affiliates in the ordinary course of business;



89









 





          (g) payment of customary compensation, fees and reasonable out of pocket costs to, and
indemnities for the benefit of, directors, officers and employees of the Loan Parties and their
Domestic Subsidiaries in the ordinary course of business;



          (h) transactions with directors, officers and employees of the Loan Parties or any of their
Subsidiaries not required to be disclosed pursuant to Item 404(a) of Regulation S-K of the Exchange
Act;



          (i) transactions with Non-Loan Parties relating to the sale and purchase of materials and
goods in the ordinary course of business and consistent with the Loan Parties’ policies and
historical practices;



          (j) transactions with Non-Loan Parties relating to licenses and sublicenses of Intellectual
Property rights in the ordinary course of business not interfering, individually or in the
aggregate, in any material respect with the conduct of the business of the Loan Parties and their
Domestic Subsidiaries; and



          (k) transactions with Non-Loan Parties relating to leases, subleases, licenses or sublicenses
of real or personal property in the ordinary course of business and not interfering in any material
respect with the business of the Loan Parties and their Domestic Subsidiaries.



     Section 10.8 Limitation on Certain Accounting Changes and Amendments to Organizational
Documents. No Loan Party shall, nor shall it permit any Domestic Subsidiary to, (a) change its
Fiscal Year end (unless it has given the Administrative Agent at least 30 days prior written notice
of such change), or make any material change in its accounting treatment (other than in connection
with tax accounting) and reporting practices except as required or permitted by GAAP or applicable
laws or (b) amend, modify or change its articles of incorporation (or corporate charter or other
similar organizational documents) or amend, modify or change its bylaws (or other similar
documents) in any manner which would materially and adversely affect the rights or interests of the
Lenders.



     Section 10.9 Limitation on Payments and Modifications of Indebtedness. No Loan Party
shall, nor shall it permit any Domestic Subsidiary to, directly or indirectly,



          (a) amend, modify, waive or supplement (or permit the modification, amendment, waiver or
supplement of) any of the terms or provisions of the Existing Senior Notes (or any Permitted
Refinancing Indebtedness in respect thereof) or any Subordinated Indebtedness in any respect which
would materially and adversely affect the rights or interests of the Administrative Agent and the
Lenders hereunder; or



          (b) make any payment or prepayment on, or redeem or acquire for value (including, without
limitation, (x) by way of depositing with any trustee with respect thereto money or securities
before due for the purpose of paying when due and (y) at the maturity thereof) any Subordinated
Indebtedness or the Existing Senior Notes (or any Permitted Refinancing Indebtedness in respect
thereof), except:



               (i) refinancings, refundings, renewals, extensions or exchange of any Subordinated
Indebtedness permitted under Section 10.1(c) and (i) and by any subordination
agreement applicable thereto;



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               (ii) the payment of scheduled principal installments, if any, interest, expenses and
indemnities in respect of Subordinated Indebtedness permitted under Section 10.1(c) and
(i) (other than any such payments prohibited by the subordination provisions thereof); and



               (iii) prepayments, repurchases and repayments of the Existing Senior Notes (or any Permitted
Refinancing Indebtedness in respect thereof); provided that (A) no Default or Event of
Default shall have occurred and be continuing or would result therefrom and (B) (1) if such
prepayments, repurchases or repayments are made from the proceeds of (x) any Permitted Refinancing
Indebtedness expressly permitted pursuant to Section 10.1(l), (y) an issuance of Capital
Stock by the Company or (z) a disposition of assets (other than Collateral) expressly permitted
pursuant to Section 10.5, then such prepayments, repurchases or repayments shall be
permitted without further limitation under this clause (iii) or (2) if such prepayments,
repurchases or repayments are made from any source not described in clause (iii)(B)(1) above, then
either:



                    (A) both 30-Day Excess Availability and Excess Availability on the date of such prepayment,
repurchase or repayment (calculated on a pro forma basis after giving effect to
such prepayment, repurchase or repayment) shall not be less than $300,000,000; or



                    (B) (1) both 30-Day Excess Availability and Excess Availability on the date of such
prepayment, repurchase or repayment (calculated on a pro forma basis after giving
effect to such prepayment, repurchase or repayment) shall not be less than twenty-five percent
(25%) of the Aggregate Commitment and (2) the Company shall have a Fixed Charge Coverage Ratio
equal to or greater than 1.10 to 1.00 (calculated on a pro forma basis after giving
effect to such prepayment, repurchase or repayment); and



               (iv) prepayments, repurchases and repayments of the Existing Senior Notes (or any Permitted
Refinancing Indebtedness in respect thereof) required in connection with the sale or other
disposition of any assets of the Company and its Subsidiaries the proceeds of which are not
required to be applied to prepay Loans pursuant to Section 2.5(c)(ii).



     Section 10.10 No Further Negative Pledges; Restrictive Agreements.



          (a) No Loan Party shall, nor shall it permit any Subsidiary to, directly, or indirectly,
create or otherwise cause or suffer to exist any restriction that prohibits or limits the ability
of any Loan Party or any Subsidiary of such Loan Party to (i) pay dividends or make other
distributions or pay any Indebtedness owed to such Loan Party or any Subsidiary of such Loan Party
or (ii) make loans or advances to such Loan Party or any Subsidiary of such Loan Party, other than
restrictions arising under (A) applicable law, (B) the Loan Documents, (C) the Existing Senior
Notes, (D) any agreement relating to Indebtedness, (1) with respect to Loan Parties and Domestic
Subsidiaries, which is permitted under Section 10.1(c), 10.1(d) or 10.1(e),
and (2) with respect to any Foreign Subsidiary, which is not prohibited by Section 10.1,
including that certain Euro 130,000,000 Five Year Credit Agreement, dated as of November 8, 2005,
by and among Mohawk International Holdings S.À.R.L., as borrower, the Company, as guarantor, the
lenders from time to time party thereto and KBC Bank NV, as administrative agent and issuer, and
any refinancings, replacements or renewals thereof and (E) the organizational documents or any
related joint venture or similar agreements binding on or applicable to any Subsidiary that is not
a wholly-owned Subsidiary.



          (b) No Loan Party shall, nor shall it permit any Domestic Subsidiary to, directly, or
indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction that
prohibits or limits the ability of any Loan Party or any Domestic Subsidiary of such Loan Party to
(i) guarantee the Indebtedness of any Loan Party, (ii) transfer any of its properties or assets to
such Loan Party or any



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Subsidiary of such Loan Party, or (iii) create, incur, assume or suffer to exist any Lien upon
any of the Collateral, whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (A) applicable law, (B) the Loan Documents, (C) the Existing Senior
Notes, (D) customary provisions restricting subletting or assignment of any lease governing a
leasehold interest of such Loan Party or any Subsidiary of such Loan Party, (E) customary
restrictions on dispositions of real property interests found in reciprocal easement agreements of
such Loan Party or any Subsidiary of such Loan Party, (F) any agreement relating to Indebtedness
permitted under Section 10.1(c), 10.1(d) or 10.1(e), (G) customary
restrictions contained in an agreement related to the sale of assets (to the extent such sale is
permitted pursuant to Section 10.5) that limit the encumbrance of such assets pending the
consummation of such sale, (H) customary provisions restricting assignment of any agreement entered
into in the ordinary course of business, (I) the organizational documents or any related joint
venture or similar agreements binding on or applicable to any Subsidiary that is not a wholly-owned
Subsidiary (but only to the extent such encumbrance or restriction covers the assets of such
Subsidiary or any Capital Stock in such Subsidiary), and (J) any agreement (1) evidencing
Indebtedness which a Loan Party or Subsidiary may create, incur, assume, or permit or suffer to
exist under Section 10.1 and which Indebtedness is secured by a Lien permitted to exist
under Section 10.2, and (2) which prohibits the transfer of, and the creation of any other
Lien on, the property securing such Indebtedness (and any replacement property and customary
provisions in respect of proceeds, accessions, and other after-acquired property).




     Section 10.11 Nature of Business. No Loan Party shall, nor shall it permit any
Subsidiary to, engage in any business other than a Permitted Line of Business.



     Section 10.12 Sale and Lease-Back Transaction. No Loan Party shall, nor shall it
permit any of its Domestic Subsidiaries to, enter into any Sale and Lease-Back Transaction other
than to the extent the disposition of such assets in connection therewith is permitted by
Section 10.5.



ARTICLE 11

EVENTS OF DEFAULT AND REMEDIES




     Section 11.1 Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”, and
collectively as “Events of Default”:



          (a) Payment Default. The Borrowers fail to pay when due (i) any principal of Loans or
any reimbursement obligation in respect of any Letter of Credit or (ii) (A) any interest on the
Loans, any fees payable hereunder or under the Fee Letter or (B) any other Obligation for which
notice of the amount being due and payable has been given by the Administrative Agent, and such
failure to pay under clause (ii) continues for five (5) or more Business Days.



          (b) Covenant Default. Any Loan Party fails to perform (i) any of the covenants
contained in Sections 6.2(d), 6.3(a), (b) or (d), 7.1(a), 7.6,
9.1(a), 9.5(a) or (b)(v) or (vii) (subject to Section
1.02(m)), 9.9, 9.10 or 9.11, or Article 10 or (ii) any of the
terms, covenants, conditions or provisions contained in this Agreement (other than as specified in
clause (i)) or any of the other Loan Documents and such failure shall continue for thirty (30) days
after the earlier of receipt by such Loan Party of notice thereof from the Administrative Agent or
after any Responsible Officer of the Administrative Borrower obtains knowledge thereof.



          (c) Misrepresentation. Any representation, warranty or statement of fact made by or
on behalf of any Loan Party in this Agreement, the other Loan Documents or any other written
agreement, certificate, schedule or confirmatory assignment delivered in connection with this
Agreement



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that (i) is subject to a materiality or Material Adverse Effect qualification shall be false
or misleading when made or deemed made or (ii) is not subject to a materiality or Material Adverse
Effect qualification shall be false or misleading in any material respect when made or deemed made.




          (d) Guarantor Default. Any Guarantor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or provisions of the
Guaranty.



          (e) Judgment. Any judgment for the payment of money is rendered against any Loan
Party in an amount that exceeds, individually or in the aggregate with all unsatisfied judgments
against all Loan Parties, $25,000,000 (to the extent not covered by insurance where the insurer has
assumed responsibility in writing for such judgment) and shall remain undischarged or unvacated for
a period in excess of thirty (30) days or execution shall at any time not be effectively stayed or
bonded pending appeal or otherwise, or any attachment, garnishment or execution having a value in
excess of $25,000,000 is rendered against any Loan Party or any of the Collateral.



          (f) Involuntary Bankruptcy Proceeding. A case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of any other
jurisdiction now or hereafter in effect (whether at law or in equity) is filed against any Loan
Party or all or any part of its respective properties and such petition or application is not
dismissed within sixty (60) days after the date of its filing or any Loan Party shall file any
answer admitting or not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief requested is granted
sooner.



          (g) Voluntary Bankruptcy Proceeding. A case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction
now or hereafter in effect (whether at a law or equity) is filed by any Loan Party or for all or
any part of its respective property or any Loan Party makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer in connection with any liquidation of such Loan
Party not otherwise permitted by this Agreement or calls a meeting of its creditors or principal
creditors in connection with a moratorium or adjustment of the Indebtedness due to them.



          (h) Indebtedness Cross-Default. Any Loan Party or any Domestic Subsidiary thereof
shall (i) default in the payment of any Indebtedness (other than Indebtedness owing to the
Administrative Agent and the Lenders hereunder) the aggregate outstanding amount of which
Indebtedness is in excess of $25,000,000 beyond the period of grace if any, provided in the
instrument or agreement under which such Indebtedness was created, or (ii) default in the
observance or performance of any other agreement or condition relating to any Indebtedness (other
than Indebtedness owing to the Administrative Agent and the Lenders hereunder) the aggregate
outstanding amount of which Indebtedness is in excess of $25,000,000 or contained in any instrument
or agreement evidencing, securing or relating thereto or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause, or to permit the holder
or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, with the giving of notice and/or lapse of time, if required, any such Indebtedness to become
due prior to its stated maturity (any applicable grace period having expired), including, without
limitation, any “put” of such Indebtedness to any such Loan Party or Domestic Subsidiary.



          (i) Failure of Agreements. Any material provision hereof or of any of the other Loan
Documents shall for any reason cease to be valid, binding and enforceable with respect to any party
hereto or thereto (other than the Administrative Agent, the Lenders, the Issuing Banks and the
Swingline



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Lender) in accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Loan Documents has ceased to be
or is otherwise not valid, binding or enforceable in accordance with its terms, or any Lien
provided for herein or in any of the other Loan Documents shall cease to be, or shall be asserted
by any Loan Party to have ceased to be, a valid and perfected first priority Lien in any material
portion of the Collateral purported to be subject thereto (except as otherwise permitted herein or
therein).




          (j) ERISA Event. An ERISA Event shall occur that results in or could reasonably be
expected to result in liability of any Loan Party or any Domestic Subsidiary thereof in an
aggregate amount in excess of $25,000,000.



          (k) Change of Control. Any Change of Control shall occur.



     Section 11.2 Remedies.



          (a) At any time an Event of Default has occurred and is continuing, the Administrative Agent
and the Lenders shall have all rights and remedies provided in this Agreement, the other Loan
Documents, the UCC and other applicable law, all of which rights and remedies may be exercised
without notice to or consent by any Loan Party, except as such notice or consent is expressly
provided for hereunder or required by applicable law. All rights, remedies and powers granted to
the Administrative Agent and the Lenders hereunder, under any of the other Loan Documents, the UCC
and other applicable law, are cumulative, not exclusive and enforceable, in the Administrative
Agent’s discretion, alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Loan Party of this Agreement or any of the other Loan
Documents. Subject to Section 13, the Administrative Agent may, and at the direction of
the Required Lenders shall, at any time or times, proceed directly against any Loan Party to
collect the Obligations without prior recourse to the Collateral.



          (b) Without limiting the generality of the foregoing, at any time an Event of Default has
occurred and is continuing, the Administrative Agent may, at its option and shall upon the
direction of the Required Lenders, (i) upon notice to the Administrative Borrower, accelerate the
payment of all Obligations and demand immediate payment thereof to the Administrative Agent for
itself and the benefit of the Lenders (provided that upon the occurrence of any Event of
Default described in Sections 11.1(f) and 11.1(g), all Obligations shall
automatically become immediately due and payable) and/or (ii) terminate the Commitments whereupon
the obligation of each Lender to make any Loan and each Issuing Bank to issue any Letter of Credit
shall immediately terminate (provided that upon the occurrence of any Event of Default
described in Sections 11.1(f) and 11.1(g), the Commitments and any other obligation
of the Administrative Agent or a Lender hereunder shall automatically terminate).



          (c) Without limiting the foregoing, at any time an Event of Default has occurred and is
continuing, the Administrative Agent may, in its discretion (i) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which any of the Collateral may
be located and take possession of the Collateral or complete processing, manufacturing and repair
of all or any portion of the Collateral, (ii) require any Loan Party, at the Borrowers’ expense, to
assemble and make available to the Administrative Agent any part or all of the Collateral at any
place and time designated by the Administrative Agent, (iii) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (iv) remove any or all of the
Collateral from any premises on or in which the same may be located for the purpose of effecting
the sale, foreclosure or other disposition thereof or for any other purpose, (v) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all Collateral (including



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entering into contracts with respect thereto, public or private sales at any exchange,
broker’s board, at any office of the Administrative Agent or elsewhere) at such prices or terms as
the Administrative Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Administrative Agent having the right to purchase the whole or any part of the Collateral at
any such public sale, all of the foregoing being free from any right or equity of redemption of any
Loan Party, which right or equity of redemption is hereby expressly waived and released by Loan
Parties and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by the
Administrative Agent upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by the Administrative Agent. If
notice of disposition of Collateral is required by law, ten (10) days prior notice by the
Administrative Agent to the Administrative Borrower designating the time and place of any public
sale or the time after which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Loan Parties waive any other notice. In
the event the Administrative Agent institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, each Loan Party waives the posting of any bond
which might otherwise be required.




          (d) At any time an Event of Default has occurred and is continuing, upon the Administrative
Agent’s or any Issuing Bank’s request, the Borrowers will either, as the Administrative Agent shall
specify, furnish cash collateral to the applicable Issuing Bank to be used to secure and fund the
reimbursement obligations to such Issuing Bank in connection with any Letter of Credit Obligations
or furnish cash collateral to the Administrative Agent for the Letter of Credit Obligations. Such
cash collateral shall be in the amount equal to one hundred three percent (103%) of the amount of
the Letter of Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the Letters of Credit giving
rise to such Letter of Credit Obligations.



          (e) At any time or times that an Event of Default has occurred and is continuing, the
Administrative Agent may, in its discretion, enforce the rights of any Loan Party against any
account debtor, secondary obligor or other obligor in respect of any of the Accounts. Without
limiting the generality of the foregoing, the Administrative Agent may, in its discretion, at such
time or times (i) notify any or all account debtors, secondary obligors or other obligors in
respect thereof that the Accounts have been assigned to the Administrative Agent and that the
Administrative Agent has a Lien therein and the Administrative Agent may direct any or all account
debtors, secondary obligors and other obligors to make payment of Accounts directly to the
Administrative Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts
or other obligations included in the Collateral and thereby discharge or release the account debtor
or any secondary obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Accounts or such other obligations,
but without any duty to do so, and the Administrative Agent and the Lenders shall not be liable for
any failure to collect or enforce the payment thereof nor for the negligence of its agents or
attorneys selected with reasonable care with respect thereto and (iv) take whatever other action
the Administrative Agent may deem necessary or desirable for the protection of its interests and
the interests of the Lenders. At any time that an Event of Default has occurred and is continuing,
at the Administrative Agent’s request, all invoices and statements sent to any account debtor shall
state that the Accounts and such other obligations have been assigned to the Administrative Agent
and are payable directly and only to the Administrative Agent and the Loan Parties shall deliver to
the Administrative Agent such originals of documents evidencing the sale and delivery of goods or
the performance of services giving rise to any Accounts as the Administrative Agent may require.
In the event any account debtor returns Inventory when an Event of Default has occurred and is
continuing, the Borrowers shall, upon the Administrative Agent’s request, hold the returned
Inventory in trust for the Administrative Agent, segregate all returned Inventory from all of its
other property, dispose of the returned Inventory solely according to the



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Administrative Agent’s instructions, and not issue any credits, discounts or allowances with
respect thereto without the Administrative Agent’s prior written consent.




          (f) To the extent that applicable law imposes duties on the Administrative Agent or any Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such
law), each Loan Party acknowledges and agrees that it is not commercially unreasonable for the
Administrative Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by
the Administrative Agent or any Lender 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 consents of any Governmental
Authority or other third party for the collection or disposition of Collateral to be collected or
disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary
obligors or other persons obligated on Collateral or to remove liens or encumbrances on, or any
adverse claims against, Collateral, (iv) to exercise collection remedies against account debtors
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 Loan Party, for expressions of
interest in acquiring all or any portion of the 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
capability 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, (xi) to purchase
insurance or credit enhancements to insure the Administrative Agent or the Lenders against risks of
loss, collection or disposition of Collateral or to provide to the Administrative Agent or the
Lenders a guaranteed return from the collection or disposition of Collateral, or (xii) to the
extent deemed appropriate by the Administrative Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Administrative Agent in the
collection or disposition of any of the Collateral. Each Loan Party acknowledges that the purpose
of this Section 11.2(f) is to provide non-exhaustive indications of what actions or
omissions by the Administrative Agent or any Lender would not be commercially unreasonable in the
exercise by the Administrative Agent or any Lender of remedies against the Collateral and that
other actions or omissions by the Administrative Agent or any Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 11.2(f).
Without limitation of the foregoing, nothing contained in this Section 11.2(f) shall be
construed to grant any rights to any Loan Party or to impose any duties on the Administrative Agent
or the Lenders that would not have been granted or imposed by this Agreement or by applicable law
in the absence of this Section 11.2(f).



          (g) For the purpose of enabling the Administrative Agent to exercise the rights and remedies
hereunder, each Loan Party hereby grants to the Administrative Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable at any time an Event of Default shall have occurred
and be continuing) without payment of royalty or other compensation to any Loan Party, to use,
assign, license or sublicense any of the trademarks, service-marks, trade names, business names,
trade styles, designs, logos and other source of business identifiers and other Intellectual
Property and general intangibles now owned or hereafter acquired by any Loan Party, wherever the
same maybe located, including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for the compilation or
printout thereof.



          (h) At any time an Event of Default shall have occurred and be continuing, the Administrative
Agent may apply the cash proceeds of Collateral actually received by the Administrative Agent from
any sale, lease, foreclosure or other disposition of such Collateral to payment of the



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Obligations, in whole or in part and in accordance with the terms hereof, whether or not then
due or may hold such proceeds as cash collateral for the Obligations. The Loan Parties shall
remain liable to the Administrative Agent and the Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys’ fees and expenses, as provided herein.




          (i) Without limiting the foregoing, (i) at any time a Default or an Event of Default shall
have occurred and be continuing, the Administrative Agent and the Lenders may, at the
Administrative Agent’s option, and upon the occurrence of an Event of Default at the direction of
the Required Lenders, the Administrative Agent and the Lenders shall, without notice, (A) cease
making Loans or arranging for Letters of Credit or reduce the lending formulas or amounts of Loans
and Letters of Credit available to the Borrowers and/or (B) terminate any provision of this
Agreement providing for any future Loans to be made by the Administrative Agent and the Lenders or
Letters of Credit to be issued by any Issuing Bank and (ii) the Administrative Agent may, at its
option, establish such Reserves as the Administrative Agent determines, without limitation or
restriction, notwithstanding anything to the contrary contained herein.



     Section 11.3 Crediting Payments and Proceeds.



          (a) In the event that the Obligations have been accelerated or the Commitments have been
terminated pursuant to Section 11.2, all payments received by the Administrative Agent or
the Lenders upon the Obligations and all net proceeds from the enforcement of all the Obligations
(including proceeds of any Collateral) shall be applied as follows: first, to pay any fees,
indemnities or expense reimbursements then due to the Administrative Agent, Issuing Banks and
Swingline Lender, each in their capacity as such, from any Borrower or Guarantor under the terms of
the Loan Documents; second, to pay any fees, indemnities, or expense reimbursements then
due to the Lenders from any Borrower or Guarantor under the terms of the Loan Documents;
third, to pay interest due and principal in respect of Swingline Loans; fourth, to
pay interest due in respect of any Loans (other than Swingline Loans, but including any Special
Agent Advances); fifth, to pay principal in respect of Special Agent Advances (other than
Excess Special Agent Advances) relating to Collateral or the Loan Parties; sixth, to pay
principal in respect of all Loans (other than Excess Special Agent Advances) and the aggregate
amount of all drawings under Letters of Credit for which any Issuing Bank has not at such time been
reimbursed; seventh, to cash collateralize any Letter of Credit Obligations;
eighth, to pay or prepay any Obligations arising under or pursuant to any Noticed Bank
Products, on a pro rata basis; ninth, to pay principal in respect of Excess Special Agent
Advances relating to Collateral or the Loan Parties; tenth, to pay or prepay any other
Obligations then due arising under any other Bank Products; and last, the balance, if any,
after all of the Obligations have been indefeasibly paid in full, to the Borrowers.



          (b) Notwithstanding anything to the contrary contained in any of the Loan Documents, to the
extent any Borrower uses any proceeds of the Loans or Letters of Credit to acquire rights in or the
use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any
Collateral, payments in respect of the Obligations shall be deemed applied first, to the
Obligations arising from Loans and Letter of Credit Obligations that were not used for such
purposes, and second, to the Obligations arising from Loans and Letter of Credit
Obligations the proceeds of which were used to acquire rights in or the use of any Collateral in
the chronological order in which such Borrower acquired such rights in or the use of such
Collateral.



          (c) For purposes of this Section 11.3, “Paid in full” and “payment in full” and
“prepayment in full” means valid, final and irrevocable payment of all amounts owing under the Loan
Documents according to the terms thereof, including loan fees, service fees, professional fees,
interest (including interest accrued after the commencement of any case under the U.S. Bankruptcy
Code or any



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similar domestic or foreign similar statute), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in
part in any case under the U.S. States Bankruptcy Code or any similar statute in any jurisdiction,
but excluding (i) interest to the extent paid in excess of amounts based on the pre-default rates
(but not any other interest) and (ii) fees paid in respect of the waiver of an Event of Default, in
each case as to amounts under clauses (i) and (ii) above only to the extent that such amounts are
disallowed in any case under the U.S. Bankruptcy Code. Amounts distributed with respect to any
Bank Products shall be the actual amount owing under such Bank Product as calculated by the
applicable Bank Product Provider and reported in writing to the Administrative Agent. The
Administrative Agent shall have no obligation to calculate the amount to be distributed with
respect to any Bank Product, but may rely upon written notice of the amount (setting forth a
reasonably detailed calculation) from the applicable Bank Product Provider. In the absence of such
notice, the Administrative Agent may assume the amount to be distributed is the amount of such Bank
Product last reported to it.




     Section 11.4 Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan or Letter of Credit Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall
have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such
proceeding or otherwise:



          (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, Letter of Credit Obligations and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and
their respective agents and counsel and all other amounts due the Lenders and the Administrative
Agent under Sections 3.2 and 14.4) allowed in such judicial proceeding; and



          (b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent under Sections 3.2
and 14.3. Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.




ARTICLE 12

THE ADMINISTRATIVE AGENT




     Section 12.1 Appointment, Powers and Immunities. Each Lender and each Issuing Bank
irrevocably designates, appoints and authorizes Wachovia to act as the Administrative Agent
hereunder and under the other Loan Documents with such powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement and of the other Loan Documents, together with
such other powers



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as are reasonably incidental thereto. The Administrative Agent (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the other Loan
Documents, and shall not by reason of this Agreement or any other Loan Document be a trustee or
fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other Loan Documents, or
in any certificate or other document referred to or provided for in, or received by any of them
under, this Agreement or any other Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or any
other document referred to or provided for herein or therein or for any failure by any Loan Party
or any other Person to perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to the Lenders for any action taken or omitted to be taken by it hereunder or under any
other Loan Document or under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.
The Administrative Agent may employ agents, bailees, custodians and attorneys in fact and shall not
be responsible for the negligence or misconduct of any such persons selected by it in good faith.
The Administrative Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the
extent permitted herein) in form and substance satisfactory to the Administrative Agent shall have
been delivered to and acknowledged by the Administrative Agent.




     Section 12.2 Reliance by the Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this Agreement or any other
Loan Document, the Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions given by the
Required Lenders or all of the Lenders as is required in such circumstance, and such instructions
of the Administrative Agent and any action taken or failure to act pursuant thereto shall be
binding on all the Lenders.



     Section 12.3 Notice of Events of Default.



          (a) The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or an Event of Default or other failure of a condition precedent to the Loans and
Letters of Credit hereunder, unless and until the Administrative Agent has received written notice
from a Lender, or Borrower specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a “Notice of Default or Failure of Condition”. In the
event that the Administrative Agent receives such a Notice of Default or Failure of Condition, the
Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall (subject to Section 13.8) take such action with respect to any such Event of Default
or failure of condition precedent as shall be directed by the Required Lenders to the extent
provided for herein; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to or by reason of such Event of Default
or failure of condition precedent, as it shall deem advisable in the best interest of the Lenders.
Without limiting the foregoing, and notwithstanding the existence or occurrence and continuance of
an Event of Default or any other failure to satisfy any of the conditions precedent set forth in
Section 4 of this Agreement to the contrary, unless and until otherwise directed by the
Required Lenders, the Administrative Agent may, but shall have no obligation to, continue to make
Loans and each Issuing Bank may, but shall have no obligation to, issue or cause to be issued any
Letter of Credit for the



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ratable account and risk of the Lenders from time to time if the Administrative Agent believes
making such Loans or issuing or causing to be issued such Letter of Credit is in the best interests
of the Lenders.




          (b) Except with the prior written consent of the Administrative Agent, no Lender or Issuing
Bank may assert or exercise any enforcement right or remedy (other than the filing of a proof of
claim) in respect of the Loans, Letter of Credit Obligations or other Obligations, as against any
Loan Party or any of the Collateral or other property of any Loan Party.



     Section 12.4 Wachovia in its Individual Capacity. With respect to its Commitment and
the Loans made and Letters of Credit issued or caused to be issued by it (and any successor acting
as the Administrative Agent), so long as Wachovia shall be a Lender hereunder, it shall have the
same rights and powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Administrative Agent, and the term “Lender” or “Lenders” shall,
unless the context otherwise indicates, include Wachovia in its individual capacity as Lender
hereunder. Wachovia (and any successor acting as the Administrative Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make investments in and generally
engage in any kind of business with the Borrowers (and any of its Subsidiaries or Affiliates) as if
it were not acting as the Administrative Agent, and Wachovia and its Affiliates may accept fees and
other consideration from any Loan Party and any of its Subsidiaries and Affiliates for services in
connection with this Agreement or otherwise without having to account for the same to the Lenders.



     Section 12.5 Indemnification. The Lenders agree to indemnify the Administrative
Agent, the Swingline Lender and each Issuing Bank, each acting in its capacity as such (to the
extent not reimbursed by the Borrowers hereunder and without limiting any obligations of the
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any and all claims of
any kind and nature whatsoever that may be imposed on, incurred by or asserted against such Persons
(including by any Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Loan Document or any other documents
contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
(including the costs and expenses that such Person is obligated to pay hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by a final
non-appealable judgment of a court of competent jurisdiction. The foregoing indemnity shall
survive the payment of the Obligations and the termination of this Agreement.



     Section 12.6 Non-Reliance on the Administrative Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Administrative Agent or other Lender,
and based on such documents and information as it has deemed appropriate, made its own credit
analysis of Loan Parties and has made its own decision to enter into this Agreement and that it
will, independently and without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own analysis and decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. The Administrative Agent shall not be required to keep itself informed as to
the performance or observance by any Loan Party of any term or provision of this Agreement or any
of the other Loan Documents or any other document referred to or provided for herein or therein or
to inspect the properties or books of any Loan Party. The Administrative Agent will use
commercially reasonable best efforts to provide the Lenders with any information received by the
Administrative Agent from any Loan Party which is required to be provided to the Lenders or deemed
to be requested by the Lenders hereunder and with a copy of any Notice of Default or Failure of
Condition received by the Administrative Agent from any Borrower or any Lender; provided
that the Administrative Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to the Administrative Agent’s own



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gross negligence or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent or deemed requested by the
Lenders hereunder, the Administrative Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs, financial condition
or business of any Loan Party that may come into the possession of the Administrative Agent.




     Section 12.7 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Loan Documents, the Administrative Agent shall
in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 12.6 against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.



     Section 12.8 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Administrative Agent to enter into this Agreement and the other Loan
Documents. Each Lender agrees that any action taken by the Administrative Agent or Required
Lenders in accordance with the terms of this Agreement or the other Loan Documents and the exercise
by the Administrative Agent or Required Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.



     Section 12.9 Field Audit, Examination Reports and other Information; Disclaimer by the
Lenders. By signing this Agreement, each Lender:



          (a) is deemed to have requested that the Administrative Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report and report with
respect to the Borrowing Base prepared or received by the Administrative Agent (each field audit or
examination report and report with respect to the Borrowing Base being referred to herein as a
“Report”), appraisals with respect to the Collateral and financial statements with respect
to the Company and its Subsidiaries received by the Administrative Agent;



          (b) expressly agrees and acknowledges that the Administrative Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or financial statement or
(ii) shall not be liable for any information contained in any Report, appraisal or financial
statement;



          (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Administrative Agent or any other party performing any audit or examination
will inspect only specific information regarding Loan Parties and will rely significantly upon Loan
Parties’ books and records, as well as on representations of Loan Parties’ personnel; and



          (d) agrees to keep all Reports confidential and strictly for its internal use in accordance
with the terms of Section 14.9, and not to distribute or use any Report in any other
manner.



     Section 12.10 Collateral Matters.



          (a) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its discretion to release any security interest in, mortgage or Lien upon, any of the Collateral
(i) upon termination of the Commitments and payment and satisfaction of all of the Obligations and
delivery of cash collateral to the extent required under Section 14.12 below, or (ii)
constituting property being sold or disposed of if the Administrative Borrower or any Loan Party
certifies to the Administrative Agent that the sale or disposition is made in compliance with
Section 10.5 (and the Administrative Agent may rely



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conclusively on any such certificate, without further inquiry), or (iii) constituting property
in which any Loan Party did not own an interest at the time the security interest, mortgage or Lien
was granted or at any time thereafter, or (iv) if required or permitted under the terms of any of
the other Loan Documents, or (v) subject to Section 14.2, if approved, authorized or
ratified in writing by the Required Lenders. Upon request by the Administrative Agent at any time,
the Lenders will promptly confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this Section 12.10. In no event shall
the consent or approval of any Issuing Bank or any Bank Product provided (in its capacity as such)
to any release of Collateral be required.




          (b) The Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to)
execute such documents as may be necessary to evidence the release of the security interest,
mortgage or Liens granted to the Administrative Agent upon any Collateral to the extent set forth
above; provided that (i) the Administrative Agent shall not be required to execute any such
document on terms which, in the Administrative Agent’s opinion, would expose the Administrative
Agent to liability or create any obligations or entail any consequence other than the release of
such security interest, mortgage or Liens without recourse or warranty and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any security interest, mortgage or
Lien upon (or obligations of any Loan Party in respect of) the Collateral retained by such Loan
Party.



          (c) The Administrative Agent shall have no obligation whatsoever to any Lender, any Issuing
Bank or any other Person to investigate, confirm or assure that the Collateral exists or is owned
by any Loan Party or is cared for, protected or insured or has been encumbered, or that any
particular items of Collateral meet the eligibility criteria applicable in respect of the Loans or
Letters of Credit hereunder, or whether any particular reserves are appropriate, or that the Liens
and security interests granted to the Administrative Agent pursuant hereto or any of the Loan
Documents or otherwise have been properly or sufficiently or lawfully created, perfected, protected
or enforced or are entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Administrative Agent in this Agreement
or in any of the other Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, subject to the other terms and
conditions contained herein, the Administrative Agent may act in any manner it may deem
appropriate, in its discretion, given the Administrative Agent’s own interest in the Collateral as
a Lender and that the Administrative Agent shall have no duty or liability whatsoever to any other
Lender or any other Issuing Bank.



          (d) Each Lender represents to the Administrative Agent and each other Lender that it in good
faith is not, directly or indirectly (by negative pledge or otherwise), relying upon any Margin
Stock as collateral in the extension or maintenance of the credit provided for in this Agreement.



     Section 12.11 Agency for Perfection. Each Lender and each Issuing Bank hereby
appoints the Administrative Agent as agent and bailee for the purpose of perfecting the security
interests in and Liens upon that portion of the Collateral which, in accordance with Article 9 of
the UCC can be perfected only by possession (or where the security interest of a secured party with
possession has priority over the security interest of another secured party) and the Administrative
Agent and each Lender and each Issuing Bank hereby acknowledges that it holds possession of any
such Collateral for the benefit of the Secured Parties. Should any Lender or any Issuing Bank
obtain possession of any such Collateral, such Lender shall notify the Administrative Agent
thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such
Collateral to the Administrative Agent or in accordance with the Administrative Agent’s
instructions.



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     Section 12.12 Successor to the Administrative Agent. The Administrative Agent may at
any time give notice of its resignation to the Lenders and the Company. If the Administrative
Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Company, a successor agent from among the Lenders. So long as no Event of
Default shall have occurred and be continuing, any successor agent appointed under this Section
shall be subject to the approval of the Company (such approval not to be unreasonably withheld).
Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the retiring
Administrative Agent and the term “Administrative Agent” as used herein and in the other
Loan Documents shall mean such successor agent and the retiring Administrative Agent’s appointment,
powers and duties as the Administrative Agent shall be terminated. After any retiring
Administrative Agent’s resignation hereunder as the Administrative Agent, the provisions of this
Article 12 shall inure to its benefit as to any actions taken or omitted by it while it was
the Administrative Agent under this Agreement. If no successor agent has accepted appointment as
the Administrative Agent by the date which is thirty (30) days after the date of a retiring
Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall
nonetheless thereupon become effective and the Lenders shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above (except that in the case of any Collateral held by the existing
Administrative Agent on behalf of the Secured Parties under the Loan Documents, the retiring
Administrative Agent shall continue to hold such Collateral until such time as a successor
Administrative Agent is appointed). In addition to the foregoing, the Required Lenders may remove
the Administrative Agent if the Administrative Agent shall become the subject of a bankruptcy or
insolvency proceeding, and the Required Lenders may appoint a successor agent as provided for above
(which successor agent shall be subject to the approval of the Company as set forth above).



     Section 12.13 Other Agent Designations. The Administrative Agent may at any time and
from time to time determine that a Lender may, in addition, be a “Syndication Agent”,
“Documentation Agent” or similar designation hereunder and enter into an agreement with such Lender
to have it so identified for purposes of this Agreement. Any such designation shall be effective
upon written notice by the Administrative Agent to the Administrative Borrower of any such
designation. Any Lender that is so designated as a Syndication Agent, Documentation Agent or such
similar designation by the Administrative Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any of the other Loan Documents other than those
applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall
not have or be deemed to have any fiduciary relationship with any Lender and no Lender shall be
deemed to have relied, nor shall any Lender rely, on a Lender so identified as a Syndication Agent,
Documentation Agent or such similar designation in deciding to enter into this Agreement or in
taking or not taking action hereunder.



ARTICLE 13

GUARANTY




     Section 13.1 The Guaranty. In order to induce the Lenders to enter into this
Agreement and to extend credit hereunder or any Lender (or its Affiliates) to provide any Bank
Products and in recognition of the direct benefits to be received by the Guarantors from the
extensions of credit hereunder and the provision of Bank Products, each Guarantor hereby
unconditionally and irrevocably, jointly and severally, guarantees as primary obligor and not
merely as surety, the full and prompt payment when due, whether upon maturity, by acceleration or
otherwise, of any and all of the Obligations. Each Guarantor agrees that this Guaranty is a
continuing, unconditional guaranty of payment and performance and not of collection, and that its
obligations under this Guaranty shall be primary, absolute and unconditional. If any or all of



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the Obligations becomes due and payable hereunder or in connection with any Bank Product, each
Guarantor unconditionally promises to pay such Obligations to the Administrative Agent, the
Lenders, the Issuing Banks or their respective order, on demand, together with any and all
reasonable expenses that may be incurred by the Administrative Agent or the Lenders in collecting
any of the Obligations.



Notwithstanding any provision to the contrary contained herein or in any other of the Loan
Documents, to the extent the obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the obligations of each such
Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law
(whether federal or state).




     Section 13.2 Bankruptcy. Additionally, each of the Guarantors unconditionally and
irrevocably guarantees, jointly and severally, the payment of any and all Obligations whether or
not due or payable by any Borrower upon the occurrence of any of the events specified in
Sections 11.1(f) and 11.1(g), and unconditionally promises to pay such Obligations
to the Administrative Agent for the account of itself and the Lenders, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that to the extent that
any Loan Party shall make a payment or a transfer of an interest in any property to the
Administrative Agent or any Lender, which payment or transfer or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, or otherwise is avoided, and/or required to
be repaid to a Loan Party, the estate of a Loan Party, a trustee, receiver, interim receiver,
monitor or any other party under any bankruptcy law, state, federal, provincial or foreign law,
common law or equitable cause, then to the extent of such avoidance or repayment, the obligation or
part thereof intended to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made.



     Section 13.3 Nature of Liability. The liability of each Guarantor hereunder is
exclusive and independent of any security for or other guaranty of the Obligations whether executed
by any such Guarantor, any other guarantor or by any other party, and no Guarantor’s liability
hereunder shall be affected or impaired by (a) any direction as to application of payment by a
Borrower or by any other party, (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Obligations, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution or termination of, or
increase, decrease or change in personnel by, a Loan Party, or (e) any payment made to the
Administrative Agent or the Lenders on the Obligations that the Administrative Agent or such
Lenders repay a Loan Party pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each of the Guarantors waives any right to the
deferral or modification of its obligations hereunder by reason of any such proceeding.



     Section 13.4 Independent Obligation. The obligations of each Guarantor hereunder are
independent of the obligations of any other Loan Party in respect of the Obligations, and a
separate action or actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Loan Party and whether or not any other Loan Party is joined in
any such action or actions.



     Section 13.5 Authorization. Each of the Guarantors authorizes the Administrative
Agent and each Lender without notice or demand (except as shall be required by applicable statute
and cannot be waived), and without affecting or impairing its liability hereunder, from time to
time to (a) renew, compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Obligations or any part thereof in accordance with
this Agreement or the agreements governing Bank Products, including any increase or decrease of the
rate of interest thereon, (b) take and hold security from any Guarantor or any other party for the
payment of this Guaranty or the Obligations and exchange, enforce, waive and release any such
security, (c) apply such security and direct



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the order or manner of sale thereof as the Administrative Agent and the Lenders in their
discretion may determine and (d) release or substitute any one or more endorsers or obligors.




     Section 13.6 Reliance. It is not necessary for the Administrative Agent or the
Lenders to inquire into the capacity or powers of any Borrower or other obligor of the Obligations
or the officers, directors, members, partners or agents acting or purporting to act on its behalf,
and any Obligations made or created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.



     Section 13.7 Waiver.



          (a) Each of the Guarantors waives any right (except as shall be required by applicable law and
cannot be waived) to require the Administrative Agent or any Lender to (i) proceed against any
Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held
from any Borrower, any other guarantor or any other party, or (iii) pursue any other remedy in the
Administrative Agent’s or any Lender’s power whatsoever. Each of the Guarantors waives any defense
based on or arising out of any defense of any Borrower, any other guarantor or any other party
other than payment in full of the Obligations (other than contingent indemnity obligations),
including without limitation any defense based on or arising out of the disability of any Borrower,
any other guarantor or any other party, or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of any Borrower other than
payment in full of the Obligations. The Administrative Agent may, at its election, foreclose on or
otherwise enforce its rights under any security held by the Administrative Agent by one or more
judicial or nonjudicial sales (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Administrative Agent or any Lender may have against any Borrower or
any other party, or any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been paid in full and the Commitments
have been terminated. Each of the Guarantors waives any defense arising out of any such election
by the Administrative Agent or any of the Lenders, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantors
against any Borrower or any other party or any security.



          (b) Each of the Guarantors waives all presentments, demands for performance, protests and
notices, including without limitation notices of nonperformance, notice of protest, notices of
dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional Obligations. Each Guarantor assumes all responsibility for being
and keeping itself informed of each Borrower’s or other obligor’s financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that neither the Administrative Agent nor any Lender shall have any duty to advise such Guarantor
of information known to it regarding such circumstances or risks.



          (c) Each of the Guarantors hereby agrees it will not exercise any rights of subrogation that
it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) to the claims of the Lenders against any Borrower or any
other guarantor or other obligor of the Obligations owing to the Administrative Agent and the
Lenders (collectively, the “Other Parties”) and all contractual, statutory or common law
rights of reimbursement, contribution or indemnity from any Other Party that it may at any time
otherwise have as a result of this Guaranty until such time as the Obligations shall have been paid
in full and the Commitments have been terminated. Each of the Guarantors hereby further agrees not
to exercise any right to enforce any other remedy which the Administrative Agent or the Lenders now
have or may hereafter have against any Other Party, any endorser or any other guarantor of all or
any part of the Obligations of any Borrower and any benefit of, and any right to participate in,
any security or collateral



105









 




given to or for the benefit of the Administrative Agent and the Lenders to secure payment of
the Obligations until such time as the Obligations (other than contingent indemnity obligations)
shall have been paid in full and the Commitments have been terminated.




     Section 13.8 Limitation on Enforcement. The Lenders agree that this Guaranty may be
enforced only by the action of the Administrative Agent acting upon the instructions of the
Required Lenders and that no Lender shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent for the benefit of itself and the Lenders under the terms of
this Agreement. The Lenders further agree that this Guaranty may not be enforced against any
director, officer, employee or stockholder of the Guarantors.



     Section 13.9 Confirmation of Payment. The Administrative Agent and the Lenders will,
upon request after payment of the Obligations that are the subject of this Guaranty and termination
of the Commitments relating thereto, confirm to the Borrowers, Guarantors or any other Person that
such Obligations have been paid and the Commitments relating thereto terminated, subject to the
provisions of Section 14.2.



ARTICLE 14

MISCELLANEOUS




     Section 14.1 Notices.



          (a) All notices, requests and demands hereunder shall be in writing and deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of business on the next
business day for the recipient); if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing. Notices delivered through
electronic communications shall be effective to the extent set forth in Section 14.1(b)
below. All notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in accordance with this
Section 14.1):



	 	 	 

	If to any Loan Party:

	 	Mohawk Industries, Inc.

160 South Industrial Boulevard

Calhoun, Georgia 30701

Attn: Chief Financial Officer

Telephone No.: (706) 624-2695

Telecopy No.: (706) 624-2483
	 
	 	 
	with a copy to:

	 	Mohawk Industries, Inc.

160 South Industrial Boulevard

Calhoun, Georgia 30703-7002

Attn: James T. Lucke, Esq.

Telephone No.: (706) 624-2660

Telecopy No.: (706) 624-2483






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	If to the Administrative Agent,
Swingline Lender or Wachovia, as
Issuing Bank:

	 	Wachovia Bank, National Association

171 17th Street NW

MAC: G0128-031

Atlanta, GA 30363

Attn: Dan Denton, Portfolio Management

Telephone No.: (404) 214-1696

Telecopy No.: (404) 214-7299






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



     Section 14.2 Amendments and Waivers.



          (a) Neither this Agreement nor any other Loan Document nor any terms hereof or thereof may be
amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination
is in writing signed by the Required Lenders or at the Administrative Agent’s option, by the
Administrative Agent with the authorization or consent of the Required Lenders, and as to
amendments to any of the Loan Documents (other than with respect to any provision of Article
12), by each Loan Party and such amendment, waiver, discharge or termination shall be effective
and binding as to the Administrative Agent, all the Lenders and all the Issuing Banks only in the
specific instance and for the specific purpose for which given; except, that, no such amendment,
waiver, discharge or termination shall:



               (i) reduce the interest rate or any fees or extend the time of payment of principal, interest
or any fees or reduce the principal amount of any Loan or Letter of Credit Obligations, in each
case without the consent of each Lender directly affected thereby (it being understood and agreed
that any change to the definition of Average Excess Availability or Excess Availability or in each
case in the component definitions thereof shall not constitute a reduction in the rate of
interest); provided that only the consent of the Required Lenders shall be necessary to
waive any obligation of the Borrowers to pay interest at the Default Rate during the continuance of
an Event of Default,



               (ii) increase the Commitment of any Lender over the amount thereof then in effect or provided
hereunder (or reinstate any commitment terminated pursuant to Section 11.2), in each case
without the consent of such Lender,



               (iii) release all or substantially all of the value of the Collateral or release any material
Loan Party from its obligations under the Loan Documents (except as expressly required



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hereunder or under any of the other Loan Documents or applicable law and except as permitted
under Section 9.9 or 12.10), without the consent of the Administrative Agent and
all of the Lenders,




               (iv) reduce any percentage specified in the definitions of Required Lenders or Supermajority
Lenders, in either case, without the consent of the Administrative Agent and all of the Lenders,



               (v) consent to the assignment or transfer by any Loan Party of any of their rights and
obligations under this Agreement (except as permitted pursuant to Section 10.4), without
the consent of the Administrative Agent and all of the Lenders,



               (vi) amend, modify or waive any terms of this Section 14.2, the definition of Pro Rata
Shares or, except as otherwise permitted by Section 4.11, the application of payments in
Section 3.4 or 11.3, without the consent of the Administrative Agent and all of the
Lenders, and



               (vii) increase the advance rates constituting part of the Borrowing Base (or amend or modify
any of the defined terms used therein that would have the direct effect of increasing the Borrowing
Base or Excess Availability) or increase the Letter of Credit Limit, without the consent of the
Supermajority Lenders.



     Notwithstanding the foregoing subsection (a):




          (A) this Agreement may be amended to increase the interest rate or any fees
hereunder solely with the consent of the Administrative Agent and the Borrowers;




          (B) this Agreement and the other Loan Documents may be amended to reflect
definitional, technical and conforming modifications to the extent necessary to
effectuate any Facility Increase pursuant to Section 2.7 with the prior
written consent of the Administrative Agent, the Loan Parties and each Lender or
Eligible Assignee participating in such Facility Increase pursuant to documentation
satisfactory to the Administrative Agent and the Loan Parties without the consent of
any other Lender or Issuing Bank;




          (C) modifications to the Loan Documents may be made to the extent necessary to
grant a security interest in additional collateral to the Administrative Agent for
the benefit of the Secured Parties with the prior written consent of the
Administrative Agent and the Loan Parties pursuant to documentation satisfactory to
the Administrative Agent and the Loan Parties without the consent of any Lender or
Issuing Bank; and




          (D) if the Administrative Agent and the Administrative Borrower shall have
jointly identified an obvious error or any error or omission of a technical or
immaterial nature, in each case, in any provision of the Loan Documents, then the
Administrative Agent and the Administrative Borrower shall be permitted to amend
such provision and such amendment shall become effective without any further action
or consent of any other party to any Loan Document.



          (b) The Administrative Agent, the Lenders, the Swingline Lender and the Issuing Banks shall
not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any
of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as
provided herein. Any such waiver shall be enforceable only to the extent specifically set forth
therein.



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A waiver by the Administrative Agent, any Lender or any Issuing Bank of any right, power
and/or remedy on any one occasion shall not be construed as a bar to, or waiver of, any such right,
power and/or remedy which the Administrative Agent, any Lender or any Issuing Bank would otherwise
have on any future occasion, whether similar in kind or otherwise.




          (c) Notwithstanding anything to the contrary contained in Section 14.2(a) above, in
connection with any amendment, waiver, discharge or termination, in the event that any Lender whose
consent thereto is required shall fail to consent or fail to consent in a timely manner (such
Lender being referred to herein as a “Non-Consenting Lender”), but the consent of the
Required Lenders to such amendment, waiver, discharge or termination is obtained, then the
Administrative Borrower may, at its sole expense and effort, replace such Non-Consenting Lender
within one hundred twenty (120) days thereafter by requiring such Non-Consenting Lender to sell,
assign and transfer to an Eligible Assignee, without recourse, the Commitment of such
Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant thereto;
provided that such Eligible Assignee consents to such amendment, waiver, discharge or
termination. The Administrative Borrower shall provide the Administrative Agent and the
Non-Consenting Lender with prior written notice of its intent to exercise its right under this
Section 14.2(c), which notice shall specify the date on which such purchase and sale shall
occur. Such purchase and sale shall be made in accordance with, and subject to, the provisions of
Section 14.11 (including, without limitation, payment to the Administrative Agent by the
Administrative Borrower of the assignment fee specified in Section 14.11) and pursuant to
the terms of an Assignment and Assumption (whether or not executed by the Non-Consenting Lender),
except that on the date of such purchase and sale, such Eligible Assignee specified by the
Administrative Borrower, shall pay to the Non-Consenting Lender (except as the Eligible Assignee
and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the principal balance
of the Loans held by the Non-Consenting Lender outstanding as of the close of business on the
Business Day immediately preceding the effective date of such purchase and sale, plus (ii)
amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to
the effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee). The Administrative Agent is hereby irrevocably appointed
as attorney-in-fact to execute any such Assignment and Assumption if the Non-Consenting Lender
fails to execute same.



          (d) The consent of the Administrative Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of the Administrative Agent hereunder or under any of the
other Loan Documents, in addition to the consent of the Lenders otherwise required by this
Section 14.2 and the exercise by the Administrative Agent of any of its rights hereunder
with respect to Reserves or Eligible Accounts or Eligible Inventory shall not be deemed an
amendment to the advance rates provided for in this Section 14.2. The consent of each
Issuing Bank shall be required for any amendment, waiver or consent affecting the rights or duties
of such Issuing Bank hereunder or under any of the other Loan Documents, in addition to the consent
of the Lenders otherwise required by this Section 14.2, provided that the consent
of such Issuing Bank shall not be required for any other amendments, waivers or consents. The
consent of Swingline Lender shall be required for any amendment, waiver or consent affecting the
rights or duties of the Swingline Lender hereunder or under any of the other Loan Documents, in
addition to the consent of the Lenders otherwise required by this Section 14.2.
Notwithstanding anything to the contrary contained in Section 14.2(a) above, the
Administrative Agent may consent to any change in the type of organization, jurisdiction of
organization or other legal structure of any Loan Party or any of its Subsidiaries not prohibited
by the terms of this Agreement and amend the terms hereof or of any of the other Loan Documents as
may be necessary or desirable to reflect any such change, in each case without the approval of any
Lender.



          (e) The consent of the Administrative Agent and a Bank Product Provider that is providing Bank
Products and has outstanding any such Bank Products at such time that are secured



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hereunder shall be required for any amendment to the priority of payment of Obligations
arising under or pursuant to any such Hedge Agreements of a Loan Party or other Bank Products as
set forth in Section 11.3.




     Section 14.3 Costs and Expenses. Subject to any and all limitations and restrictions
on the obligation of the Loan Parties to pay fees, costs and expenses contained elsewhere in this
Agreement or any other Loan Document, the Loan Parties, jointly and severally, shall pay (a) to the
Administrative Agent and its Affiliates on demand all reasonable out-of-pocket costs, expenses
(including all reasonable fees, charges and disbursements of counsel for the Administrative Agent),
filing fees and taxes paid or payable in connection with the preparation, negotiation, execution,
delivery, recording, syndication, and administration of this Agreement, the other Loan Documents
and all other documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or entered into in respect
hereof and thereof, (b) all reasonable out-of-pocket expenses incurred by any Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, (c) to the Administrative Agent all reasonable out-of-pocket costs and
expenses (including the fees, charges and disbursements of any counsel for the Administrative
Agent), filing fees and taxes paid or payable in connection with the collection, liquidation,
enforcement and defense of the Obligations and the Administrative Agent’s rights in the Collateral,
including, without limitation: (i) all costs and expenses of filing or recording (including UCC
financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (ii) costs and expenses and fees for insurance premiums,
inspections, appraisal fees and search fees, costs and expenses of Patriot Act compliance, costs
and expenses of remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with the Administrative Agent’s
customary charges and fees with respect thereto; (iii) costs and expenses of preserving and
protecting the Collateral; (iv) costs and expenses paid or actually incurred in connection with
obtaining payment of the Obligations, enforcing the Liens of the Administrative Agent, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement
and the other Loan Documents or defending any claims made or threatened against the Administrative
Agent or any Lender arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters) and (v) all reasonable
out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by the
Administrative Agent during the course of periodic field examinations of the Collateral and such
Loan Party’s operations, plus a per diem charge at the Administrative Agent’s then standard
rate for the Administrative Agent’s examiners in the field and office (which rate as of the Closing
Date is $1,000 per person per day) and (d) all reasonable out-of-pocket costs and expenses of the
Administrative Agent, any Lender or any Issuing Bank (including the fees, charges and disbursements
of any counsel for the Administrative Agent, any Lender or any Issuing Bank) actually incurred in
connection with the enforcement or protection of its rights (i) in connection with this Agreement
and the other Loan Documents, including its rights under this Section or (ii) in connection with
the Loans made or the Letters of Credit issued hereunder, including all reasonable out-of-pocket
expenses actually incurred during any workout, restructuring or negotiations in respect of any
Loans or Letters of Credit.



     Section 14.4 Indemnification. Each Loan Party shall, jointly and severally, indemnify
and hold the Administrative Agent, each Lender, each Issuing Bank and each Joint Lead Arranger, and
their respective officers, directors, agents, employees, partners, advisors and counsel and their
respective affiliates (each such person being an “Indemnitee”), harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses (including reasonable fees,
disbursements, settlement costs and other charges of counsel) imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or proceeding commenced
or threatened related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Loan Documents, or any undertaking or
proceeding related to any of the transactions contemplated



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hereby or thereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of counsel except that
Loan Parties shall not have any obligation under this Section 14.4 to indemnify an
Indemnitee to the extent that such losses, claims, damages, liabilities, costs or expenses (a) are
determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from (i) the gross negligence or willful misconduct of such Indemnitee or (ii) the
material breach in bad faith of such Indemnitee’s obligations under this Agreement or any other
Loan Document in any claim brought by the Company or any Subsidiary or Affiliate thereof against
such Indemnitee or (b) do not result from an act or omission by the Company or any of its
Subsidiaries or Affiliates and that result from any investigation, litigation or proceeding brought
by an Indemnitee against any other Indemnitee (excluding any investigation, litigation or
proceeding by an Indemnitee against the Administrative Agent or any of its affiliates, directors,
officers, employees, partners, representatives, advisors or agents or any of their respective
heirs, successors or assigns). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 14.4 may be unenforceable because it violates any law or
public policy, each Loan Party shall pay the maximum portion which it is permitted to pay under
applicable law to the Indemnitees in satisfaction of indemnified matters under this Section
14.4. To the extent permitted by applicable law, no Loan Party or Indemnitee shall assert, and
each Loan Party and each of the Administrative Agent, each Lender and each Issuing Bank, on its own
behalf and on behalf of its affiliated Indemnitees hereby waives, any claim against any Indemnitee
or Loan Party, as applicable, on any theory of liability for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement, any of the other Loan Documents or any undertaking or transaction
contemplated hereby. No Indemnitee referred to above shall be liable for any damages arising from
the use by unintended recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in connection with this
Agreement or any of the other Loan Documents or the transaction contemplated hereby or thereby.
All amounts due under this Section 14.4 shall be payable upon demand. The foregoing
indemnity shall survive the payment of the Obligations and the termination of this Agreement.




     Section 14.5 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.



          (a) The validity, interpretation and enforcement of this Agreement and the other Loan
Documents (except as otherwise provided therein) and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by
the internal laws of the State of New York but excluding any principles of conflicts of law or
other rule of law that would cause the application of the law of any jurisdiction other than the
laws of the State of New York.



          (b) The Loan Parties, the Administrative Agent, the Lenders and the Issuing Banks irrevocably
consent and submit to the non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court for the Southern District of New York, whichever the Administrative
Agent may elect, and waive any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other Loan Documents or in any
way connected with or related to the dealings of the parties hereto in respect of this Agreement or
any of the other Loan Documents or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters may be heard in the courts described above
(except that the Administrative Agent and the Lenders shall have the right to bring any action or
proceeding against any Loan Party or its or their property in the courts of any other jurisdiction
which the Administrative Agent deems necessary or appropriate in order to realize on the Collateral
or to otherwise enforce its rights against any Loan Party or its or their property).




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          (c) Each Loan Party hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return receipt requested)
directed to its address set forth herein and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mail, or, at the Administrative
Agent’s option, by service upon any Loan Party (or the Administrative Borrower on behalf of such
Loan Party) in any other manner provided under the rules of any such courts.




          (d) THE LOAN PARTIES, THE ADMINISTRATIVE AGENT, THE LENDERS AND THE ISSUING BANKS EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE LOAN PARTIES, THE ADMINISTRATIVE AGENT,
THE LENDERS AND THE ISSUING BANKS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY LOAN PARTY,
THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.




          (e) The Administrative Agent, the Lenders and the Issuing Banks shall not have any liability
to any Loan Party (whether in tort, contract, equity or otherwise) for losses suffered by such Loan
Party in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event occurring in connection
herewith, unless it is determined by a final and non-appealable judgment or court order binding on
the Administrative Agent, such Lender and such Issuing Bank, that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. In any such litigation, the
Administrative Agent, the Lenders and the Issuing Banks shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement. Each Loan Party: (i) certifies that neither the
Administrative Agent, any Lender, any Issuing Bank nor any representative, the Administrative Agent
or attorney acting for or on behalf of the Administrative Agent, any Lender or any Issuing Bank has
represented, expressly or otherwise, that the Administrative Agent, the Lenders and the Issuing
Banks would not, in the event of litigation, seek to enforce any of the waivers provided for in
this Agreement or any of the other Loan Documents and (ii) acknowledges that in entering into this
Agreement and the other Loan Documents, the Administrative Agent, the Lenders and the Issuing Banks
are relying upon, among other things, the waivers and certifications set forth in this Section
14.5 and elsewhere herein and therein.




     Section 14.6 Waiver of Notices. To the extent permitted under applicable law, each
Loan Party hereby expressly waives demand, presentment, protest and notice of protest and notice of
dishonor with respect to any and all instruments and chattel paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such
as are expressly provided for herein. No notice to or demand on any Loan Party which the
Administrative Agent or any Lender may elect to give shall entitle such Loan Party to any other or
further notice or demand in the same, similar or other circumstances.



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     Section 14.7 Waiver of Counterclaims. Each Loan Party waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then compulsory
counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.



     Section 14.8 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement
as a whole, but this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of the parties shall
be construed and enforced only to such extent as shall be permitted by applicable law.



     Section 14.9 Confidentiality.



          (a) Each Lending Party agrees to keep confidential any Information (as hereinafter defined);
provided that nothing herein shall prevent any Lending Party from disclosing such
Information (i) to any other Lending Party or any Affiliate of any Lending Party, or any officer,
director, employee, agent, auditor, attorney or advisor of any Lending Party or Affiliate of any
Lending Party (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (ii) to any other Person if it is reasonably necessary for the administration of the
Credit Facility provided hereunder, so long as such Person has agreed to keep such Information
confidential in accordance with provisions substantially similar to those contained in this
Section 14.9, (iii) as required by any law, rule, or regulation, (iv) upon the order of any
court or administrative agency, (v) upon the request or demand of any regulatory agency or
authority, (vi) that is or becomes available to the public or that is or becomes available to any
Lending Party (or any Affiliate of any Lending Party) other than as a result of a disclosure by any
Lending Party prohibited by this Agreement, (vii) in connection with any litigation to which such
Lending Party or any of its Affiliates may be a party, (viii) to the extent necessary in connection
with the exercise of any remedy under this Agreement or any other Loan Document, (ix) subject to
provisions substantially similar to those contained in this Section 14.9, to any actual
Participant or Eligible Assignee or any Person proposed to become a Participant or Eligible
Assignee and (x) to Gold Sheets and other similar bank trade publications (such information to
consist of deal terms and other information customarily found in such publications). The Company
hereby authorizes the Administrative Agent to use its name and logo and the amount of the Credit
Facility provided hereunder in any “tombstone” or comparable advertising, on its website or in
other marketing materials of the Administrative Agent. As used herein, the term
“Information” means all written and electronic information concerning the Company or any of
its Subsidiaries that is furnished (whether before or after the date hereof) in connection with
this Agreement, any other Loan Document or the transactions contemplated hereby and thereby, by, or
on behalf of the Company or any such Subsidiary by any of its respective affiliates, directors,
officers, employees, advisors or authorized agents (collectively, “Representatives”) to any
Lender Party, including, but not limited to, all information, data or documents about any Loan
Party’s finances, organization, operations, research and development, manufacturing, technology,
sales, pricing, costs, cost structure, strategies, contracts, marketing, management, processes and
procedures, products or other business information, as well as any other information related to
this Agreement, any other Loan Document or the transactions contemplated hereby and thereby, and
all analyses, notes, compilations, or other documents prepared by any Lender Party which contain,
reflect or are derived from any such information.




          (b) In no event shall this Section 14.9 or any other provision of this Agreement, any
of the other Loan Documents or applicable law be deemed to require the Administrative Agent, any
Lender or any Issuing Bank to return any materials furnished by a Loan Party to the Administrative
Agent, a Lender or an Issuing Bank or prevent the Administrative Agent, a Lender or an Issuing Bank
from responding to routine informational requests in accordance with the Code of Ethics for the
Exchange






113









 







of Credit Information promulgated by The Robert Morris Associates or other applicable industry
standards relating to the exchange of credit information. The obligations of the Administrative
Agent, the Lenders and the Issuing Banks under this Section 14.9 shall supersede and
replace the obligations of the Administrative Agent, the Lenders and the Issuing Banks under any
confidentiality letter signed prior to the Closing Date or any other arrangements concerning the
confidentiality of information provided by any Loan Party to the Administrative Agent or any
Lender.




          (c) Each of the Lenders and the Issuing Banks acknowledges that (i) Information may include
material non-public information concerning an Loan Party or Subsidiary thereof; (ii) it has
developed compliance procedures regarding the use of material non-public information; and (iii) it
will handle such material non-public information in accordance with applicable law, including
federal and state securities laws.




     Section 14.10 Successors. This Agreement, the other Loan Documents and any other
document referred to herein or therein shall be binding upon and inure to the benefit of and be
enforceable by the Administrative Agent, the Lenders, the Issuing Banks, Loan Parties and their
respective successors and assigns, except that a Borrower may not assign its rights under this
Agreement, the other Loan Documents and any other document referred to herein or therein without
the prior written consent of the Administrative Agent and the Lenders. Any such purported
assignment without such express prior written consent shall be void. No Lender may assign its
rights and obligations under this Agreement except as provided in Section 14.11 below. The
terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining
the relative rights and obligations of Loan Parties, the Administrative Agent, the Lenders and the
Issuing Banks with respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement or any of the other Loan
Documents.



     Section 14.11 Assignments; Participations.



          (a) Each Lender may assign all or, if less than all, a portion equal to at least $5,000,000 in
the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one
or more Eligible Assignees (but not including for this purpose any assignments in the form of a
participation), each of which assignees shall become a party to this Agreement as a Lender by
execution of an Assignment and Assumption; provided that:




               (i) the consent of the Administrative Borrower (such consent not to be unreasonably withheld,
conditioned or delayed) shall be required for any assignment unless (A) an Event of Default has
occurred and is continuing or (B) the assignment is to a Lender or an Affiliate of a Lender;
provided that the Administrative Borrower shall be deemed to have consented to any such
assignment unless it shall object thereto by written notice to the Administrative Agent within five
(5) Business Days after having received notice thereof;



               (ii) the consent of the Administrative Agent (such consent not to be unreasonably withheld,
conditioned or delayed) shall be required if such assignment is to a Person that is not a Lender,
an Affiliate of a Lender or an Approved Fund;



               (iii) the consent of each Issuing Bank and the Swingline Lender (such consents not to be
unreasonably withheld, conditioned or delayed) shall be required if such assignment is to a Person
that is not a Lender or an Affiliate of a Lender;



               (iv) such transfer or assignment will not be effective until recorded by the Administrative
Agent on the Register; and



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               (v) the Administrative Agent shall have received for its sole account payment of a processing
fee from the assigning Lender or the assignee in the amount of $3,500.



          (b) The Administrative Agent shall maintain a register of the names and addresses of the
Lenders, their Commitments and the principal amount of their Loans (the “Register”). The
Administrative Agent shall also maintain a copy of each Assignment and Assumption delivered to and
accepted by it and shall modify the Register to give effect to each Assignment and Assumption. The
entries in the Register shall be conclusive and binding for all purposes, absent manifest error,
and Loan Parties, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Administrative Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice.




          (c) Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and to
the other Loan Documents and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Assumption, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of Credit Obligations) of a
Lender hereunder and thereunder and the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and Assumption,
relinquish its rights and be released from its obligations under this Agreement, except for those
indemnification rights which specifically survive termination of this Agreement.




          (d) By execution and delivery of an Assignment and Assumption, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Assumption, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other Loan Documents or
the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any
of the other Loan Documents furnished pursuant hereto, (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Loan Party or any of its Subsidiaries or the performance or observance by any Loan Party of any
of the Obligations; (iii) such assignee confirms that it has received a copy of this Agreement and
the other Loan Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such Assignment and
Assumption, (iv) such assignee will, independently and without reliance upon the assigning Lender,
the Administrative Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents, (v) such assignee appoints and authorizes the
Administrative Agent to take such action agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such
assignee agrees that it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement and the other Loan Documents are required to be performed by it as a
Lender. The Administrative Agent and the Lenders may furnish any information concerning any Loan
Party in the possession of the Administrative Agent or any Lender from time to time to assignees
and Participants.




          (e) Each Lender may sell participations to one or more banks or other entities (other than a
natural person, the Company or any of the Company’s Subsidiaries or Affiliates) (each, a
“Participant”) all or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of its Commitments and the
Loans owing to it and its participation in the Letter of Credit Obligations, without the consent of
the Administrative Agent






115









 







or the other Lenders); provided that (i) such Lender’s obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the other Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and Loan Parties, the other Lenders and the
Administrative Agent shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other Loan Documents, and (iii)
the Participant shall not have any rights under this Agreement or any of the other Loan Documents
(the Participant’s rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant relating thereto) and
all amounts payable by any Loan Party hereunder shall be determined as if such Lender had not sold
such participation.




          (f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans
hereunder to a Federal Reserve Bank or other central bank in support of borrowings made by such
Lenders from such Federal Reserve Bank or other central bank; provided that no such pledge
shall release such Lender from any of its obligations hereunder or substitute any such pledgee for
such Lender as a party hereto.




          (g) Any Lender that is an Issuing Bank or the Swingline Lender may at any time assign all of
its Commitments pursuant to, and subject to the terms of, this Section 14.11. If such
Issuing Bank or Swingline Lender ceases to be a Lender, it may, at its option, resign as Issuing
Bank or Swingline Lender. In addition, any Additional Issuing Bank may, at any time give notice of
its resignation to the Administrative Agent and the Company. Upon the resignation of any Issuing
Bank or Swingline Lender, such Issuing Bank’s or Swingline Lender’s obligations to issue Letters of
Credit or make Swingline Loans shall terminate but it shall retain all of the rights and
obligations of an Issuing Bank or Swingline Lender hereunder with respect to Letters of Credit or
Swingline Loans outstanding as of the effective date of its resignation and all Letter of Credit
Obligations or Swingline Loans with respect thereto (including the right to require the Lenders to
make Loans or fund risk participations in outstanding Letter of Credit Obligations or Swingline
Loans), shall continue.




     Section 14.12 Term.



          (a) This Agreement and the other Loan Documents shall become effective as of the date set
forth on the first page hereof and shall continue in full force and effect for a term ending on the
Maturity Date, unless sooner terminated pursuant to the terms hereof. In addition, the Borrowers
may terminate this Agreement at any time upon five (5) Business Days prior written notice to the
Administrative Agent (which notice shall be irrevocable). Upon the Maturity Date or any other
effective date of termination of the Loan Documents, the Borrowers shall pay to the Administrative
Agent all outstanding and unpaid Obligations and shall furnish cash collateral to the
Administrative Agent (or at the Administrative Agent’s option, a letter of credit issued for the
account of the Borrowers and at the Borrowers’ expense, in form and substance reasonably
satisfactory to the Administrative Agent, by an issuer reasonably acceptable to the Administrative
Agent and payable to the Administrative Agent as beneficiary) in such amounts as the Administrative
Agent determines are reasonably necessary to secure the Administrative Agent, the Lenders and the
Issuing Banks from loss, cost, damage or expense, including attorneys’ fees and expenses, in
connection with any contingent Obligations, including issued and outstanding Letter of Credit
Obligations and checks or other payments provisionally credited to the Obligations and/or as to
which the Administrative Agent or any Lender has not yet received full and final payment and any
continuing obligations of the Administrative Agent or any Lender pursuant to any Deposit Account
Control Agreement and for any of the Obligations arising under or in connection with any Bank
Products in such amounts as the Bank Product Provider providing such Bank Products may require
(unless such Obligations arising under or in connection with any Bank Products are paid in full in
cash and terminated in a manner satisfactory to such Bank Product Provider), in each case as the






116









 







Administrative Agent, such Lender or such Bank Product Provider shall specify in writing in
reasonable detail with adequate supporting information. The amount of such cash collateral (or
letter of credit, as the Administrative Agent may determine) as to any Letter of Credit Obligations
shall be in the amount equal to one hundred three percent (103%) of the amount of the Letter of
Credit Obligations plus the amount of any fees and expenses payable in connection therewith
through the end of the latest expiration date of the Letters of Credit giving rise to such Letter
of Credit Obligations. Such payments in respect of the Obligations and cash collateral shall be
remitted by wire transfer in Federal funds to the Administrative Agent Payment Account or such
other bank account of the Administrative Agent, as the Administrative Agent may, in its discretion,
designate in writing to the Administrative Borrower for such purpose. Interest and fees shall be
due until and including the next Business Day, if the amounts so paid by the Borrowers to the
Administrative Agent Payment Account or other bank account designated by the Administrative Agent
are received in such bank account later than 2:00 p.m.




          (b) No termination of the Commitments, this Agreement or any of the other Loan Documents shall
relieve or discharge any Loan Party of its respective duties, obligations and covenants under this
Agreement or any of the other Loan Documents until all Obligations (other than contingent
obligations in respect of indemnification) have been fully and finally discharged and paid, and the
Administrative Agent’s continuing Lien upon the Collateral and the rights and remedies of the
Administrative Agent and the Lenders hereunder, under the other Loan Documents and applicable law,
shall remain in effect until all such Obligations (other than contingent obligations in respect of
indemnification) have been fully and finally discharged and paid. Accordingly, each Loan Party
waives any rights it may have under the UCC to demand the filing of termination statements with
respect to the Collateral and the Administrative Agent shall not be required to send such
termination statements to Loan Parties, 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 (other
than contingent obligations in respect of indemnification) paid and satisfied in full in
immediately available funds; provided that the Administrative Agent shall release such
security interests and take such further actions as authorized pursuant to Section 12.10.




     Section 14.13 Entire Agreement. This Agreement, the other Loan Documents, any
supplements hereto or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and understanding concerning the
subject matter hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In
the event of any inconsistency between the terms of this Agreement and any schedule or exhibit
hereto, the terms of this Agreement shall govern.



     Section 14.14 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title III
of Pub.L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”)) hereby notifies
Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify
and record information that identifies each person or corporation who opens an account and/or
enters into a business relationship with it, which information includes the name and address of
Loan Parties and other information that will allow such Lender to identify such person in
accordance with the Patriot Act and any other applicable law. Loan Parties are hereby advised
that any Loans or Letters of Credit hereunder are subject to satisfactory results of such
verification.



     Section 14.15 Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency
into another currency, the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent or the applicable Issuing Bank, as the case may be,
could purchase the first currency with such other currency on the Business Day preceding the date
on which final judgment is



117









 




given. The obligation of each Borrower in respect of any such sum due from it to the
Administrative Agent, any Issuing Bank or any Lender hereunder or under the other Loan Documents
shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than the
currency in which such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business
Day following receipt by the Administrative Agent, such Issuing Bank or such Lender, as the case
may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent, such
Issuing Bank or such Lender, as the case may be, may in accordance with normal banking procedures
purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement
Currency so purchased is less than the sum originally due to the Administrative Agent, any Issuing
Bank or any Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, such
Issuing Bank or such Lender, as the case may be, against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Administrative Agent, any
Issuing Bank or any Lender in such currency, the Administrative Agent, such Issuing Bank or such
Lender, as the case may be, agrees to return the amount of any excess to such Borrower (or to any
other Person who may be entitled thereto under applicable law).




     Section 14.16 Counterparts, Etc. This Agreement or any of the other Loan Documents
may be executed in any number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement or any of the other Loan Documents by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original executed
counterpart of this Agreement or any of such other Loan Documents. Any party delivering an
executed counterpart of any such agreement by telefacsimile or other electronic method of
transmission shall also deliver an original executed counterpart, but the failure to do so shall
not affect the validity, enforceability or binding effect of such agreement.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]









118









 








     IN WITNESS WHEREOF, the Administrative Agent, the Lenders and the Loan Parties have caused
these presents to be duly executed as of the day and year first above written.



	 	 	 	 	 
	 	BORROWERS:



MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Vice President-Finance and Chief Financial Officer 	 
	 
	 	ALADDIN MANUFACTURING CORPORATION

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Vice President-Finance and Assistant Secretary 	 
	 
	 	MOHAWK FACTORING, INC.

 	 
	 	By:  	/s/ John J. Koach
 	 
	 	 	Name:  	John J. Koach 	 
	 	 	Title:  	Secretary and Assistant Treasurer 	 
	 
	 	DAL-TILE CORPORATION

DAL-TILE DISTRIBUTION, INC.

MOHAWK CARPET DISTRIBUTION, INC.

UNILIN FLOORING NC, LLC

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	WAYN-TEX LLC

 	 
	 	By:  	/s/ Scott R. Veldman
 	 
	 	 	Name:  	Scott R. Veldman 	 
	 	 	Title:  	Vice President and Treasurer 	 



 









 






	 	 	 	 	 
	 	GUARANTORS:



DAL-TILE, LLC

DAL-TILE GROUP INC.

MOHAWK CARPET TRANSPORTATION OF GEORGIA, LLC

MOHAWK ESV, INC.

MOHAWK SERVICING, LLC

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	DAL-TILE INTERNATIONAL INC.

DAL-TILE SERVICES, INC.

MOHAWK CARPET, LLC

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Vice President-Finance and Assistant Secretary 	 
	 
	 	DAL-TILE SHARED SERVICES, INC.

MOHAWK RESOURCES, LLC

 	 
	 	By:  	/s/ Frank H. Boykin
 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	ADMINISTRATIVE AGENT:





WACHOVIA BANK, NATIONAL ASSOCIATION,

as the Administrative Agent, Issuing Bank and Swingline

Lender

 	 
	 	By:  	/s/ Joye C. Lynn
 	 
	 	 	Name:  	Joye C. Lynn 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	LENDERS:



WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender

 	 
	 	By:  	/s/ Joye C. Lynn
 	 
	 	 	Name:  	Joye C. Lynn 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as a Syndication Agent and as a Lender

 	 
	 	By:  	/s/ T.C. Wilde
 	 
	 	 	Name:  	T.C. Wilde 	 
	 	 	Title:  	V.P. 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	SUNTRUST BANK,

as a Syndication Agent and as a Lender

 	 
	 	By:  	/s/ Stephen D. Metts
 	 
	 	 	Name:  	Stephen D. Metts 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as a Syndication Agent and as a Lender

 	 
	 	By:  	/s/ Andrew A. Doherty
 	 
	 	 	Name:  	Andrew A. Doherty 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	REGIONS BANK, as a Lender

 	 
	 	By:  	/s/ Micheal A. Mezza
 	 
	 	 	Name:  	Michael A. Mezza 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	Deutsche Bank Trust Company Americas,

as a Lender

 	 
	 	By:  	/s/ Marguerite Sutton
 	 
	 	 	Name:  	Marguerite Sutton 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	                       /s/ Erin Morrissey
 	 
	 	 	Name:  	Erin Morrissey 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	Barclays Bank, PLC,

as a Lender

 	 
	 	By:  	/s/ Ritam Bhalla
 	 
	 	 	Name:  	Ritam Bhalla 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	ING Belgium SA/NV

as a Lender

 	 
	 	By:  	/s/ Johan J. Markey
 	 
	 	 	Name:  	Johan J. Markey 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	                   /s/ Walter MOENS
 	 
	 	 	Name:  	Walter MOENS 	 
	 	 	Title:  	Head of GLP Structured Finance 	 
	 




 












 





EXHIBIT A

to

LOAN AND SECURITY AGREEMENT




FORM OF ASSIGNMENT AND ASSUMPTION



     This ASSIGNMENT AND ASSUMPTION (this “Assignment and Assumption”) dated as of
[                    ] is made between [                    ] (the “Assignor”) and [                    ]
(the
“Assignee”).



WITNESSETH:




     WHEREAS, Wachovia Bank, National Association, in its capacity as administrative agent pursuant
to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial
institutions which are parties thereto as lenders (in such capacity, the “Administrative
Agent”), and the financial institutions which are parties to the Loan Agreement as lenders
(individually, each a “Lender” and collectively, “Lenders”) have entered into
financing arrangements pursuant to which the Administrative Agent and the Lenders have agreed to
make loans and advances and provide other financial accommodations to Mohawk Industries, Inc., a
Delaware corporation (the “Company”, and together with any of its Subsidiaries that are or
may become parties thereto as Borrowers, each individually a “Borrower” and collectively,
the “Borrowers”), on the terms and conditions set forth in the Loan and Security Agreement,
dated as of September 2, 2009, by and among Borrowers, certain of their Subsidiaries designated as
guarantors thereto (each individually a “Guarantor” and collectively, the
“Guarantors”), the Administrative Agent and the Lenders (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the
“Loan Agreement”), and the other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being collectively referred to
herein as the “Loan Documents”);



     WHEREAS, as provided under the Loan Agreement, Assignor committed to making Loans (the
“Committed Loans”) to Borrowers in an aggregate amount not to exceed $[                    ] (the
“Commitment”);



     WHEREAS, Assignor wishes to assign to Assignee [part of the][all] rights and obligations of
Assignor under the Loan Agreement in respect of its Commitment in an amount equal to $[                    ]
(the “Assigned Commitment Amount”) on the terms and subject to the conditions set forth
herein and Assignee wishes to accept assignment of such rights and to assume such obligations from
Assignor on such terms and subject to such conditions;



     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
the parties hereto agree as follows (capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement):



     1. Assignment and Assumption.



          (a) Subject to the terms and conditions of this Assignment and Assumption, Assignor hereby
sells, transfers and assigns to Assignee, and Assignee hereby purchases, assumes and undertakes
from Assignor, without recourse and without representation or warranty (except as provided in this
Assignment and Assumption), an interest in (i) the Commitment and each of the Committed Loans of
Assignor and (ii) all related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Loan Agreement and the other Loan Documents, so that
after giving effect






A-1









 







thereto, the Commitment of Assignee shall be as set forth below and the Pro Rata Share of
Assignee shall be [                    ] ([   ]%) percent.




          (b) With effect on and after the Effective Date (as defined in Section 5 hereof), Assignee
shall be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform
all of the obligations of a Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Agreement are required to be performed by it
as a Lender. It is the intent of the parties hereto that the Commitment of Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Commitment Amount and Assignor
shall relinquish its rights and be released from its obligations under the Loan Agreement to the
extent such obligations have been assumed by Assignee; provided, that, Assignor
shall not relinquish its rights under Sections 2.3, 3.4(a), 3.5, 12.5 and 14.4 of the Loan
Agreement to the extent such rights relate to the time prior to the Effective Date.




          (c) After giving effect to the assignment and assumption set forth herein, on the Effective
Date Assignee’s Commitment will be $[                    ].



          (d) After giving effect to the assignment and assumption set forth herein, on the Effective
Date Assignor’s Commitment will be $[                    ] (as such amount may be further reduced by any
other assignments by Assignor on or after the date hereof).



     2. Payments.



          (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof,
Assignee shall pay to Assignor on the Effective Date in immediately available funds an amount equal
to $[                    ], representing Assignee’s Pro Rata Share of the principal amount of all Committed
Loans.




          (b) Assignee shall pay to the Administrative Agent the processing fee in the amount specified
in Section 14.11(a)(v) of the Loan Agreement.




     3. Reallocation of Payments. Any interest, fees and other payments accrued to the
Effective Date with respect to the Commitment, Committed Loans and outstanding Letters of Credit
shall be for the account of Assignor. Any interest, fees and other payments accrued on and after
the Effective Date with respect to the Assigned Commitment Amount shall be for the account of
Assignee. Each of Assignor and Assignee agrees that it will hold in trust for the other party any
interest, fees and other amounts which it may receive to which the other party is entitled pursuant
to the preceding sentence and pay to the other party any such amounts which it may receive promptly
upon receipt.



     4. Independent Credit Decision. Assignee acknowledges that it has received a copy of
the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most recent
financial statements of the Company and its Subsidiaries, and such other documents and information
as it has deemed appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Assumption and agrees that it will, independently and without reliance upon
Assignor, the Administrative Agent or any Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal decisions in taking
or not taking action under the Loan Agreement.



A-2









 





     5. Effective Date; Notices.



          (a) As between Assignor and Assignee, the effective date for this Assignment and Assumption
shall be [                    ] (the “Effective Date”); provided, that, the following
conditions precedent have been satisfied on or before the Effective Date:




               (i) this Assignment and Assumption shall be executed and delivered by Assignor and Assignee;



               (ii) if required, the consent of the Administrative Agent and the Administrative Borrower as
required for an effective assignment of the Assigned Commitment Amount by Assignor to Assignee
shall have been duly obtained and shall be in full force and effect as of the Effective Date;



               (iii) written notice of such assignment, together with payment instructions, addresses and
related information with respect to Assignee, shall have been given to Administrative Borrower and
the Administrative Agent;



               (iv) Assignee shall pay to Assignor all amounts due to Assignor under this Assignment and
Assumption; and



               (v) the processing fee referred to in Section 2(b) hereof shall have been paid to the
Administrative Agent.



          (b) Promptly following the execution of this Assignment and Assumption, Assignor shall deliver
to Administrative Borrower and the Administrative Agent for acknowledgment by the Administrative
Agent, a Notice of Assignment in the form attached hereto as Schedule I.




     [6. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT] Administrative Agent.



          (a) Assignee hereby appoints and authorizes Assignor in its capacity as the Administrative
Agent to take such action as agent on its behalf to exercise such powers under the Loan Agreement
as are delegated to the Administrative Agent by the Lenders pursuant to the terms of the Loan
Agreement.




          (b) Assignee shall assume no duties or obligations held by Assignor in its capacity as the
Administrative Agent under the Loan Agreement.]




     7. Withholding Tax. Assignee (a) represents and warrants to Assignor, the
Administrative Agent and Borrowers that under applicable law and treaties no tax will be required
to be withheld by Assignee, the Administrative Agent or Borrowers with respect to any payments to
be made to Assignee hereunder or under any of the Loan Documents, (b) agrees to furnish (if it is
organized under the laws of any jurisdiction other than the United States or any State thereof) to
the Administrative Agent and Borrowers prior to the time that the Administrative Agent or Borrowers
are required to make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable (wherein
Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption
from U.S. federal income withholding tax on all payments hereunder) and agrees to provide new such
forms upon the expiration of any previously delivered form or comparable statements in accordance
with applicable U.S. law and regulations and amendments thereto, duly executed and completed by
Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.



A-3









 





     8. Representations and Warranties.



          (a) Assignor represents and warrants that (i) it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any security
interest, lien, encumbrance or other adverse claim, (ii) it is duly organized and existing and it
has the full power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Assumption and any other documents required or permitted to be executed
or delivered by it in connection with this Assignment and Assumption and to fulfill its obligations
hereunder, (iii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution, delivery and performance
of this Assignment and Assumption, and apart from any agreements or undertakings or filings
required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance, and (iv) this Assignment and Assumption
has been duly executed and delivered by it and constitutes the legal, valid and binding obligation
of Assignor, enforceable against Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors’ rights and to general equitable principles.




          (b) Assignor makes no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the Loan Agreement or
any of the other Loan Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant
thereto. Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements of Borrowers,
Guarantors or any of their respective Affiliates, or the performance or observance by Borrowers,
Guarantors or any other Person, of any of its respective obligations under the Loan Agreement or
any other instrument or document furnished in connection therewith.




          (c) Assignee represents and warrants that (i) it is duly organized and existing and it has
full power and authority to take, and has taken, all action necessary to execute and deliver this
Assignment and Assumption and any other documents required or permitted to be executed or delivered
by it in connection with this Assignment and Assumption, and to fulfill its obligations hereunder,
(ii) no notices to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Assumption, and apart from any agreements or undertakings or filings required by the
Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; (iii) this Assignment and Assumption has been duly
executed and delivered by it and constitutes the legal, valid and binding obligation of Assignee,
enforceable against Assignee in accordance with the terms hereof, subject, as to enforcement, to
bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating
to or affecting creditors’ rights to general equitable principles; and (iv) it is an Eligible
Assignee.




     9. Further Assurances. Assignor and Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may reasonably request in
connection with the transactions contemplated by this Assignment and Assumption, including the
delivery of any notices or other documents or instruments to Borrowers or the Administrative Agent,
which may be required in connection with the assignment and assumption contemplated hereby.



     10. Miscellaneous.



          (a) Any amendment or waiver of any provision of this Assignment and Assumption shall be in
writing and signed by the parties hereto. No failure or delay by either party hereto in






A-4









 







exercising any right, power or privilege hereunder shall operate as a waiver thereof and any
waiver of any breach of the provisions of this Assignment and Assumption shall be without prejudice
to any rights with respect to any other for further breach thereof.




          (b) All payments made hereunder shall be made without any set-off or counterclaim.




          (c) Assignor and Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment and Assumption.




          (d) This Assignment and Assumption may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same instrument.




          (e) THIS ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK. Assignor
and Assignee each irrevocably submits to the non-exclusive jurisdiction of the courts of the State
of New York and the United States District Court for the Southern District of New York, whichever
the Administrative Agent may elect, and waive any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Agreement or any of the other Loan
Documents or in any way connected with or related to the dealings of the parties hereto in respect
of this Agreement or any of the other Loan Documents or the transactions related hereto or thereto,
in each case whether now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters may be heard in the courts
described above (except that the Administrative Agent and the Lenders shall have the right to bring
any action or proceeding against any Loan Party or its or their property in the courts of any other
jurisdiction which the Administrative Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Loan Party or its or their property).




          (f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ASSUMPTION, THE LOAN AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






A-5









 








     IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Assumption to be
executed and delivered by their duly authorized officers as of the date first above written.



	 	 	 	 	 
	 	ASSIGNOR:



[                    ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-6









 






	 	 	 	 	 



	 	 	 	 	 
	 	ASSIGNEE:



[                    ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-7









 






	 	 	 	 	 



SCHEDULE I




NOTICE OF ASSIGNMENT AND ASSUMPTION



Date: [                    ]




Wachovia Bank, National Association

171 17th Street NW, 100 Building

Atlanta, Georgia 30636

Attention: Portfolio Manager

Telephone No. (404) 214-3533

Telecopy No. (404) 214-9299






Re: Mohawk Industries, Inc., et al.


Ladies and Gentlemen:




     Wachovia Bank, National Association, in its capacity as administrative agent pursuant to the
Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions
which are parties thereto as lenders (in such capacity, the “Administrative Agent”), and
the financial institutions which are parties to the Loan Agreement as lenders (individually, each a
“Lender” and collectively, “Lenders”) have entered into financing arrangements
pursuant to which the Administrative Agent and the Lenders have agreed to make loans and advances
and provide other financial accommodations to Mohawk Industries, Inc., a Delaware corporation (the
“Company”, and together with any of its Subsidiaries that are or may become parties thereto
as borrowers, each individually a “Borrower” and collectively, the “Borrowers”), on
the terms and conditions as set forth in the Loan and Security Agreement, dated as of September 2,
2009, by and among Borrowers, certain of their Subsidiaries designated as guarantors thereto (each
individually a “Guarantor” and collectively, the “Guarantors”), the Administrative
Agent and the Lenders (as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”), and the other agreements,
documents and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as
the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the “Loan Documents”). Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan
Agreement.



     1. We hereby give you notice of, and request your consent to, the assignment by [                    ]
(the “Assignor”) to [                    ] (the “Assignee”) such that after giving effect to
the assignment Assignee shall have an interest equal to [                    ] ([   ]%) percent of the total
Commitments pursuant to the Assignment and Assumption Agreement attached hereto (the
“Assignment and Assumption”). We understand that the Assignor’s Commitment shall be
reduced by $[                    ], as the same may be further reduced by other assignments on or after the
date hereof.



     2. Assignee agrees that, upon receiving the consent of the Administrative Agent and, if
applicable, the Administrative Borrower, to such assignment, Assignee will be bound by the terms of
the Loan Agreement as fully and to the same extent as if the Assignee were the Lender originally
holding such interest under the Loan Agreement.



A-8









 





     3. The following administrative details apply to Assignee:



	 	 	 	 	 	 	 

	(A)

	 	Notice address:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Assignee name:
	 	 
 

	 	  
	 

	 	Address:
	 	 
 

	 	  
	 

	 	Attention:
	 	 
 

	 	  
	 

	 	Telephone:
	 	 
 

	 	  
	 

	 	Telecopier:
	 	 
 

	 	  
	 
	 	 	 	 	 	 
	(B)

	 	Payment instructions:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Account No.:
	 	 
 

	 	  
	 

	 	At:
	 	 
 

	 	  
	 

	 	Reference:
	 	 
 

	 	  
	 

	 	Attention:
	 	 
 

	 	  






     4. You are entitled to rely upon the representations, warranties and covenants of each of
Assignor and Assignee contained in the Assignment and Assumption.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






A-9









 








     IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment and Assumption
to be executed by their respective duly authorized officials, officers or agents as of the date
first above mentioned.



	 	 	 	 	 
	 	Very truly yours,



ASSIGNOR:



[                    ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-10









 






	 	 	 	 	 



	 	 	 	 	 
	 	ASSIGNEE:



[                    ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-11









 






[ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:



	 	 	 	 	 
	ADMINISTRATIVE AGENT:



WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 	 	 
	By:  	
 	 	 
	 	Name:  	 	 	 
	 	Title:  	]	 	 



A-12









 







[ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:



	 	 	 	 	 
	ADMINISTRATIVE BORROWER:



MOHAWK INDUSTRIES, INC.,

as Administrative Borrower

 	 	 
	By:  	
 	 	 
	 	Name:  	 	 	 
	 	Title:  	]	 	 



A-13









 






	 	 	 	 	 



EXHIBIT B

to

LOAN AND SECURITY AGREEMENT




FORM OF BORROWING BASE CERTIFICATE



[see attached]



B-1









 





EXHIBIT C

to

LOAN AND SECURITY AGREEMENT




FORM OF COMPLIANCE CERTIFICATE




Date: [                    ]




			
	To:	 	Wachovia Bank, National Association

171 17th Street NW, 100 Building

Atlanta, Georgia 30636

Attention: Portfolio Manager

Telephone No. (404) 214-3533

Telecopy No. (404) 214-9299




Ladies and Gentlemen:




     I, solely in my capacity as an officer of the Company (as defined below) and not in my
individual capacity, hereby certify to you pursuant to Section 9.5 of the Loan Agreement
(as defined below) as follows:



     1. I am the duly elected Chief Financial Officer of Mohawk Industries, Inc., a Delaware
corporation (the “Company”). Capitalized terms used herein without definition shall have
the meanings given to such terms in the Loan and Security Agreement (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the
“Loan Agreement”), dated as of September 2, 2009, among the Company, certain Subsidiaries
of the Company, as borrowers (together with the Company, each individually a “Borrower” and
collectively, the “Borrowers”), certain Subsidiaries of the Borrowers as guarantors (each
individually a “Guarantor” and collectively, the “Guarantors”), the financial
institutions party thereto as lenders (the “Lenders”) and Wachovia Bank, National
Association, as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”).



     2. I have reviewed the terms of the Loan Agreement, and have made, or have caused to be made
under my supervision, a review in reasonable detail of the transactions and the financial condition
of Borrowers and Guarantors, during the immediately preceding fiscal [month][quarter][year].



     3. The review described in Section 2 above did not disclose the existence during or at the end
of such fiscal [month][quarter][year], and I have no knowledge of the existence and continuance on
the date hereof, of any condition or event that constitutes a Default or an Event of Default,
except as set forth on Schedule I attached hereto. Described on Schedule I
attached hereto are the exceptions, if any, to this Section 3 listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which any Borrower or
Guarantor has taken, is taking, or proposes to take with respect to such condition or event.



     4. The Fixed Charge Coverage Ratio for the Company as of the end of the consecutive 12-fiscal
month period most recently ended is [   ] to 1.00, as more particularly described by the
calculations set forth on Schedule II attached hereto. Such Fixed Charge Coverage Ratio
demonstrates that the Borrowers and Guarantors are [or would be] in compliance with the covenant
set forth in Section 9.11 of the Loan Agreement for such consecutive 12-fiscal month period
(which requires the Company to maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.00 at
any time Excess Availability is less



C-1









 




than the Financial Covenant Threshold Amount)[, whether or not such compliance is required
under the terms thereof].




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






C-2









 








     The foregoing certifications are made and delivered as of the date first above written.



	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Chief Financial Officer 	 



C-3









 






	 	 	 	 	 



SCHEDULE I




DEFAULTS AND EVENTS OF DEFAULT



C-4









 





SCHEDULE II




FIXED CHARGE COVERAGE RATIO



(each item listed below is calculated for consecutive 12-month period most recently ended)



	 	 	 

	1.          Consolidated EBITDA: determined on a consolidated basis for
the Company and its Subsidiaries in accordance with GAAP, (a)
Consolidated Net Income for such period plus (b) without
duplication, the sum of the following to the extent deducted
in calculating Consolidated Net Income: (i) Consolidated
Interest Expense for such period, (ii) income tax expense
(including, without limitation, any federal, state, local and
foreign income and similar taxes) of the Company and its
Subsidiaries for such period, (iii) depreciation and
amortization of the Company and its Subsidiaries for such
period, (iv) those certain cash restructuring charges for the
twelve-month period ending August 1, 2009 as set forth on
Schedule 1.1(b), (v) any extraordinary charges or any non-cash
charges (including non-recurring charges) for such period
(excluding non-cash charges that are expected to become cash
charges in a future period or that are reserves for future
cash charges), (vi) non-cash losses for such period from the
proposed or actual disposition of material assets, (vii)
non-cash goodwill and intangible asset write-downs and
restructuring charges for such period (provided that any cash
payment made with respect to any such goodwill and intangible
asset write-down or restructuring charges shall be subtracted
in computing Consolidated EBITDA during the period during
which such cash payment is made), (viii) non cash charges
resulting from the vesting or exercise of stock options or
stock appreciation rights granted to management of the Company
or any Subsidiary for such period, and (ix) non-cash charges
to the extent solely attributable to unrealized losses under
Financial Accounting Standards Board Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities
(“SFAS 133”) for such period (provided that any cash payment
made with respect to any such non-cash charge shall be
subtracted in computing Consolidated EBITDA during the period
in which such cash payment is made (it being understood that
the provision of cash collateral shall not constitute a
“payment” for these purposes)), minus (c) without duplication,
the sum of the following to the extent included in calculating
Consolidated Net Income: (i) non-cash, extraordinary or
non-recurring gains for such period, (ii) non-cash gains for
such period from the proposed or actual disposition of
material assets, and (iii) non-cash gains to the extent solely
attributable to unrealized gains under SFAS 133 (provided that
any cash received with respect to any such non-cash gain shall
be added in computing Consolidated EBITDA during the period in
which such cash is received)

	 	$                    
	 
	 	 
	2.          Cash interest income

	 	$                    
	 
	 	 
	3.          Unfinanced Capital Expenditures

	 	$                    






C-5









 






	 	 	 

	4.          Consolidated Cash Taxes

	 	$                    
	 
	 	 
	5.          Restricted Payments made pursuant to Section 10.6(e)
of the Loan Agreement

	 	$                    
	 
	 	 
	6.          Numerator: Item 1 plus Item 2 minus Item 3
minus Item 4 minus Item 5

	 	$                    
	 
	 	 
	7.          Denominator: Fixed Charges (Consolidated Interest Expense
paid in cash plus Consolidated Indebtedness Payments made)

	 	$                    
	 
	 	 
	8.          Item 6 divided by Item 7

	 	  _____: 1.0





***In lieu of the table provided above, the Administrative Agent and the Company may agree to use
an alternative format for this Schedule II; provided that such format accurately
calculates the applicable Fixed Charge Coverage Ratio, as set forth in the Loan Agreement.***





C-6











 





EXHIBIT D

to

LOAN AND SECURITY AGREEMENT




FORM OF INFORMATION CERTIFICATE



[see attached]



D-1









 





INFORMATION CERTIFICATE

OF

MOHAWK INDUSTRIES, INC.




                    , 2009




Wachovia Bank, National Association, as Agent



Reference is made to that certain Commitment Letter dated June 12, 2009 (including the annexes
attached thereto, the “Commitment Letter”) from Wachovia Bank, National Association
(“Wachovia Bank”) and the other “Commitment Parties” named therein to Mohawk Industries,
Inc. (the “Company”). Capitalized terms not otherwise defined herein but defined in the
Commitment Letter or the Term Sheet (as defined in the Commitment Letter) have the respective
meanings given them in the Commitment Letter or the Term Sheet, as applicable.



In connection with certain financing provided or to be provided or arranged for as contemplated by
the Commitment Letter, the Company represents and warrants as follows to Administrative Agent and
Lenders as of the date hereof:





	1.	 	The full and exact name of each Borrower and each material domestic subsidiary of the
Borrowers (each a “Loan Party” and collectively, the “Loan Parties”) as set
forth in its certificate of incorporation (or its certificate of formation or other
organizational document filed with the applicable state governmental authority, as the case
may be) is as follows:
	 
	2.	 	No Loan Party receives payments under any trade name in the operation of its business (e.g.
billing, advertising, etc.; note: do not include names which are product names only) except as
follows:
	 
	3.	 	Each Loan Party is a registered organization of the following type (for example, corporation,
limited partnership, limited liability company, etc.):





	 	 	 	 	 
	 	 	Date of	 	Jurisdiction of
	Loan Party	 	Organization	 	Organization
	 	 	 	 	 






	4.	 	The organizational identification number of each Loan Party issued by its jurisdiction of
organization is as set forth below (or if none is issued by the jurisdiction of organization
indicate “none”):





	 	 	 
	Loan Party	 	ID No.
	 	 	 





D-2









 







	5.	 	The Federal Employer Identification Number of each Loan Party is as follows:





	 	 	 
	Loan Party	 	FEIN
	 	 	 






	6.	 	Each Loan Party is duly qualified and authorized to transact business as a foreign
organization in the following states and is in good standing in such states:





	 	 	 
	Loan Party	 	Jurisdiction
	 	 	 






	7.	 	Since the date five (5) years prior to the date hereof, the name of each Loan Party as set
forth in its organizational documentation as filed of record with the applicable state
authority has been changed as follows:





	 	 	 	 	 
	Loan Party	 	Date of Change	 	Prior Name
	 	 	 	 	 






	8.	 	Since the date of five (5) years prior to the date hereof, each Loan Party has made or
entered into the following mergers or acquisitions:





	 	 	 	 	 
	Loan Party	 	Merger/Acquisition	 	Date
	 	 	 	 	 





D-3









 







	9.	 	The chief executive office and mailing address of each Loan Party is located at the address
indicated for such Loan Party on Schedule 8.2 hereto.
	 
	10.	 	The books and records of each Loan Party pertaining to accounts, contract rights, inventory,
and other assets are located at the addresses indicated for such Loan Party on Schedule 8.2
hereto.
	 
	11.	 	Each Loan Party maintains inventory valued in excess of $200,000 only at the addresses
(indicate whether locations are owned, leased or operated by third parties and if leased or
operated by third parties, their name and address) indicated for such Loan Party on Schedule
8.2 hereto.
	 
	12.	 	There is no provision in the certificate of incorporation, certificate of formation,
articles of organization, by-laws or operating agreement of any Loan Party (as applicable) or
the other organizational documents of such Loan Party, or in the laws of the State of its
organization, expressly requiring any vote or consent of it shareholders, members or other
holders of the equity interests therein to borrow or to authorize the mortgage or pledge of or
creation of a security interest in any assets of such Loan Party or any subsidiary. Such
power is vested exclusively in its Board of Directors (or in the case of a limited
partnership, the general partner that is the signatory hereto, or in the case of a limited
liability company, the manager that is the signatory hereto).





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D-4









 








     Agent and Lenders shall be entitled to rely upon the foregoing in all respects and each of the
undersigned is duly authorized to execute and deliver this Information Certificate on behalf of the
Loan Party for which he or she is signing.



	 	 	 	 	 
	 	Very truly yours,



MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



D-5









 







SCHEDULE 8.2

to

INFORMATION CERTIFICATE




Locations





	A.	 	Loan Party:                     






	 	1.	 	Chief Executive Office:
	 
	 	2.	 	Location of Books and Records:
	 
	 	3.	 	Locations of Inventory:





	 	 	 	 	 
	 	 	 	 	Name/Address of Lessor or
	Address	 	Owned/Leased/Third Party*	 	Third Party, as Applicable
	 	 	 	 	 







 




			
	*	 	Indicate in this column next to applicable
address whether the location is owned by each Loan Party, leased by each Loan
Party or owned and operated by a third party (e.g., warehouse, processor,
consignee, etc.)




D-6









 










EXHIBIT E

to

LOAN AND SECURITY AGREEMENT




FORM OF JOINDER AGREEMENT



     THIS JOINDER AGREEMENT (the “Agreement”), dated as of [                    ], is by and between
[                    ], a [                    ] (the “[Applicant Borrower][Joining_Guarantor]”) and
WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent (the
“Administrative Agent”) under that certain Loan and Security Agreement (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”; capitalized terms not otherwise defined herein shall have
the respective meanings ascribed thereto in the Loan Agreement), dated as of September 2, 2009,
among Mohawk Industries, Inc., a Delaware corporation (the “Company”), certain Subsidiaries
of the Company, as borrowers (together with the Company, each individually a “Borrower” and
collectively, the “Borrowers”), certain Subsidiaries of the Borrowers as guarantors (each
individually a “Guarantor” and collectively, the “Guarantors”), the financial
institutions party thereto as lenders (the “Lenders”) and the Administrative Agent.



     [The Applicant Borrower has indicated its desire to become a Borrower under the Loan
Agreement.]



     [The Joining Guarantor is required to become a Guarantor pursuant to the terms of the Loan
Agreement.]



     Accordingly, the [Applicant Borrower][Joining Guarantor] hereby agrees as follows:



     1. The [Applicant Borrower][Joining Guarantor] hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, the [Applicant Borrower][Joining Guarantor] will be deemed to
be a party to the Loan Agreement and a “[Borrower][Guarantor]” for all purposes of the Loan
Agreement and the other Loan Documents, and shall have all of the obligations of a
[Borrower][Guarantor] thereunder as if it has executed the Loan Agreement and the other Loan
Documents, as applicable. The [Applicant Borrower][Joining Guarantor] hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in
the Loan Agreement and in the Loan Documents, including without limitation (i) all of the
representations and warranties of the Loan Parties set forth in Section 8 of the Loan
Agreement, as supplemented from time to time in accordance with the term thereof, and (ii) all of
the affirmative and negative covenants set forth in Sections 9 and 10 of the Loan Agreement.



     2. The [Applicant Borrower][Joining Guarantor] acknowledges and confirms that it has received
a copy of the Loan Agreement and the schedules and exhibits thereto. The schedules to the Loan
Agreement are amended to provide the information shown on the attached Schedule I.



     3. The [Applicant Borrower][Joining Guarantor] confirms that all of the Obligations under the
Loan Agreement, upon the [Applicant Borrower][Joining Guarantor] becoming a [Borrower][Guarantor]
will and shall continue to be, in full force and effect and that immediately upon the [Applicant
Borrower][Joining Guarantor] becoming a [Borrower][Guarantor], the term “Obligations” as used in
the Loan Agreement shall include all applicable Obligations of such [Applicant Borrower][Joining
Guarantor] under the Loan Agreement and under each other Loan Document.



     4. The [Applicant Borrower][Joining Guarantor] hereby agrees that upon becoming a
[Borrower][Guarantor] it will assume all Obligations of a [Borrower][Guarantor] as set forth in the



E-1









 




Loan Agreement.




     6. The [Applicant Borrower][Joining Guarantor] agrees that at any time and from time to time,
upon the written request of the Administrative Agent, it will execute and deliver such further
documents and do such further acts and things as the Administrative Agent may reasonably request in
order to effectuate the purposes of this Agreement.



     7. This Agreement may be executed in two or more counterparts, each of which shall constitute
an original but all of which when taken together shall constitute one contract.



     8. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK BUT
EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION
OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The [Applicant
Borrower][Joining Guarantor] each irrevocably submits to the non-exclusive jurisdiction of the
courts of the State of New York and the United States District Court for the Southern District of
New York, whichever the Administrative Agent may elect, waives any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under this Agreement or
any of the other Loan Documents or in any way connected with or related to the dealings of the
parties hereto in respect of this Agreement or any of the other Loan Documents or the transactions
related hereto or thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agrees that any dispute with respect to any such matters
may be heard in the courts described above (except that the Administrative Agent and the Lenders
shall have the right to bring any action or proceeding against any Loan Party or its or their
property in the courts of any other jurisdiction which the Administrative Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its rights against any
Loan Party or its or their property).



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






E-2









 








     IN WITNESS WHEREOF, the [Applicant Borrower][Joining Guarantor] has caused this Agreement to
be duly executed by its authorized officers, and the Administrative Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the day and year
first written above.



	 	 	 	 	 
	 	[APPLICANT BORROWER][JOINING GUARANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



E-3









 







	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




E-4











 





SCHEDULE I




SCHEDULES TO LOAN AGREEMENT



E-5









 





EXHIBIT F

to

LOAN AND SECURITY AGREEMENT




FORM OF NOTICE OF BORROWING



Date: [                    ]




Wachovia Bank, National Association

171 17th Street NW, 100 Building

Atlanta, Georgia 30636

Attention: Portfolio Manager

Telephone No. (404) 214-3533

Telecopy No. (404) 214-9299




Ladies and Gentlemen:




     The undersigned, Mohawk Industries, Inc., a Delaware corporation (the “Company”), on
behalf of itself and the other Borrowers party to the Loan and Security Agreement (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”; capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Loan Agreement), dated as of September 2, 2009, among the
Company, certain Subsidiaries of the Company, as borrowers (together with the Company, each
individually a “Borrower” and collectively, the “Borrowers”), certain Subsidiaries
of the Borrowers as guarantors (each individually a “Guarantor” and collectively, the
“Guarantors”), the financial institutions party thereto as lenders (the “Lenders”)
and Wachovia Bank, National Association, as administrative agent for the Lenders (in such capacity,
the “Administrative Agent”), hereby gives you notice, irrevocably, pursuant to Section
2.4 of the Loan Agreement that the Company hereby requests, on behalf of the Borrowers,
borrowings under the Loan Agreement, and in that connection sets forth below the information
relating to such borrowings (the “Proposed Borrowings”) as required by Section 2.4
of the Loan Agreement:



	 	 	 	 	 

	1.

	 	Date of Loan:
	 	
 


	 

	 	 	 	(Complete with a date no earlier than (i) the same Business Day
as of the date of this Notice of Prepayment with respect to any
Swingline Loan or Base Rate Loan and (ii) three (3) Business Days
subsequent to date of this Notice of Prepayment with respect to any
Eurodollar Rate Loan)
	 
	 	 	 	 
	2.

	 	Principal Amount:
	 	$


	 

	 	 	 	(Complete with an amount in accordance with Section 2.4(a) of the Credit Agreement)
	 
	 	 	 	 
	3.

	 	Type of Loan:
	 	o    Revolving Loan
	 

	 	 	 	o    Swingline Loan
	 
	 	 	 	 
	4.

	 	Rate of Loan:
	 	o    Base Rate (Revolving Loans only)
	 

	 	 	 	o    Eurodollar Rate (Revolving Loans only)
	 

	 	 	 	o    LIBOR Market Index Rate (Swingline Loans only)






F-1









 






	 	 	 	 	 

	5.

	 	Interest Period1:
	 	o    One (1) month
	 

	 	 	 	o    Two (2) months
	 

	 	 	 	o    Three (3) months
	 

	 	 	 	o    Six (6) months






     The Company hereby certifies, on behalf of the Borrowers, that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:



     (a) all representations and warranties contained in the Loan Agreement and in the other Loan
Documents are true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the making of each such Loan
set forth above and after giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date); provided that
any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or
similar language shall be true and correct (after giving effect to any qualification therein) in
all respects on such respective dates);



     (b) no Default or Event of Default exists or has occurred and is continuing on and as of the
date of the making of the Loans set forth above and after giving effect thereto; and



     (c) Excess Availability is equal to or greater than the aggregate amount of requested Loans
set forth above and after giving effect thereto.



     If notice of this Proposed Borrowing has been given previously by telephone, then this notice
should be considered a written confirmation of such telephone notice as may be required by
Section 2.4 of the Loan Agreement.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






 




			
	1	 	Only needed for Eurodollar Rate Loans.




F-2









 










	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



F-3









 







EXHIBIT G

to

LOAN AND SECURITY AGREEMENT




FORM OF NOTICE OF ACCOUNT DESIGNATION




Dated as of:                     




Wachovia Bank, National Association,

as Administrative Agent

NC0680

1525 West W.T. Harris Blvd.

Charlotte, NC 28262

Attention of: Syndication Agency Services




Ladies and Gentlemen:





     This Notice of Account Designation is delivered to you pursuant to Section 2.4(b) of
the Loan and Security Agreement (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the “Loan Agreement”; capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement),
dated as of September 2, 2009, among the Company, certain Subsidiaries of the Company, as borrowers
(together with the Company, each individually a “Borrower” and collectively, the
“Borrowers”), certain Subsidiaries of the Borrowers as guarantors (each individually a
“Guarantor” and collectively, the “Guarantors”), the financial institutions party
thereto as lenders (the “Lenders”) and Wachovia Bank, National Association, as
administrative agent for the Lenders (in such capacity, the “Administrative Agent”).



     1. The Administrative Agent is hereby authorized to disburse all Loan proceeds into the
following account(s):


                                                            

ABA Routing Number:                     

Account Number:                     




     2. This authorization shall remain in effect until revoked or until a subsequent Notice of
Account Designation is provided to the Administrative Agent.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






G-1









 








     IN WITNESS WHEREOF, the undersigned has executed this Notice of Account Designation as of the
day and year first written above.



	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



G-2









 






	 	 	 	 	 



EXHIBIT H

to

LOAN AND SECURITY AGREEMENT




FORM OF NOTICE OF PREPAYMENT




Dated as of:                     




Wachovia Bank, National Association,

as Administrative Agent

NC0680

1525 West W.T. Harris Blvd.

Charlotte, NC 28262

Attention of: Syndication Agency Services




Ladies and Gentlemen:





     This Notice of Prepayment is delivered to you pursuant to Section 2.5(b) of the Loan
and Security Agreement (as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”; capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement), dated as
of September 2, 2009, among the Company, certain Subsidiaries of the Company, as borrowers
(together with the Company, each individually a “Borrower” and collectively, the
“Borrowers”), certain Subsidiaries of the Borrowers as guarantors (each individually a
“Guarantor” and collectively, the “Guarantors”), the financial institutions party
thereto as lenders (the “Lenders”) and Wachovia Bank, National Association, as
administrative agent for the Lenders (in such capacity, the “Administrative Agent”).



     The Administrative Borrower hereby provides notice to the Administrative Agent that it shall
repay the following:



	 	 	 	 	 

	1.

	 	Date of Prepayment:
	 	

 

	 

	 	 	 	(Complete with a date no earlier than (i) the same Business Day
as of the date of this Notice of Prepayment with respect to any
Swingline Loan or Base Rate Loan and (ii) three (3) Business Days
subsequent to date of this Notice of Prepayment with respect to any
Eurodollar Rate Loan)
	 
	 	 	 	 
	2.

	 	Principal Amount:
	 	$

	 

	 	 	 	(Complete with an amount in accordance with Section 2.5(b) of the Credit Agreement)
	 
	 	 	 	 
	3.

	 	Type of Loan:
	 	o    Revolving Loan
	 

	 	 	 	o    Swingline Loan
	 
	 	 	 	 
	4.

	 	Rate of Loan:
	 	o    Base Rate (Revolving Loans only)
	 

	 	 	 	o    Eurodollar Rate (Revolving Loans only)
	 

	 	 	 	o    LIBOR Market Index Rate (Swingline Loans only)






[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





H-1









 








     IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and
year first written above.



	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




H-2











 





EXHIBIT I

to

LOAN AND SECURITY AGREEMENT




FORM OF NOTICE OF CONVERSION



Date: [__________]





	To: 	 	 Wachovia Bank, National Association 

171 17th Street NW, 100 Building

Atlanta, Georgia 30636

Attention: Portfolio Manager

Telephone No. (404) 214-3533

Telecopy No. (404) 214-9299





Ladies and Gentlemen:




     The undersigned, Mohawk Industries, Inc., a Delaware corporation (the “Company”), on
behalf of itself and the other Borrowers party to the Loan and Security Agreement (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”; capitalized terms not otherwise defined herein shall have
the respective meanings ascribed thereto in the Loan Agreement), dated as of September 2, 2009,
among the Company, certain Subsidiaries of the Company, as borrowers (together with the Company,
each individually a “Borrower” and collectively, the “Borrowers”), certain
Subsidiaries of the Borrowers as guarantors (each individually a “Guarantor” and
collectively, the “Guarantors”), the financial institutions party thereto as lenders (the
“Lenders”) and Wachovia Bank, National Association, as administrative agent for the Lenders
(in such capacity, the “Administrative Agent”), hereby gives you notice, irrevocably,
pursuant to Section 3.1 of the Loan Agreement that the Borrowers hereby request conversions
and/or continuations under the Loan Agreement, and in that connection set forth below the
information relating to such conversions and/or continuations (the
“Conversions/Continuations”) as required by Section 3.1 of the Loan Agreement:



	 	 	 	 	 

	1. Type of Loans to be converted/continued:

	 	 ̈     Base Rate

	 

	 	 ̈     Eurodollar Rate

	 
	 	 	 	 
	2. Last day of Interest Period1:
	 	___________________
	 
	 	 	 	 
	3. Effective date of conversion/continuation:
	 	___________________
	 
	 	 
	4. Principal Amount2:

	 	$__________________
	 

	 	 
	 
	 	 	 	 
	5. Interest Period3:

	 	 ̈     One (1) month

	 

	 	 ̈     Two (2) months

	 

	 	 ̈     Three (3) months

	 

	 	 ̈     Six (6) months









 




			
	1	 	Only needed for Eurodollar Rate Loans.
	 
	2	 	Principal amount must equal $2,000,000 or any
whole multiple of $500,000 in excess thereof.
	 
	3	 	Only needed for Eurodollar Rate Loans.




I-1









 










     The Company, on behalf of the Borrowers, hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Conversion/Continuation:



     (a) all representations and warranties contained in the Loan Agreement and in the other Loan
Documents are true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the making of each such Loan
set forth above and after giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date); provided that
any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or
similar language shall be true and correct (after giving effect to any qualification therein) in
all respects on such respective dates);



     (b) no Default or Event of Default exists or has occurred and is continuing on and as of the
date of the making of the Loans set forth above and after giving effect thereto; and



     (c) the Conversions/Continuations satisfy all limitations set forth in the Loan Agreement
(including, without limitation, availability under each the Borrowing Base).



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






I-2









 








	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



I-3









 






	 	 	 	 	 



EXHIBIT J

to

LOAN AND SECURITY AGREEMENT




FORM OF NOTE



			
	 	 	 
	$____________
	 	____________, 200___






     FOR VALUE RECEIVED, each of the undersigned, MOHAWK INDUSTRIES, INC., a Delaware corporation,
MOHAWK FACTORING, INC., a Delaware corporation, ALADDIN MANUFACTURING CORPORATION, a Delaware
corporation, MOHAWK CARPET DISTRIBUTION, INC., a Delaware corporation, WAYN-TEX LLC, a Delaware
limited liability company, DAL-TILE CORPORATION, a Pennsylvania corporation, DAL-TILE DISTRIBUTION,
INC., a Delaware corporation and UNILIN FLOORING NC, LLC, a North Carolina limited liability
company (each a “Borrower” and collectively, the “Borrowers”), jointly and
severally, promises to pay to the order of ____________ (the “Lender”), at the place and
times provided in the Loan Agreement referred to below, the principal sum of ____________
DOLLARS ($_______________) or, if less, the unpaid principal amount of all Revolving Loans made by the
Lender from time to time pursuant to that certain Loan and Security Agreement, dated as of
September 2, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”) by and among the Borrowers, the Lenders who are or may become a party
thereto, as Lenders, and Wachovia Bank, National Association, as the Administrative Agent.
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in
the Loan Agreement.



     The unpaid principal amount of this Note from time to time outstanding is subject to mandatory
repayment from time to time as provided in the Loan Agreement and shall bear interest as provided
in Section 3.1 of the Loan Agreement. All payments of principal and interest on this Note
shall be payable in lawful currency of the United States of America in immediately available funds
to the account designated in the Loan Agreement.



     This Note is entitled to the benefits of, and evidences Obligations incurred under, the Loan
Agreement, to which reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which each Borrower is permitted and required to make
prepayments and repayments of principal of the Obligations evidenced by this Note and on which such
Obligations may be declared to be immediately due and payable.



     THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY
PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF
ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK.



     The Indebtedness evidenced by this Note is senior in right of payment to all Subordinated
Indebtedness referred to in the Loan Agreement.



     Each Borrower hereby waives all requirements as to diligence, presentment, demand of payment,
protest and (except as required by the Loan Agreement) notice of any kind with respect to this
Note.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






J-1









 








     IN WITNESS WHEREOF, the undersigned have executed this Note under seal as of the day and year
first above written.



	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Vice President-Finance and Chief Financial Officer 	 
	 
	 	ALADDIN MANUFACTURING CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	Vice President-Finance and Assistant Secretary 	 
	 
	 	MOHAWK FACTORING, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	John J. Koach 	 
	 	 	Title:  	Secretary and Assistant Treasurer 	 
	 
	 	DAL-TILE CORPORATION

DAL-TILE DISTRIBUTION, INC.

MOHAWK CARPET DISTRIBUTION, INC.

UNILIN FLOORING NC, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Frank H. Boykin 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	WAYN-TEX LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Scott R. Veldman 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 






J-2









 








EXHIBIT K

to

LOAN AND SECURITY AGREEMENT




FORM OF ACQUISITION COMPLIANCE CERTIFICATE



Date: [__________]1





	To:  	 	Wachovia Bank, National Association

171 17th Street NW, 100 Building

Atlanta, Georgia 30636

Attention: Portfolio Manager

Telephone No. (404) 214-3533

Telecopy No. (404) 214-9299





Ladies and Gentlemen:




     I, solely in my capacity as a Responsible Officer (as defined below) of the Company (as
defined below) and not in my individual capacity, hereby certify to you pursuant to the Loan
Agreement (as defined below) as follows:



     1. I am the duly elected [____________] of Mohawk Industries, Inc., a Delaware corporation (the
“Company”). Capitalized terms used herein without definition shall have the meanings given
to such terms in the Loan and Security Agreement (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), dated as of September 2, 2009, among the Company, certain Subsidiaries of the
Company, as borrowers (together with the Company, each individually a “Borrower” and
collectively, the “Borrowers”), certain Subsidiaries of the Borrowers as guarantors (each
individually a “Guarantor” and collectively, the “Guarantors”), the financial
institutions party thereto as lenders (the “Lenders”) and Wachovia Bank, National
Association, as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”).



     2. [____________], a Loan Party (the “Acquiring Company”), intends to acquire (the
“Acquisition”) [all of the Capital Stock][substantially all of the assets][substantially
all of a business/division] of [_________], a [_________] (the “[Target][Seller]”) for a
Permitted Acquisition Consideration amount equal to $[_________]. In connection with the
Acquisition, I have reviewed (a) the financial statements of the Company and its Subsidiaries dated
as of [__________] and for the fiscal quarter period then ended and such statements present fairly
the financial position of the Company and its Subsidiaries as of the dates indicated and the
results of their operations and cash flows for the period indicated in conformity with GAAP applied
on a consistent basis and (b) the financial statements of the [Target][Seller] dated as of
[_________] and for the fiscal quarter period then ended and, to the best of my knowledge, such
statements present fairly the financial position of the [Target][Seller] as of the dates indicated
and the results of their operations and cash flows for the period indicated in conformity with GAAP
applied on a consistent basis.





 




			
	1	 	For any Acquisition with Permitted
Acquisition Consideration greater than $50,000,000, this certificate shall be
delivered to Administrative Agent at least (a) ten (10) Business Days prior to
the consummation of such Acquisition (or such shorter period as may be agreed
to by the Administrative Agent in its sole discretion) if, immediately before
and after giving effect to such Acquisition, Pro Forma Excess Availability
would be less than $300,000,000 or (b) five (5) Business Days prior to the
consummation of such Acquisition (or such shorter period as may be agreed to by
the Administrative Agent in its sole discretion) if, immediately before and
after giving effect to such Acquisition, Pro Forma Excess Availability would be
greater than $300,000,000.




K-1









 










     3. Based upon the review described in Section 2 above, I hereby certify that:




     (a) the business, assets or division acquired are for use, or the Person acquired is
engaged, in a Permitted Line of Business;




     (b) [the Acquisition involves a merger or other combination involving [a Borrower, and
such Borrower is the surviving entity][a Guarantor, and either such Guarantor is the
surviving entity or the surviving entity shall become a Loan Party if and when required to
do so under Section 9.9];]2




     (c) immediately before and after giving effect to such Acquisition, no Default or Event
of Default exists;




     (d) the Permitted Acquisition Consideration is comprised of (select one of the
following):




	 	o  	 	the incurrence or assumption of Indebtedness permitted pursuant to Section
10.1 of the Loan Agreement, the Capital Stock of the Company or the proceeds of
any issuance of Capital Stock of the Company (or a combination thereof) and (i) both
30-Day Pro Forma Excess Availability and Pro Forma Excess Availability on the date
of such Acquisition are not less than $150,000,000 and (ii) the Permitted
Acquisition Consideration is not funded, in whole or in part, from the proceeds of
any Loan under the Loan Agreement; or
	 
	 	o 	 	 any source not described in the preceding clause, and immediately before and
after giving effect to the Acquisition (select one of the following):






	 	o 	 	 both 30-Day Pro Forma Excess Availability and Pro Forma Excess
Availability on the date of such Acquisition are not less than $300,000,000;
or
	 
	 	o 	 	 both 30-Day Pro Forma Excess Availability and Pro Forma Excess
Availability on the date of such Acquisition are not less than twenty-five
percent (25%) of the Aggregate Commitment and the Company has a Fixed Charge
Coverage Ratio equal to or greater than 1.10 to 1.00 (calculated for the
fiscal month most recently ended prior to the consummation of such
Acquisition for which financial statements have been delivered pursuant to
Section 9.5 of the Loan Agreement, on a pro forma
basis after giving effect to such Acquisition); [and]






     (e) the Acquisition is non-hostile and has been approved, as necessary, by the target’s
board of directors, shareholders or other requisite Persons[.][; and]




     (f) [attached hereto as Schedule I is an acquisition summary with respect to
the [Target][assets and/or business or division of the Seller] (including financial
statements for the most recent twelve month period for which they are available and as
otherwise available, or such other form of financial statements reasonably acceptable to the
Administrative Agent) and the Company’s calculation of pro forma
Consolidated EBITDA





 




			
	2	 	To be included if the Acquisition involves a
merger or other combination involving a Loan Party.




K-2









 











relating thereto calculated in a manner reasonably satisfactory to the Administrative
Agent.]3



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






 




			
	3	 	To be included if, immediately before and
after giving effect to such Acquisition, Pro Forma Excess Availability would be
less than $300,000,000.




K-3









 










     The foregoing certifications are made and delivered as of the date first above written.



	 	 	 	 	 
	 	MOHAWK INDUSTRIES, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




K-4











 






SCHEDULE 1.1(a)




LENDERS AND COMMITMENTS



	 	 	 	 	 	 	 	 	 
	Lender	 	Commitment Amount	 	Commitment Percentage
	Wachovia Bank, National
Association
	 	$	100,000,000	 	 	 	16.666666667	%
	JPMorgan Chase Bank, N.A.
	 	$	100,000,000	 	 	 	16.666666667	%
	SunTrust Bank
	 	$	100,000,000	 	 	 	16.666666667	%
	Bank of America, N.A.
	 	$	100,000,000	 	 	 	16.666666667	%
	Regions Bank
	 	$	50,000,000	 	 	 	8.333333333	%
	Deutsche Bank Trust Company
Americas
	 	$	50,000,000	 	 	 	8.333333333	%
	Barclays Bank PLC
	 	$	50,000,000	 	 	 	8.333333333	%
	ING Belgium SA/NV
	 	$	50,000,000	 	 	 	8.333333333	%
	Total:
	 	$	600,000,000	 	 	 	100.000000000	%







 









 






SCHEDULE 1.1(b)




CONSOLIDATED EBITDA ADJUSTMENTS



	 	 	 

	December, 2008

	$	16,405,000
	March, 2009
	$	122,816,000
	June, 2009
	$	10,028,000
	July, 2009
	$	6,159,000






 









 






SCHEDULE 1.1(c)




EXISTING LETTERS OF CREDIT



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ISSUING	 	 	 	 	 	 	 	 	 	 	 	 	 
	L/C NUMBER	 	BANK	 	 	ISSUED	 	 	EXPIRES	 	 	BENEFICIARY	 	 	AMOUNT	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FOREIGN VENDORS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	01814653
	 	Regions	 	 	11/10/04	 	 	 	11/10/09	 	 	Vendor	 	$	219,918.00	*
	SM230614
	 	Wachovia	 	 	03/26/08	 	 	 	01/31/10	 	 	Vendor	 	$	2,000,000.00	 
	SM229128
	 	Wachovia	 	 	12/10/07	 	 	 	12/31/09	 	 	Vendor	 	$	250,000.00	 
	SM232852
	 	Wachovia	 	 	09/26/08	 	 	 	12/31/09	 	 	Vendor	 	$	120,000.00	 
	SM235217
	 	Wachovia	 	 	07/14/09	 	 	 	08/15/10	 	 	Vendor	 	$	1,000,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL	 	$	3,589,918.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ENVIRONMENTAL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	P276539 / D-235523
	 	JPMorgan	 	 	02/12/98	 	 	 	02/12/10	 	 	TNRCC	 	$	497,000.00	 
	P213553 / D-235388
	 	JPMorgan	 	 	05/31/01	 	 	 	12/23/09	 	 	COMMONWEALTH OF KENTUCKY	 	$	10,000.00	 
	SM233892W
	 	Wachovia	 	 	02/10/09	 	 	 	02/10/10	 	 	STATE OF TENNESSEE	 	$	319,900.17	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL	 	$	826,900.17	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UTILITIES
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	S401155
	 	Wachovia	 	 	04/15/03	 	 	 	04/15/10	 	 	City of Calhoun	 	$	415,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL	 	$	415,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	INSURANCE PROGRAM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SM415073C
	 	First Union	 	 	10/23/03	 	 	 	10/01/09	 	 	Vendor	 	$	43,000,000.00	 
	SM408494C
	 	First Union	 	 	12/31/03	 	 	 	12/31/09	 	 	Vendor	 	$	25,000.00	 
	SM233574W
	 	Wachovia	 	 	12/31/08	 	 	 	01/14/10	 	 	Vendor	 	$	14,130,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL	 	$	57,155,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IRB Letters of Credit
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	S116152
	 	First Union	 	 	07/05/03	 	 	 	07/05/10	 	 	Regions Bank	 	$	6,657,340.00	 
	S116153
	 	First Union	 	 	06/05/03	 	 	 	06/06/10	 	 	Regions Bank	 	$	3,181,348.78	 
	870-086228
	 	Wachovia	 	 	07/05/03	 	 	 	07/05/10	 	 	Regions Bank	 	$	1,039,453.00	 
	870-089659
	 	Wachovia	 	 	10/05/03	 	 	 	10/05/10	 	 	Regions Bank	 	$	1,039,453.00	 
	870-090142
	 	Wachovia	 	 	11/05/03	 	 	 	11/05/10	 	 	Regions Bank	 	$	1,039,453.00	 
	870-111632
	 	Wachovia	 	 	08/05/03	 	 	 	08/02/10	 	 	Regions Bank	 	$	3,222,302.00	 
	870-007339
	 	Wachovia	 	 	01/13/01	 	 	 	01/13/10	 	 	Bank of New York	 	$	6,745,753.42	 
	S130879
	 	First Union	 	 	01/28/01	 	 	 	01/28/10	 	 	First Union	 	$	30,616,438.36	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	53,541,541.56	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COMMERCIAL TRADE LETTERS OF CREDIT
	 	 	 	 	 	 	 	 	 	 	 





1.1(c)-1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ISSUING	 	 	 	 	 	 	 	 	 	 	 	 	 
	L/C NUMBER	 	BANK	 	 	ISSUED	 	 	EXPIRES	 	 	BENEFICIARY	 	 	AMOUNT	 
	LM732128
	 	Wachovia	 	 	08/28/09	 	 	 	11/30/09	 	 	Vendor	 	$	47,799.68	 
	LM731879
	 	Wachovia	 	 	05/14/09	 	 	 	05/31/10	 	 	Vendor	 	$	646,606.10	 
	LM731297
	 	Wachovia	 	 	09/10/08	 	 	 	10/31/09	 	 	Vendor	 	$	308,411.04	 
	LM731923
	 	Wachovia	 	 	06/02/09	 	 	 	10/31/09	 	 	Vendor	 	$	235,960.68	**
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL	 	$	1,238,777.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL Letters of Credit	 	$	116,767,137.23	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 








 




			
	*	 	Denominated in GB Pounds: £135,000
	 
	**	 	Denominated in Euro: €188,000




1.1(c)-2









 










SCHEDULE 7.1




OTHER COLLATERAL REPORTS




	•	 	Unless denoted, reports should be provided by each business unit.
	 
	•	 	All reports (including any substitute or pro forma reports) shall be
provided in form and substance satisfactory to the Administrative Agent consistent with those
previously delivered to the Administrative Agent.





Additional Report(s) due within 15 business days after each fiscal quarter-end:





	1.	 	Accrued Encycle reserve analysis for Flooring business unit only (solely to the extent that
an account or reserve exists for such product, or to the extent claims are made against such
product)




Additional Report(s) due within 15 business days after each fiscal month-end or such date agreed to
by the Administrative Agent:





	1.	 	Consolidating general ledger trial balance
	 
	2.	 	Accounts receivable roll-forward
	 
	3.	 	Summary accounts receivable aged trial balance by customer in due date form
	 
	4.	 	Top four accounts receivable concentration
	 
	5.	 	Accounts receivable due date aging detailed by invoice for top 20 Flooring and Home business
unit customers
	 
	6.	 	Accounts receivable due date aging detailed by invoice for all business units except for
Flooring and Home business units
	 
	7.	 	Accounts receivable reconciliation from roll-forward to agings to general ledger to financial
statement
	 
	8.	 	Inventory by category and location with associated monthly rent, if applicable
	 
	9.	 	Inventory slow moving and obsolescence analysis
	 
	10.	 	Inventory reconciliation from perpetual to general ledger to financial statement
	 
	11.	 	Perpetual inventory reports on a product category basis for all business units other than
Flooring, which will provide an inventory trend report by product type
	 
	12.	 	Summary accounts payable invoice date agings by customer
	 
	13.	 	Accrued rebates, co-op advertising, and overbill by customer
	 
	14.	 	Open claims and returns by customer matched against open accounts receivable
	 
	15.	 	Accounts receivable aging by terms for customers with extended terms (net 62 – 122 days), if
applicable


















 





SCHEDULE 8.2




NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; 

COLLATERAL LOCATIONS



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chief
	 	 	 	 	Former	 	Org Type /	 	 	 	 	 	Federal	 	Executive
	 	 	Loan Party	 	Names/Mergers	 	Jurisdiction	 	Org ID No.	 	ID No.	 	Office
	1.

	 	Mohawk Industries,
Inc.
	 	Acquired Unilin
Holding NV
(10/30/05)


Acquired assets of
Unifin, Inc.
12/30/05
	 	Delaware corporation
	 	 	2182224	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2.

	 	Mohawk Factoring,
Inc.
	 	None.
	 	Delaware corporation
	 	 	2814276	 	 	XX-XXXXXXX
	 	300 Delaware
Ave., Suite 1273,
Wilmington, DE
19801
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3.

	 	Mohawk Resources,

LLC
	 	Prior name: Mohawk
Resources, Inc.
(1/1/09)
	 	Delaware LLC
	 	 	3291896	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4.

	 	Mohawk Servicing,

LLC
	 	Prior name: Mohawk
Servicing, Inc.
(1/1/09)
	 	Delaware LLC
	 	 	2814275	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.

	 	Aladdin

Manufacturing

Corporation
	 	Mergers/Acq.:
Aladdin Texas LLC
(12/31/08)


Wayn-Tex, Inc.
(1/31/05)


Acquired assets of
Roanoke, AL
facility from
Propex (2/2006)
	 	Delaware corporation
	 	 	2009920	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701






8.2-1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chief
	 	 	 	 	Former	 	Org Type /	 	 	 	 	 	Federal	 	Executive
	 	 	Loan Party	 	Names/Mergers	 	Jurisdiction	 	Org ID No.	 	ID No.	 	Office
	6.

	 	Mohawk Carpet
Distribution, Inc.
	 	Prior name: Mohawk
Mills, Inc.
(1/1/09) 


Mergers/Acq.:
	 	Delaware corporation
	 	 	2502648	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 

	 	 	 	Aladdin Texas LLC
(12/31/04); 


Aladdin of Texas
Holding, LLC
(12/31/08);


Mohawk Brands, Inc.
(1/1/09):

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Mohawk Carpet
Distribution, L.P.
(1/1/09)	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7.

	 	Wayn-Tex LLC
	 	Prior name:
Wayn-Tex, Inc.
(12/31/05)
	 	Delaware LLC
	 	 	2302289	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8.

	 	Dal-Tile Corporation
	 	Acquired all
interests of
Dal-Tile Shared
Services, Inc.
(1/1/09) in
intercompany
reorganization
	 	Pennsylvania

corporation
	 	 	2607239	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217






8.2-2









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chief
	 	 	 	 	Former	 	Org Type /	 	 	 	 	 	Federal	 	Executive
	 	 	Loan Party	 	Names/Mergers	 	Jurisdiction	 	Org ID No.	 	ID No.	 	Office
	9.

	 	Dal-Tile
Distribution, Inc.
	 	Prior name:
Dal-Tile SSC East,
Inc. (1/1/09)


Mergers/Acq.: Alpha
Granite & Marble
Co. (6/4/04);


Dal-Tile I LLC
(12/31/04);


DTG Tile Inc.
(12/31/04);


DTL Tile Inc.
(12/31/04);


Keys Granite, Inc.
(7/05);


Marble Point, Inc.
and MP
Transportation, LLC
(assets -5/08);


Dal-Tile SSC West,
Inc. (1/1/09)
	 	Delaware corporation
	 	 	3871291	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217






8.2-3









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chief
	 	 	 	 	Former	 	Org Type /	 	 	 	 	 	Federal	 	Executive
	 	 	Loan Party	 	Names/Mergers	 	Jurisdiction	 	Org ID No.	 	ID No.	 	Office
	10.

	 	Unilin Flooring NC,

LLC
	 	Mergers/Acq.:
Unilin Décor NC,
LLC (5/4/04);


Quick-Step NC, LLC
(5/1/05);


Quick Step
Flooring, Inc.
(5/4/05);


Unilin Holding,
Inc. (12/31/08);


Columbia Wood
Flooring (assets —
8/07);


Syarikat Malaysia
Wood Industries Sdn
Bhd (8/07);


Universal Woodfloor
(Europe) AB (8/07)
	 	North Carolina LLC
	 	 	0734521	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11.

	 	Mohawk Carpet, LLC
	 	Prior name: Mohawk

Carpet Corporation

(1/1/09)
	 	Delaware LLC
	 	 	2513056	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12.

	 	Dal-Tile
International Inc.
	 	Mergers/Acq.: Alpha
Granite & Marble
Inc. (6/4/04)
	 	Delaware corporation
	 	 	3457743	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	13.

	 	Mohawk Carpet
Transportation of
Georgia, LLC
	 	None.
	 	Delaware LLC
	 	 	3604613	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701






8.2-4









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chief
	 	 	 	 	Former	 	Org Type /	 	 	 	 	 	Federal	 	Executive
	 	 	Loan Party	 	Names/Mergers	 	Jurisdiction	 	Org ID No.	 	ID No.	 	Office
	14.

	 	Mohawk ESV, Inc.
	 	None.
	 	Delaware corporation
	 	 	3871290	 	 	XX-XXXXXXX
	 	160 South
Industrial Blvd.,
Calhoun, GA 30701
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	15.

	 	Dal-Tile Group Inc.
	 	None.
	 	Delaware corporation
	 	 	2213609	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	16.

	 	Dal-Elit, LLC
	 	Prior name:

Dal-Elit, LP
	 	Texas LLC
	 	 	0801067058	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	17.

	 	Dal-Tile Services,
Inc.
	 	None.
	 	Delaware corporation
	 	 	3871297	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	18.

	 	Dal-Tile Shared
Services, Inc.
	 	Mergers/Acq.: DTL
Tile, LLC
(1/28/05);


DTG Tile, LLC
(1/28/05);
	 	Delaware corporation
	 	 	4625837	 	 	XX-XXXXXXX
	 	7834 CF Hawn

Freeway, Dallas, TX

75217







8.2-5











 




Schedule 8.2 (Continued):



Locations of Collateral with Value in excess of $200,000:




	 	 	 	 	 
	Address	 	City	 	State
	1026 Lafayette Hwy

	 	Roanoke
	 	AL
	1470 County Rd. 21 S.

	 	Fayette
	 	AL
	288 Oxmoor Ct. Suite C

	 	Birmingham
	 	AL
	30500 Hwy 59

	 	Loxley
	 	AL
	75 Via De Tonti Ln. Suite A

	 	Springdale
	 	AR
	9460 Maumelle Blvd.

	 	Little Rock
	 	AR
	1439-B South 40th Ave

	 	Phoenix
	 	AZ
	15550 N. 84th St. Suite 101

	 	Scottsdale
	 	AZ
	2950-1 E. Broadway Rd.

	 	Phoenix
	 	AZ
	3511 E. Broadway Rd.

	 	Phoenix
	 	AZ
	4775 S, Coach Dr.

	 	Tucson
	 	AZ
	1115-A Research Dr.

	 	Redlands
	 	CA
	1132 Durtyea Avenue

	 	Irvine
	 	CA
	1235 Fee Dr.

	 	Sacramento
	 	CA
	135 Via Trevizio

	 	Corona
	 	CA
	1600 S. Page Ct.

	 	Anaheim
	 	CA
	16400 Trojan Way

	 	La Mirada
	 	CA
	1713 Stewart St.

	 	Santa Monica
	 	CA
	183 Arthur Rd

	 	Martinez
	 	CA
	1963-65 Davis St.

	 	San Leandro
	 	CA
	2091 E. Howell Ave.

	 	Anaheim
	 	CA
	2303 Merced St.

	 	San Leandro
	 	CA
	2461 N. Argyle Ave.

	 	Fresno
	 	CA
	25 Pelican Way

	 	San Rafael
	 	CA
	2549 Zanker Rd.

	 	San Jose
	 	CA
	258 Sutton Rd.

	 	Santa Rosa
	 	CA
	270 N. Marshall Ave.

	 	El Cajon
	 	CA
	277 Utah Ave.

	 	San Francisco
	 	CA
	295 N. Willow Ave.

	 	City of Industry
	 	CA
	3008 Cherokee Rd.

	 	Stockton
	 	CA
	31353 Huntwood Ave

	 	Hayward
	 	CA
	3625 E. Jurupa

	 	Ontario
	 	CA
	41973 Remington Ave.

	 	Temecula
	 	CA
	485 Victor Way Suite 7

	 	Salinas
	 	CA
	590 Martin Dr.

	 	Santa Clara
	 	CA
	711 Rancho Conejo blvd.

	 	Newbury Park
	 	CA
	7484 Raytheon Rd.

	 	San Diego
	 	CA
	7484 Raytheon Rd. Ste B

	 	San Diego
	 	CA






8.2-6









 






	 	 	 	 	 
	Address	 	City	 	State
	77-583 El Duna Court Rd. Suite A

	 	Palm Desert
	 	CA
	7865 Ostrow St.

	 	San Diego
	 	CA
	7902 Sepulveda Blvd.

	 	Van Nuys
	 	CA
	963 Seaboard Ct

	 	Upland
	 	CA
	9687 Transportation Way

	 	Fontana
	 	CA
	9888 Horn Rd.

	 	Sacramento
	 	CA
	11117 184 St.

	 	Edmonton
	 	CD
	2770 Bentall St.

	 	Vancouver
	 	CD
	3201 Ogden Rd. SE

	 	Calgary
	 	CD
	40 Graniteridge Rd. Unit 1

	 	Concord, Ontario,
 Canada
	 	CD
	14600 E. 35th Pl.

	 	Aurora
	 	CO
	3593 Windsor Drive

	 	Denver
	 	CO
	735 S. Huron

	 	Denver
	 	CO
	852 S. Jason Suite 8

	 	Denver
	 	CO
	121 Brainard Td. Blvd A

	 	Hartford
	 	CT
	180 Church St.

	 	Torrington
	 	CT
	5 Clinton Pl

	 	West Haven
	 	CT
	1147 Gateway Blvd.

	 	Boynton Beach
	 	FL
	1707 Old Ikeechobee Rd.

	 	West Palm Beach
	 	FL
	1800 Cypress Lake Dr. Suite 500

	 	Orlando
	 	FL
	3306 Park Central Blvd. N.

	 	Fort Lauderdale
	 	FL
	3375 SW 24th Street

	 	Pembroke Park
	 	FL
	3905 Center Loop Suite 400

	 	Orlando
	 	FL
	4311 Shader Rd. Suite 400

	 	Orlando
	 	FL
	6322 Pelican Circle

	 	Riverview
	 	FL
	7576 Kings Pointe Parkway

	 	Orlando
	 	FL
	8121 25th Court E.

	 	Sarasota
	 	FL
	8121 25th Court E.

	 	Sarasota
	 	FL
	8508 Benjamin Rd. Suite A

	 	Tampa
	 	FL
	8788 N.W. 27th St.

	 	Miami
	 	FL
	8800 N.W. 13 Terrace

	 	Miami
	 	FL
	9446 Philips Hwy. Suite 10

	 	Jacksonville
	 	FL
	101 Guthrie Way

	 	Atlanta
	 	GA
	106 John Bankson Dr

	 	Summerville
	 	GA
	1149 Duvall Rd

	 	Chatsworth
	 	GA
	120 Barnett Dr

	 	Milledgeville
	 	GA
	121 Goodwill Drive

	 	Dalton
	 	GA
	1440 Duvall Rd

	 	Chatsworth
	 	GA
	1441 Ellsworth Industrial NW

	 	Atlanta
	 	GA






8.2-7









 






	 	 	 	 	 
	Address	 	City	 	State
	1630 Satellite Blvd., NW Suite 570

	 	Atlanta
	 	GA
	1811 S. Hamilton St.

	 	Dalton
	 	GA
	200 Highland Rd (Treadwell)

	 	Chatsworth
	 	GA
	200 Industrial Blvd

	 	Cartersville
	 	GA
	2001 Antioch Rd

	 	Dalton
	 	GA
	207 Phelps Rd

	 	Dalton
	 	GA
	2100 S. Hamilton St

	 	Dalton
	 	GA
	235 Industrial Blvd

	 	Chatsworth
	 	GA
	243 Huffaker Rd

	 	Rome
	 	GA
	248 S.Industrial Blvd #5

	 	Calhoun
	 	GA
	3021 Olympic Industrial Dr. Suite 100

	 	Smyrna
	 	GA
	400 Clarence King Pkwy

	 	Calhoun
	 	GA
	406 Virgil Drive

	 	Dalton
	 	GA
	436 Lavender Drive-Dyehouse

	 	Rome
	 	GA
	443 Nathenial Dr

	 	Dublin
	 	GA
	447 Union Grove Rd

	 	Calhoun
	 	GA
	506 11th Ave.

	 	Dalton
	 	GA
	5081 Highway 114

	 	Lyerly
	 	GA
	531 Duvall Rd

	 	Chatsworth
	 	GA
	7782 Magnolia Ind

	 	Tifton
	 	GA
	949 Industrial Blvd

	 	Chatsworth
	 	GA
	99 Highland Rd

	 	Chatsworth
	 	GA
	Highway 411 N

	 	Eton
	 	GA
	Hwy 225

	 	Chatsworth
	 	GA
	Lyerly St

	 	Summerville
	 	GA
	McFarland Rd

	 	Dalton
	 	GA
	1200 North Nimitz Highway

	 	Honolulu
	 	HI
	2869 Mokumoa St

	 	Honolulu
	 	HI
	1809 Guthrie Ave

	 	Des Moines
	 	IA
	4245 109th St.

	 	Urbandale
	 	IA
	11589 W. Executive Dr.

	 	Boise
	 	ID
	150 E Crossroads Pkw

	 	Bolingbrook
	 	IL
	1601 Pratt Blvd.

	 	Chicago
	 	IL
	1601 Pratt Blvd.

	 	Chicago
	 	IL
	265 Marquette Dr.

	 	Bolingbrook
	 	IL
	7600 S. Grant St. Suite 1

	 	Burr Ridge
	 	IL
	5425 w. 74th St.Bldg 141

	 	Indianapolis
	 	IN
	9715 Kincaid Dr. Suite 2000

	 	Indianapolis
	 	IN
	10831 W 78th St.

	 	Shawnee
	 	KS
	15300 W. 101st Terrace

	 	Lenexa
	 	KS






8.2-8









 






	 	 	 	 	 
	Address	 	City	 	State
	15380 W. 101st Terrace

	 	Lenexa
	 	KS
	2010 S. Edwards St.

	 	Wichita
	 	KS
	5001 Gilmore Industrial Ct.

	 	Louisville
	 	KY
	675 Melanie Ln.

	 	Lewisport
	 	KY
	11093 airline Hwy.

	 	Baton Rouge
	 	LA
	11965 Lakeland Park Blvd

	 	Baton Rouge
	 	LA
	700 Elmwood Pkwy. Suite B

	 	New Orleans
	 	LA
	15 Walpole Park South

	 	Walpole
	 	MA
	80 b. Commerce Way

	 	Woburn
	 	MA
	801 Technology Center Dr.

	 	Stoughton
	 	MA
	1470 Progress Way

	 	Eldersburg
	 	MD
	1910 Park 100 Drive

	 	Glen Burnie
	 	MD
	4600 Wedgewood blvd. Suite R

	 	Frederick
	 	MD
	812-A Oregon Ave.

	 	Linthicum
	 	MD
	9220 Gaither Rd.

	 	Gaithersburg
	 	MD
	9950 Business Pkwy.

	 	Lanham
	 	MD
	1037 Forest Ave. Rear

	 	Portland
	 	ME
	Apartado 1269

	 	Monterrey
	 	Mex
	24640 Drake Rd.

	 	Farmington Hills
	 	MI
	28435 A. Automation Blvd

	 	Wixom
	 	MI
	3480 Broadmoor Ave. SE

	 	Kentwood
	 	MI
	2359 Waters Drive

	 	Mendota Heights
	 	MN
	2920 N.W. Blvd. Suite 100

	 	Minneapolis
	 	MN
	2059 Westport Center Dr.

	 	St. Louis
	 	MO
	4285 Rider Trail N. Suite 100

	 	Earth City
	 	MO
	108 E. State St.

	 	Ridgeland
	 	MS
	2701 Gabel Rd.

	 	Billings
	 	MT
	100 Main St.

	 	McAdenville
	 	NC
	15-B National Ave.

	 	Fletcher
	 	NC
	2007 Dickenson Ave

	 	Greenville
	 	NC
	214-A E. JJ Dr.

	 	Greensboro
	 	NC
	311 Staton Blvd

	 	Greenville
	 	NC
	335 Summitt Road

	 	Eden
	 	NC
	400 Innovation Ave. Ste 100

	 	Morrisville
	 	NC
	405 Forsyth Hall Dr.

	 	Charlotte
	 	NC
	5901-K Long Creek Park Dr

	 	Charlotte
	 	NC
	712 Henry St

	 	Eden
	 	NC
	9301 Globe Center Dr

	 	Morrisville
	 	NC
	Fieldcrest Road

	 	Laurel Hill
	 	NC
	12008 Portal Rd. suite 104

	 	La Vista
	 	NE






8.2-9









 






	 	 	 	 	 
	Address	 	City	 	State
	56-B Kendall Pond Rd.

	 	Manchester
	 	NH
	1000 Airport Rd. Bldg. 1 Suite 102

	 	Lakewood
	 	NJ
	1250 Valley Brook Ave.

	 	Lyndhurst
	 	NJ
	1250 Valley Brook Ave.

	 	New York
	 	NJ
	2030 Springdale Rd. Unit 100

	 	Cherry Hill
	 	NJ
	206 Rt. 46 E.

	 	Fairfield
	 	NJ
	5 Corporate Dr.

	 	Cranbury
	 	NJ
	698 US Hwy 46

	 	Teterboro
	 	NJ
	9 Whittendale Dr

	 	Moorestown
	 	NJ
	5601 Venice Avenue N.E.

	 	Albuquerque
	 	NM
	1490 Linda Way Suite E

	 	Sparks
	 	NV
	3744 W. Sunset Rd., Suite D

	 	Las Vegas
	 	NV
	3755 W. Sunset Rd, Suite G

	 	Las Vegas
	 	NV
	103 S. Clark St.

	 	Olean
	 	NY
	15 Charlotte Ave.

	 	Hicksville
	 	NY
	2918 Walden Ave. Suite 200

	 	Buffalo
	 	NY
	31 Oakland Ave.

	 	Harrison
	 	NY
	3450 Winton Pl. Space 15

	 	Rochester
	 	NY
	4 Dwight Park Dr

	 	Syracuse
	 	NY
	58-40 55th Dr.

	 	Maspeth
	 	NY
	6 Access Rd.

	 	Albany
	 	NY
	600 Franklin

	 	Mount Vernon
	 	NY
	92 19th St.

	 	Brooklyn
	 	NY
	12850 Darice Parkway Suite B

	 	Strongsville
	 	OH
	143 Commerce Blvd

	 	Johnstown
	 	OH
	23632 Mercantile Rd.

	 	Cleveland
	 	OH
	4650 Lake Forest Dr. Suite 540

	 	Blue Ask
	 	OH
	4650 Lake Forest Dr. Suite 540

	 	Cincinnati
	 	OH
	6450 LaSalle Dr

	 	Lockbourne
	 	OH
	730 Dearborn Park Ln.

	 	Columbus
	 	OH
	900 Resource Dr.

	 	Cleveland
	 	OH
	12340 E. 52nd St.

	 	Tulsa
	 	OK
	3121 Melcat Dr Suite B

	 	Oklahoma City
	 	OK
	3121 Melcat Dr. Suite A

	 	Oklahoma City
	 	OK
	3801 Dal-Tile Rd

	 	Muskogee
	 	OK
	1471 Railroad Blvd. Unit 1

	 	Eugene
	 	OR
	3240 N.W. 29th Avenue

	 	Portland
	 	OR
	104 Parkway View Dr.

	 	Pittsburgh
	 	PA
	2019 Washington Ave.

	 	Philadelphia
	 	PA
	211 N. Fourth St.

	 	Gettysburg
	 	PA






8.2-10









 






	 	 	 	 	 
	Address	 	City	 	State
	350 Dunks Ferry Rd.

	 	Bensalem
	 	PA
	4750 Westport Dr. Suite 100

	 	Harrisburg
	 	PA
	790 Vista Park Drive

	 	Pittsburg
	 	PA
	904 Marcon Blvd.

	 	Allentown
	 	PA
	Whitemarsh Industrial Campus, 5105 Campus Dr.

	 	Plymouth Meeting
	 	PA
	Marginal Baldorioty de Castro, LMM Int’l Airport, Besthree Bldg. — Suite

	 	Carolina
	 	PR
	75 Jefferson Blvd.

	 	Providence
	 	RI
	174 Lott Ct.

	 	West Columbia
	 	SC
	2066/2094 Marlborough Rd

	 	Bennettsville
	 	SC
	2118 Marlborough Rd

	 	Bennettsville
	 	SC
	300 Landrum Mills Rd

	 	Landrum
	 	SC
	4716 Hwy. 17 Bypass S.

	 	Myrtle Beach
	 	SC
	Hwy 81

	 	Calhoun Falls
	 	SC
	2520 Bransford Ave.

	 	Nashville
	 	TN
	5678 Distributon Dr.

	 	Memphis
	 	TN
	623 Old Hickory Blvd

	 	Old Hickory
	 	TN
	1005 Placid Avenue

	 	Plano
	 	TX
	10399 Silver Springs Rd.

	 	Conroe
	 	TX
	11185 Pellicano

	 	El Paso
	 	TX
	1119 Arion Pkwy.

	 	San Antonio
	 	TX
	1119 Arion Pkwy.

	 	San Antonio
	 	TX
	11711 Fuqua St.

	 	Houston
	 	TX
	11850 Hempstead Hwy. Suite 170

	 	Houston
	 	TX
	11850 Hempstead Hwy. Suite 180

	 	Houston
	 	TX
	12001 Railroad Dr.

	 	El Paso
	 	TX
	1201 N. Jackson Suite 100

	 	McAllen
	 	TX
	1625 Crescent cir. Suite 300

	 	Carrollton
	 	TX
	199 Planter Rd

	 	Sunnyvale
	 	TX
	199 Planters Rd.

	 	Sunnyvale
	 	TX
	209 S. Johnson

	 	Amarillo
	 	TX
	2250 LBJ Frwy. Suite 300

	 	Dallas
	 	TX
	2500 E. Mayfield Rd. Suite 300

	 	Arlington
	 	TX
	2515 Brockton Dr. Suite 101

	 	Austin
	 	TX
	3100 Industrial Dr

	 	Commerce
	 	TX
	325 Spring Hill Dr.

	 	Houston
	 	TX
	3600 Brittmoore Rd

	 	Houston
	 	TX
	3795 W. Cardinal Dr. Suite 100

	 	Beaumont
	 	TX
	4150-B I-30

	 	Mesquite
	 	TX
	4602 Perrin Creek Bldg 12

	 	San Antonio
	 	TX






8.2-11









 






	 	 	 	 	 
	Address	 	City	 	State
	6323 Airport Frwy. Suite A

	 	Fort Worth
	 	TX
	720 Industrial Suite 100

	 	Grapevine
	 	TX
	7834 C. F. Hawn Frwy.

	 	Dallas
	 	TX
	980 Bethel Rd

	 	Coppell
	 	TX
	1358 S 400 E. Unit 1

	 	St. George
	 	UT
	250 W. Gregson Ave.

	 	Salt Lake City
	 	UT
	3037 s. 300 W.

	 	Salt Lake City
	 	UT
	3505 W. California Ave

	 	Salt Lake City
	 	UT
	10404 LakeRidge Pkwy

	 	Ashland
	 	VA
	11850 Livingston Rd. Suite 100

	 	Manassas
	 	VA
	14790 Flint Lee Rd. Suite 200

	 	Chantilly
	 	VA
	1660 Venture Blvd

	 	Bedford
	 	VA
	22713 Commerce Center Ct. Suite 100

	 	Dulles
	 	VA
	2519 Britton’s Hill Rd.

	 	Richmond
	 	VA
	351 Floyd Pike

	 	Hillsville
	 	VA
	404 Anderson St

	 	Glasgow
	 	VA
	5733 Bayside Rd. Suite 102

	 	Virginia Beach
	 	VA
	6760 Gravel Ave.

	 	Alexandria
	 	VA
	901 S. Delphine Ave

	 	Waynesboro
	 	VA
	223 Downie Rd

	 	Chehalis
	 	WA
	23210 71st Place S

	 	Kent
	 	WA
	2525 W. Casino Rd. Suite 8A

	 	Everett
	 	WA
	3808 North Sullivan Rd

	 	Spokane
	 	WA
	4000 E. Broadway

	 	Spokane
	 	WA
	4215-A 95th St. SW

	 	Lakewood
	 	WA
	540 S. Front St.

	 	Seattle
	 	WA
	6020 6th Avenue S.

	 	Seattle
	 	WA
	12555 W. Silver Spring Dr.

	 	Milwaukee
	 	WI
	976 Glory Rd.

	 	Green Bay
	 	WI
	N24 W 23750 Watertown Rd

	 	Waukesha
	 	WI







8.2-12











 





SCHEDULE 8.6




LITIGATION



     In Shirley Williams et al. v. Mohawk Industries, Inc., four plaintiffs filed a putative class
action lawsuit in January 2004 in the United States District Court for the Northern District of
Georgia (Rome Division), alleging that they are former and current employees of the Company and
that the actions and conduct of the Company, including the employment of persons who are not
authorized to work in the United States, have damaged them and the other members of the putative
class by suppressing the wages of the Company’s hourly employees in Georgia. The plaintiffs seek a
variety of relief, including (a) treble damages; (b) return of any allegedly unlawful profits; and
(c) attorney’s fees and costs of litigation. In February 2004, the Company filed a Motion to
Dismiss the Complaint, which was denied by the District Court in April 2004. Following appellate
review of this decision, the case was returned to the District Court for further proceedings. On
December 18, 2007, the plaintiffs filed a motion for class certification. On March 3, 2008, the
District Court denied the plaintiffs motion for class certification. The plaintiffs then appealed
the decision to the United States Court of Appeals for the 11th Circuit on March 17, 2008. On May
28, 2009, the Court of Appeals issued an order reversing the District Court’s decision and
remanding the case back to the District Court for further proceedings on the class certification
issue. Discovery has been stayed at the District Court since the appeal. In August, 2009 the
Company filed a petition for certiorari with the United States Supreme Court. The Company will
continue to vigorously defend itself against this action. The Company believes that adequate
provisions for resolution of all contingencies, claims and pending litigation have been made for
probable losses and that the ultimate outcome of this action will not have a material adverse
effect on its financial condition but could have a material adverse effect on its results of
operations in a given quarter or year.








 









 








SCHEDULE 8.10




DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS



	 	 	 	 	 	 	 	 	 	 	 
	BANK ACCOUNTS:	 	 	 	 	 	 	 	 	 	 
	Unilin Flooring NC, LLC	 	 	 	 	 	 	 	Domicile	 	Control
 Agmt:
	 
	Unilin Flooring NC, LLC

	 	Bank of America
	 	XXXXXX
	 	A/R
	 	TX
	 	Yes
	Unilin Flooring NC, LLC

	 	Bank of America
	 	 	 	A/R
	 	NC
	 	+
	 
	DalTile
	 	 	 	 	 	 	 	 	 	 
	 
	DalTile Distribution, Inc

	 	Bank of America
	 	XXXXXX
	 	Stores
	 	TX
	 	Yes
	DalTile Corp

	 	Bank of America
	 	XXXXXX
	 	Concentration
	 	TX
	 	Yes*
	DalTile Corp

	 	Bank of America
	 	XXXXXX
	 	Stores
	 	TX
	 	Yes*
	DalTile Corp

	 	Bank of America
	 	XXXXXX
	 	Stores
	 	CA
	 	Yes*
	Mohawk Factoring, Inc

	 	Bank of America
	 	XXXXXX
	 	Stores and A/R
	 	TX
	 	Yes*
	DalTile Corp

	 	Bank of America
	 	XXXXXX
	 	Stores
	 	NY
	 	Yes*
	Mohawk Factoring, Inc

	 	JPM Chase
	 	XXXXXX
	 	A/R
	 	IL
	 	Yes
	DalTile Corp

	 	Wachovia
	 	XXXXXX
	 	Stores
	 	NC
	 	Yes
	DalTile Corp

	 	Wells Fargo
	 	XXXXXX
	 	Stores
	 	CA
	 	Yes
	DalTile Corp

	 	Wells Fargo
	 	XXXXXX
	 	MC / Visa — stores
	 	CA
	 	Yes
	DalTile Corp

	 	Wells Fargo
	 	XXXXXX
	 	American Express — stores
	 	CA
	 	No**
	Dal-Elit, LLC

	 	Bank of America
	 	XXXXXX
	 	Clearing accounts
	 	TX
	 	+
	 
	 	 	 	 	 	 	 	 	 	 
	Mohawk
	 	 	 	 	 	 	 	 	 	 
	 
	Mohawk Factoring, Inc

	 	Bank of America
	 	XXXXXX
	 	A/R
	 	CA
	 	Yes
	Mohawk Factoring, Inc

	 	Bank of America
	 	XXXXXX
	 	A/R
	 	CA
	 	Yes
	Mohawk Factoring, Inc

	 	Bank of America
	 	XXXXXX
	 	A/R
	 	CA
	 	Yes
	Mohawk Factoring, Inc

	 	Bank of America
	 	XXXXXX
	 	A/R
	 	TX
	 	Yes
	Mohawk Factoring, Inc

	 	Bank of Montreal
	 	XXXXXX
	 	Canadian dollar lockbox
	 	Canada
	 	+
	Mohawk Factoring, Inc

	 	Bank of Montreal
	 	XXXXXX
	 	USD lockbox
	 	Canada
	 	+
	Aladdin Manufacturing

	 	Wachovia
	 	XXXXXX
	 	Clearing accounts
	 	GA
	 	+
	Mohawk Carpet, LLC

	 	Wachovia
	 	XXXXXX
	 	Clearing accounts
	 	GA
	 	+
	Mohawk Carpet Distribution

	 	Wachovia
	 	XXXXXX
	 	Clearing accounts
	 	DE
	 	+
	Mohawk Resources, LLC

	 	Wachovia
	 	XXXXXX
	 	Clearing accounts
	 	GA
	 	+






 









 






	 	 	 	 	 	 	 	 	 	 	 
	BANK ACCOUNTS:	 	 	 	 	 	 	 	 	 	 
	Unilin Flooring NC, LLC	 	 	 	 	 	 	 	Domicile	 	Control 
Agmt:
	 
	Mohawk Carpet, LLC

	 	Wachovia
	 	XXXXXX
	 	Cash, Dublin plant
	 	TX
	 	+
	Mohawk Industries, Inc.

	 	Wells Fargo
	 	XXXXXX
	 	Clearing account — Asia
	 	CA
	 	+
	Concentration

	 	Wachovia
	 	XXXXXX
	 	Master concentration
	 	GA
	 	Yes
	Concentration

	 	Wells Fargo
	 	XXXXXX
	 	Future Master concentration
	 	CA
	 	Yes
	Mohawk Industries, Inc.

	 	JPM Chase
	 	XXXXXX
	 	Clearing account — Euro
	 	UK
	 	+
	Mohawk Industries, Inc.

	 	JPM Chase
	 	XXXXXX
	 	Clearing account — Euro
	 	UK
	 	+
	 
	 	 	 	 	 	 	 	 	 	 
	INVESTMENT ACCOUNT:
	 	 	 	 	 	 	 	 	 	 
	 
	Mohawk Industries, Inc.

	 	JPM Chase
	 	XXXXXX
	 	Prime money market fund
	 	NY
	 	Yes








 




			
	+	 	“Excluded Account” as defined in the Loan and Security Agreement
	 
	*	 	Pending review by Bank of America
	 
	**	 	Excluded from account control agreements by depositary bank due to ZBA or sweep arrangements in place.









8.2-2









 








SCHEDULE 8.12




SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY



	 	 	 	 	 
	Subsidiary	 	Jurisdiction of 
Organization	 	Beneficial Ownership
	Aladdin Manufacturing Corporation

	 	Delaware
	 	Mohawk Carpet, LLC (100%)
	Horizon Europe, Inc.

	 	Georgia
	 	Aladdin Manufacturing Corporation (100%)
	Lees Mohawk (UK) Limited

	 	UK
	 	Mohawk Carpet, LLC (100%)
	Mohawk Canada Corporation

	 	Nova Scotia
	 	Mohawk Carpet, LLC (100%)
	Mohawk Carpet, LLC

	 	Delaware
	 	Mohawk Industries, Inc. (100%)
	Mohawk Carpet Distribution, Inc.

	 	Delaware
	 	Aladdin Manufacturing Corporation (100%)
	Mohawk Carpet Transportation of Georgia, LLC

	 	Delaware
	 	Aladdin Manufacturing Corporation (100%)
	Mohawk Commercial, Inc.

	 	Delaware
	 	Mohawk Carpet, LLC (100%)
	Mohawk ESV, Inc.

	 	Delaware
	 	Mohawk Carpet, LLC (100%)
	Mohawk Factoring, Inc.

	 	Delaware
	 	Mohawk Carpet, LLC (79.3%) World International, Inc. (20.7%)
	Mohawk International (China) Ltd.

	 	Mauritius
	 	Mohawk International Holdings S.A. r.l. (100%)
	Mohawk International (India) Ltd.

	 	Mauritius
	 	Mohawk International Holdings S.A. r.l. (100%)
	Mohawk Resources, LLC

	 	Delaware
	 	Mohawk Carpet, LLC (100%)
	Mohawk Servicing, LLC

	 	Delaware
	 	Mohawk Carpet, LLC (100%)
	Wayn-Tex LLC

	 	Delaware
	 	Aladdin Manufacturing Corporation (100%)
	World International, Inc.

	 	Barbados
	 	Mohawk Carpet, LLC (100%)
	Dal-Tile International Inc.

	 	Delaware
	 	Mohawk Industries (100%)
	Dal-Elit, LLC

	 	Texas
	 	Dal-Tile Corporation (100%)
	Dal Italia LLC

	 	Delaware
	 	Dal-Tile I, LLC (83.5%)
	Dal-Tile Corporation

	 	Pennsylvania
	 	Dal-Tile Group Inc. (100%)
	Dal-Tile Group Inc.

	 	Delaware
	 	Dal-Tile International Inc. (100%)
	Dal-Tile I, LLC

	 	Delaware
	 	Dal-Tile Distribution, Inc. (100%)
	Dal-Tile Operaciones Mexico, S. de R.L. de C.V.

	 	Mexico
	 	Dal-Tile Mexico S.A. De C.V. (99.97%)
Dal-Tile Industrias S. de C.V. (.03%)
	Dal-Tile Industrias S. de R.L. de C.V

	 	Mexico
	 	Dal-Tile Mexico S.A. De C.V. (99.97%)
Dal-Tile Operaciones Mexico S. De R.L. De C.V. (.03%)
	Dal-Tile Recubrimientos, S. de R.L. de C.V.

	 	Mexico
	 	Mohawk International (Europe) S.a.
r.l. (99.99%) 

Mohawk International Holdings S.A. r.l. (.01%)
	Dal-Tile Mexico S.A. de C.V.

	 	Mexico
	 	Dal-Tile Group Inc. (99.985%) 

DTM/CM Holdings Inc. (.004%) 

Dal-Tile Corporation (.011%)
	Dal-Tile of Canada Inc.

	 	Canada
	 	Dal-Tile Group Inc. (100%)
	Dal-Tile Puerto Rico, Inc.

	 	Puerto Rico
	 	Dal-Tile Corporation (100%)
	Dal-Tile Services, Inc.

	 	Delaware
	 	Dal-Tile Corporation (100%)
	Dal-Tile Shared Services, Inc.

	 	Delaware
	 	Dal-Tile Corporation (100%)
	Dal-Tile Distribution, Inc.

	 	Delaware
	 	Dal-Tile Corporation (100%)
	DTM/CM Holdings Inc.

	 	Delaware
	 	Dal-Tile Group Inc. (100%)
	Cevotrans BV

	 	Netherlands
	 	Opstalan BV (100%)
	Mohawk Global Investments S.àr.l

	 	Luxembourg
	 	Mohawk Rock Holdings Limited (100%)
	Mohawk International (Europe) S.àr.l

	 	Luxembourg
	 	Mohawk International Holdings S.A. r.l. (100%)
	Mohawk International Holdings (DE) Corporation

	 	Delaware
	 	Mohawk Industries, Inc. (100%)






8.12-1









 






	 	 	 	 	 
	Subsidiary	 	Jurisdiction of 
Organization	 	Beneficial Ownership
	Mohawk International Holdings S.àr.l

	 	Luxembourg
	 	Mohawk Global Investments S.A. r.l. (100%)
	Mohawk Rock Holdings Limited

	 	Gibraltar
	 	Mohawk International Holdings (DE) Corporation (100%)
	Opstalan BV

	 	Netherlands
	 	Unilin Beheer BV (100%)
	Sharikat Malaysia Wood Industries Sdn Bhd

	 	Malaysia
	 	Mohawk International Holdings (DE) Corporation (100%)
	Timber Technique Finance Ltd.

	 	Ireland
	 	Flooring Industries, Ltd. (100%)
	Unilin Beheer BV

	 	Netherlands
	 	Unilin BVBA (100%)
	Unilin Flooring NC, LLC

	 	N. Carolina
	 	Mohawk Industries, Inc. (100%)
	Unilin Multipre BV

	 	Netherlands
	 	Unilin Beheer BV (100%)
	Unilin GmbH

	 	Germany
	 	Unilin BVBA (100%)
	Unilin Holding BVBA

	 	Belgium
	 	Unilin BVBA (100%)
	Unilin Holding SAS

	 	France
	 	Unilin BVBA (100%)
	Unilin SAS

	 	France
	 	Unilin Holding SAS (100%)
	Unilin Industries BVBA

	 	Belgium
	 	Unilin Holding BVBA (100%)
	Flooring Industries Ltd.

	 	Ireland
	 	Mohawk International Holdings S.A. r.l. (100%)
	F.I.L.S. Investments

	 	Ireland
	 	Timber Technique Finance Ltd. (99.9%)
Mohawk International (Europe) S.a. r.l. (.01%)
	Mohawk International (Hong Kong) Limited

	 	Hong Kong
	 	Mohawk International Holdings S.A. r.l. (100%)
	Mohawk Trading (Shanghai) Co., Ltd.

	 	China
	 	Mohawk International (Hong Kong) Limited (100%)
	Mohawk International (India) Ltd.

	 	Mauritius
	 	Mohawk International Holdings S.A. r.l. (100%)
	DB Wholesale Carpets & Flooring

	 	India
	 	Mohawk International (India) Ltd. (99.99%)
Mohawk International Holdings S.A. r.l. (.01%)
	Unilin UK Ltd.

	 	United Kingdom
	 	Unilin BVBA (100%)
	Mohawk Unilin International B.V.

	 	Netherlands
	 	Mohawk International Holdings S.A. r.l. (90%)
Mohawk International (Europe) S.a. r.l. (10%)
	Unilin Russia

	 	Dzerzhinsky, State of Nizhny, Novgorod
	 	Mohawk Unilin International B.V. (100%)
	Unilin Systems SAS

	 	France
	 	Unilin BVBA (99.76%)
	Unilin Systems SUD SAS

	 	France
	 	Unilin Systems SAS (100%)
	Mohawk Foreign Holdings, S.a. r.l.

	 	Luxembourg
	 	Mohawk Rock Holdings Limited (100%)
	Mohawk U.K. Holdings, Ltd.

	 	United Kingdom
	 	Mohawk Foreign Holdings, S.a. r.l. (100%)











8.12-2









 








SCHEDULE 8.13




COLLECTIVE BARGAINING OR SIMILAR AGREEMENTS


1) Agreement between United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union Olean Local 151G and Dal-Tile Corporation,
February 3, 2008 — February 4, 2012



2) Collective Bargaining Agreement between Mohawk Industries, Inc. and Unite Here Southern Regional
Joint Board, January 1, 2009 — December 31, 2011









 









 








SCHEDULE 8.14




MATERIAL CONTRACTS


Supply Agreement dated as of December 29, 1999, between Dal-Tile Corporation and Wold Talc Company



Indenture dated as of April 2, 2002 by and between Mohawk Industries, Inc., as Issuer and Wachovia
Bank, National Association, as Trustee, as amended, restated, supplemented or otherwise modified
through the date hereof pursuant to which Mohawk Industries, Inc. issued notes in the aggregate
original principal amount of $400,000,000 due 2012



Indenture dated as of January 9, 2006 by and between Mohawk Industries, Inc., as Issuer and
SunTrust Bank, as Trustee, as amended, restated, supplemented or otherwise modified through the
date hereof (including, without limitation, that certain First Supplemental Indenture dated as of
January 17, 2006), pursuant to which Mohawk Industries, Inc. issued notes in the aggregate original
principal amount of: (i) $500,000,000 due 2011 and (ii) $900,000,000 due 2016









 









 








SCHEDULE 10.1




EXISTING INDEBTEDNESS


As of August 1, 2009:




	 	 	 	 	 
	1991 Development Authority of Catoosa County, Georgia, Tax
exempt Industrial Development Revenue Refunding Bonds due
2011
	 	$	6,500,000	 
	1999 Development Authority of Whitfield County Solid Waste
Disposal Revenue Bonds due 2019
	 	$	3,100,000	 
	1997 Laurens County ($1MM) & Gordon County ($2MM) Industrial
Development Revenue Bonds due 2017
	 	$	3,000,000	 
	1997 Development Authority of the City of Summerville,
Georgia Exempt Facility Revenue Bonds due 2017
	 	$	30,000,000	 
	1997-C South Carolina Economic Development Authority Economic
Development Revenue Bonds due 2017
	 	$	6,473,368	 
	1997-B South Carolina Economic Development Authority Economic
Development Revenue Bonds due 2017
	 	$	3,000,000	 
	Mohawk Industries, Inc. 6.125% Senior Notes due 2016 issued
pursuant to that certain First Supplemental Indenture dated
as of January 17, 2006 by and between Mohawk Industries,
Inc., as Issuer and SunTrust Bank, as Trustee
	 	$	900,000,000	 
	Guarantee by Mohawk Industries, Inc. of the obligations of
Mohawk International Holdings S.Á r.l. under that certain
Euro Overdraft Facility with ING Belgium SA/NV
	 	€	30,000,000	 











 









 








SCHEDULE 10.2




EXISTING LIENS


Dal-Tile Distribution, Inc., Texas State Tax Lien dated July 24, 2009 in the amount of $26,775.29









 









 








SCHEDULE 10.3




EXISTING INVESTMENTS


Investments by the Loan Parties in other Loan Parties (and their Subsidiaries and Affiliates) and
Non-Loan Parties (and their Subsidiaries and Affiliates) as of the Closing Date as described on
Schedule 8.12.



Investment by Dal-Tile International Inc. of 49.99% of the equity interests in Recumbrimentos
Interceramica, S.A. de C.V.



Guarantee
by Mohawk Industries, Inc. of the obligations of Mohawk International
Holdings S.A.r.l.
under that certain Euro Overdraft Facility with ING Belgium SA/NV.






 









 








SCHEDULE 10.7




EXISTING AFFILIATE TRANSACTIONS


None.